Chlor Alkali Producers Prepare for a Year of Increased Spending in 2006

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Capital and maintenance spending for the chlorine and alkali industry segment is forecast to increase substantially over spending levels in 2005 to an estimated $144 million, an increase of almost 30%. Considering the small number of producers in the market segment this is a considerable increase. As the year progressed, chlor alkali producers continued to see an increase in demand for their products as the Chemical Processing industry (CPI) gained strength and the demand for chlorine and caustic soda to process petrochemicals and plastics grew. Equapac, Incorporated (Portland, Oregon) will add another 75,000 metric tons per year of chlorine capacity to the western market when its new plant in Longview, Washington starts up in the first quarter of 2006. For details see related news article - New Chlor-Alkali Plant on West Coast Planned.

Click on the image at right to view a chart showing North American Chlor Alkali Plants by market region.

A majority of the increase in spending can be attributed to two very large expenditures, both representing a substantial amount of new capacity. Ashta Chemicals, Incorporated (Ashtabula, Ohio) is planning to construct a grassroot chlorine and sodium hydroxide plant in Arkansas next year. This new 35,000 metric tons per year plant is being designed by BE&K Engineering Company (Birmingham, Alabama), with plans of beginning construction in the summer of 2006. See related Industry Alert titled: Ashta Chemicals is Planning Major Investment for a Grassroot Plant in Arkansas. The largest investment in 2006 for this segment of the CPI is certainly plans by PPG Industries Incorporated (NYSE:PPG) (Pittsburgh, Pennsylvania) to invest in a new 275,000 metric tons per year chlorine unit addition at their Lake Charles, Louisiana plant beginning next summer. This new unit will ultimately replace older mercury-based technology still in operation at the plant. PPG is expected to select an E&C firm for this project in the early part of 2006 to manage an undermined amount of this nearly $80 million project.

Another component of spending in this sector will continue to be environmental upgrades and improvements. The upgrade of wastewater treatment systems at more than one plant is under review to remove additional solids from effluent streams. There are still a number of mercury-based plants across the United States waiting for a final ruling from the EPA on when and how much they must reduce mercury emissions. Although a majority of chlorine producers faced with this challenge have already made investments to lower emissions, the remaining few will consider the installation of carbon bed absorption technology, process upgrades or the installation of scrubber technology to further reduce mercury emissions.

Reported maintenance spending represents the smallest portion of the total spending in this segment at just over 12%, or $17 million during 2006, although it still represents a significant opportunity for equipment and service providers. Industrialinfo.com has already identified seven planned maintenance turnarounds in this segment for 2006 and more will be reported as the new year approaches. These plants operate in a very caustic environment making inspections and replacements a significant expense each year. They also consume large amounts of energy and must maintain large electrical and control systems to operate efficiently.

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