Alkalies and Chlorine

SIC 2812

Companies in this industry

Industry report:

This industry classification includes establishments engaged in manufacturing alkalies and chlorine. Examples of products include compressed or liquefied chlorine, sodium or potassium hydroxide, sodium bicarbonate, and soda ash (not produced at mines). Alkalies produced by mining are classified in SIC 1474: Potash, Soda, and Borate Minerals.

Industry Snapshot

The two primary commodities offered by the alkalies and chlorine industry are chlorine and sodium hydroxide (caustic soda), together representing the bulk of all shipments. According to U.S. Census Bureau, the value of shipments by U.S. alkalies and chlorine manufacturers was $6.3 billion in 2007.

Chlorine and caustic soda have consistently appeared on lists of the top 10 U.S. chemicals according to production weight. They are coproducts of the same chemical process. This means that they are created at the same time and that the production of one results in the production of the other. Although there are several modern procedures used to produce chlorine and caustic soda, most rely on a technique called electrolysis. As electricity is passed through brine (a salt water solution), the brine's components--salt (sodium chloride) and water (made up of hydrogen and oxygen)--recombine to form chlorine and sodium hydroxide (caustic soda) in approximately equal amounts. Some hydrogen gas also results from the process.

Organic chemical manufacturers are the primary chlorine users in the United States. Some examples of chemicals produced with chlorine are ethylene dichloride, carbon tetrachloride, and methylene chloride. These and other chlorinated organic chemicals are used to make many products, including flame retardants, herbicides, solvents, refrigerants, polyvinyl chloride (PVC) pipe, and pigments. The second-largest chlorine user is the pulp and paper industry, which uses chlorine as a bleaching agent. Chlorine products are also used as raw ingredients in household and commercial bleaches, scouring powders, and automatic dishwashing compounds. Other chlorine uses include water treatment, sewage treatment, sanitizing, and metal extracting.

Caustic soda has a wide range of industrial applications. It is used in petroleum exploration and by water treatment facilities, tanneries, and the textile industry. It also plays a role in food processing, metal fabrication, and chemical manufacturing. Caustic soda is also used in industrial complexes to remove boiler scale. Although soda ash has been manufactured synthetically from the evaporation of brines, it is primarily produced from trona, a mined product that is covered in SIC 1474: Potash, Soda, and Borate Minerals. The last synthetic soda ash facility in the United States closed in 1986, idling 700,000 tons of capacity.

Organization and Structure

Modern methods of chlorine production were developed around electrolysis. The three most-used technologies are diaphragm cells, mercury cells, and membrane cells, all of which produce chlorine and caustic soda by decomposing brine (salt water). Combined, they account for over 90 percent of U.S. chlorine production. Other methods in operation include electrolysis of either molten magnesium chloride or molten sodium chloride; electrolysis of hydrochloric acid; and nonelectrolytic processes. The brine used as a raw material is obtained from natural deposits under the earth's surface or is made from salt and water.

Diaphragm cells, the oldest and most widely used of the modern methods, produces more than three-quarters of the nation's chlorine. Direct current is used to separate salt and water into chlorine, hydrogen, and sodium hydroxide (caustic soda). An internal asbestos fiber-coated device called a "diaphragm" keeps the chlorine and caustic soda separate. Manufacturers rely on additional evaporation and drying procedures to create products in marketable concentrations.

Mercury cells employ a different technique for keeping manufactured chlorine and caustic soda separate. Because of the presence of mercury during the application of the cell's electric current, the sodium is isolated and dissolved into the mercury. A secondary process recaptures the mercury and releases the sodium to form sodium hydroxide (caustic soda). During the early 1990s producers were moving away from mercury cells because of environmental concerns surrounding the mercury content of plant waste water.

The membrane cell represents the most rapidly growing production technology, using an ion exchange membrane to separate the chlorine and caustic soda. Membrane technology requires less electricity and produces grades of chlorine and caustic soda with higher purity than other methods.

The Chlorine Institute, founded in 1924, represents approximately 98 percent of North American chlorine production capacity through its members. Although its original purpose was to further the demand for chlorine, its aims now include the promotion of human and environmental health associated with the production, distribution, and use of chlorine, sodium hypochlorite, and sodium and potassium hydroxides.

Background and Development

The use of chlorine compounds in chemical processes dates to at least 77 A.D., but the isolated element itself was not produced until 1774. Although chlorine is a common element, in nature it exists only in compounds because it reacts readily with other substances, both organic and inorganic. For example, ordinary table salt, or sodium chloride, consists of chlorine and sodium.

A Swedish chemist, Carl Wilhelm Scheele (1742-1786), is acknowledged as the first person to create and identify chlorine. Scheele (who also co-discovered oxygen) generated a greenish-yellow gas during experiments with seawater. He called it "dephlogisticated marine acid air." The word "dephlogisticated" referred to the fact that it was not susceptible to combustion. The phrase "marine acid air" identified the new gaseous material produced from the acid obtained from marine brine. In 1810, when Sir Humphry Davy (1778-1829) used electricity to prove that the gas was an element, he coined the word "chlorine" from chloros, the Greek word for greenish-yellow.

The bleaching effects of chlorine were first put to commercial use by textile makers in France near the end of the eighteenth century. Natural cottons and linens were light brown and required bleaching before they could be dyed with light or bright colors. Traditionally, this had been accomplished by spreading out the fabrics and exposing them to the sun. Bleaching fabrics in this manner took as long as three months for cotton and six months for linen. Chlorine bleaching compounds enabled textile manufacturers to keep up with the increasing speed of production that followed improvements in spinning and weaving.

Chlorine products were greatly improved by technology during the late eighteenth and early nineteenth centuries. In 1792, a process for bleaching rags used in papermaking was developed. Bleaching powder, or calcium hypochlorite, was first introduced in 1799. The ability to transport chlorine to markets distant from manufacturing plants was achieved through the formation of potassium hypochlorite, a liquid product created with chlorine and caustic potash.

The development of chlorine production based on electrolysis lowered chlorine prices and increased the chemical's popularity. Electrolysis methods evolved through the mid-nineteenth century and, by the century's close, had become commercially viable in areas with low-cost electricity. The first commercial plant in the United States opened in 1893 in Rumford, Maine.

As the twentieth century began, chlorine was being used for an increasing number of purposes. Jersey City, New Jersey, was the first city to use chlorine to disinfect drinking water supplies. It began chlorination in 1908 and was soon followed by other major cities, including New York. Sewage treatment methods based on liquid chlorine were first adopted in Altoona, Pennsylvania, in 1913. The use of chlorine by water and sewage treatment facilities helped to virtually eliminate diseases such as cholera, typhoid, and dysentery.

Not all of chlorine's uses, however, were benevolent. During World War I, chlorine gas, an extremely poisonous substance, was used as a weapon against the Allies. Despite the horrors associated with chlorine gas, the U.S. chlorine production industry benefited from the war. Imports of chemicals from Europe were sharply curtailed because of submarine warfare. As a result, domestic production tripled and continued to grow after the war. Chlorine also played a role in the development of insecticides, anesthetics, dry cleaning fluids, and fire-fighting compounds. The fledgling plastics industry relied on chlorine to make its vital vinyl chloride products. Between 1955 and 1970, chlorine usage grew approximately 5.8 percent per year.

The 1970s ushered in an era of changes. Although the decade closed with chlorine production at a historic high, growth stagnated. Environmental questions hampered producers, and economic woes diminished demand by users. By the early 1990s, chlorine production and demand were still less than they had been in 1979.

Despite improvements that lessened the environmental impact of chlorine and caustic soda production, the industry continued to suffer from adverse publicity concerning chlorine use. Chlorine compounds react with organic substances to form dioxins, which are suspected carcinogens and pose potential health hazards including birth defects and damage to the human skin, liver, neuroendocrine system, and immune system.

Controversy about dioxins affected the use of chlorine by pulp and paper producers, one of the largest chlorine-consuming industries. Chlorine traditionally was used to bleach pulp and create white paper products. Increasingly, manufacturers turned to innovative oxygen and hydrogen peroxide bleaching technologies. Analysts estimated that the pulp and paper industry used only about 9 percent of the domestic chlorine production in 1994, a drop from 15 percent in 1990.

Environmental groups increasingly protested the use of chlorine in other areas as well. Chlorofluorocarbons (CFCs) are suspected of damaging the ozone layer of the earth's upper atmosphere. Chlorinated solvents were considered a source of air pollution because of their emissions. In response, some water treatment facilities began turning away from chlorine to other methods of water purification. According to the Chlorine Institute, however, calls to eliminate chlorine altogether were unreasonable because of the heavy financial burden of meeting such restrictions.

In 1994 the Environmental Protection Agency announced that chemical companies in the United States would have to cut their manufacturing plants' toxic air pollution by almost 90 percent from 1990 levels. According to the Detroit Free Press, the rule "requires the companies ... to install equipment to better prevent evaporation and leaks of 112 toxic chemicals. ... About 370 chemical plants in 38 states will be forced to cut toxic air pollution by a total of 506,000 tons." The new rules, instituted as a part of the 1990 Clean Air Act, involved significant expenditures on capital improvements for the affected companies.

Despite the problems associated with chlorine and its declining use in traditional markets, industry analysts anticipated overall demand to grow, driving prices up by as much as 15 percent by 2002. Vinyl exports and PVC use in new construction and in remodeling were expected to make up for declines in other areas.

Figures released by the U.S. Census Bureau for the chlor-alkali industry in 1995 showed domestic total production at $3.3 billion in shipments, with contributions to this total from chlorine (compressed or liquefied) at $849.7 million, sodium hydroxide or caustic soda at $2.06 billion, and other alkalies at $382.3 million.

Chlorine and caustic soda started off the twenty-first century under duress. The downturn in the economy led to a decrease in demand, forcing down prices. Suffering from degrading sales in the pulp and paper industry, spot prices of caustic soda ran between $165 and $175 per ton in the fall of 2001, approximately half of the selling price in January 2001. Chlorine production during 2001 was down 10 percent, reflecting the lowest production levels in 20 years. Also affecting the market was a 100,000-ton increase in imports during 2001 and a 300,000-ton decrease in exports.

The industry began to experience a slow turnaround during 2002 when the U.S. industry was valued at nearly $3 billion. Operating rates also increased again in 2003, moving up to nearly 95 percent of capacity. Research from Harriman Chemsult Ltd. found that in 2004, the industry produced an estimated 47 million metric tons of chlorine and 51 million metric tons of caustic soda worldwide. According to Chemical Market Associates, annual global chlor-alkali capacity was about 56.4 million metric tons in 2005, a figure that was projected to reach 62.2 million metric tons within five years.

The value of shipments by U.S. manufacturers of alkalies and chlorine reached $6.4 billion in 2005, according to the U.S. Census Bureau, up from $4.4 billion the previous year. Polyvinyl chloride (PVC) was the largest specific end use for chlorine, consuming 36 percent of U.S. production. Organic and inorganic chemicals accounted for 41 percent and 15 percent of consumption, respectively, with water treatment accounting for 4 percent, and pulp and paper consuming only 1 percent.

A weak housing market in the United States during the mid-2000s suppressed demand for PVC products, causing chlorine producers to reduce capacity. By extension, the supply of caustic soda, a byproduct of chlorine production, was also decreased, generating higher prices in that market.

Increased energy costs in the United States discouraged investments in chlor-alkali manufacturing facilities. As a result, North American capacity is expected to remain generally flat into the 2010s. In contrast, Asia will be driving global demand for chlor-alkali products. According to Harriman Chemsult Ltd., a market research firm, China's chlor-alkali capacity jumped from 1.5 million metric tons in 1980 to 14.1 million metric tons in 2006, representing 24 percent of world capacity. At that point, China surpassed the United States as the world's leading supplier of chlor-alkali products. By 2010, China's capacity is expected to grow to nearly 20 million metric tons, at which point the country will supply 30 percent of world capacity.

In 2006, the United States exported approximately $1.5 billion in alkalies and chlorine, according to a report by Supplier Relations US LLC. China was the world's largest importer of PVC, but it was expected to become more self-sufficient as its capacity increased. Meanwhile, northeast Asia became the world's top exporter of caustic soda in 2005, as exports increased 11 percent between 2001 and 2006.

Current Conditions

U.S. production in the industry was down in the late 2000s, along with the economy. Although chlorine production rose almost 5 percent between June 2009 and July 2009, with 53,112 tons more chlorine gas (up 6.25 percent) and 23,293 tons more liquid chlorine (up 3.3 percent) produced, overall production was 23 percent lower for the year in July 2009 as compared to the previous year, according to the Chlorine Institute.

Environmental concerns continued to plague the industry as the first decade of the twenty-first century neared a close. Companies took steps to respond to these concerns. For example, in late 2009 the Clorox Company announced that it would convert all of its factories using chlorine gas to other chemical processes. The first plant was expected to be changed over by mid-2010, with the others to follow over a period of several years, according to Basilandspice.com.Organizations such as Greenpeace applauded the move and hoped it would promote the enactment of new chemical plant legislation. Other companies moving away from chlorine use in the late 2000s, according to GoodCleanTech, included Apple, Sony Ericsson, Seagate, DSM Engineering Plastics, Nan Ya, Indium, and Silicon Storage Technology.

Still, the chlor-alkali industry brought in more than $6.5 billion in revenues in 2008, according to Supplier Relations US LLC. Exports were worth $2.1 billion, and imports, $600 million. Total domestic demand for alkalies and chlorine equaled $5.1 billion in 2008.

Industry Leaders

The Dow Chemical Co., based in Midland, Michigan, was the largest producer of chlor-alkali products in North America in the late 2000s. The company was founded in 1897 by Herbert H. Dow as a bleach manufacturer. By 1913, it exited the bleach business to focus on production of chlorine. Over the following decades, Dow expanded its scope to include plastics, and by 1986 it ranked as the world's largest producer of thermoplastics. Its chemical business remained strong, however, and in 2007 company's chlorine capacity was more than 4 million metric tons per year. Revenues for the chemical giant totaled more than $57.5 billion in 2008, and the company employed 46,102 people.

Occidental Chemical Corp., known as OxyChem, is the chemicals business of Occidental Petroleum Corp. Based in Dallas, OxyChem was the largest producer of chlorine and caustic soda in the United States in 2009, with a capacity of nearly 3.2 million metric tons per year. Its chlorine business was significantly boosted with its 2005 acquisition of Vulcan Materials Company, which added 530,000 tons in chlorine capacity to OxyChem's holdings. Sales for OxyChem reached $612.4 million in 2008 with 2,500 employees.

Olin Corp. was a leading metal and chemical company based in Clayton, Missouri. Its Olin Chlor Alkali Products unit, headquartered in Cleveland, Tennessee, had a chlorine capacity of 929,000 metric tons per year in the late 2000s. In 2007, Olin paid $416 million to acquire Pioneer Company. This deal boosted Olin's position from fourth to third largest chlorine producer (behind Dow and OxyChem) and made it the number-one industrial bleach producer in the United States. The combined chlor-alkali business produced approximately 1.3 million tons of chlorine and 1.8 million tons of caustic soda each year. In 2006, Olin's total revenue reached $1.7 billion with 3,600 employees. Chlor-alkali operations accounted for approximately 75 percent of sales.

PPG Industries Inc. of Pittsburgh, Pennsylvania, was another industry leader, with a chlorine capacity of 1.3 million metric tons per year. In addition, PPG manufactured paints and coatings, optical products, fine chemicals, silicas, glass, and fiberglass. The company had 130 plants worldwide and in 2008 greatly increased its European presence with the $3 billion purchase of SigmaKalon. Consolidated company revenue for 2008 surpassed $15.8 billion with 44,900 employees.

Workforce

The U.S. Census Bureau reported that the chlorine and alkalies manufacturing industry employed 6,364 workers in 2007, about 70 percent of which were production workers. According to Dun and Bradstreet's 2009 Industry Reports, states employing the most workers in this industry were Pennsylvania, Wyoming, and Texas. About half of the establishments in the industry employed fewer than 25 workers, but almost 40 percent of the nation's total sales came from large companies with more than 250 employees.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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