Consolidation of Chlor-Alkali Segment Continues, as Dow Chemical Announces Plans to Divest Globally

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Researched by Industrial Info Resources (Sugar Land, Texas)--In recent years, investment spending in the U.S. chlor-alkali segment has declined significantly, following a big push to upgrade and convert production technologies from mercury cells to the more environmentally friendly membrane cells. Traditionally, chlorine and caustic soda are used in the manufacturing of vinyls and plastics, in which demand remains weak. This has lead to some consolidations and mergers within this segment of the chemical industry over the past year.

The Dow Chemical Company (NYSE:DOW) (Midland, Michigan) recently announced its intentions to divest its chlor-alkali business unit, affecting 40 plants worldwide. Dow cites plans to focus on core products. In the U.S., this could affect plants in Plaquemine, Louisiana, and Freeport, Texas.

Dow entered into a joint venture with Mitsui & Company Limited (Tokyo, Japan) to construct a new chlor-alkali unit to produce 820,000 metric tons per year of chlorine and 880,000 metric tons per year of caustic soda at its Plant B in Freeport. The $400 million unit was completed this year is likely to be affected by the potential divestiture.

Similarly, at the start of the year, PPG Industries Incorporated (NYSE:PPG) (Pittsburgh, Pennsylvania) separated its commodity chemicals business, which produces chlor-alkali chemicals, and merged it with Georgia Gulf Corporation to form Axiall Corporation (NYSE:AXLL) (Atlanta, Georgia). This divestiture was part of a plan to help PPG focus on its initiative to strengthen its position as a leader in the coatings and specialty products segments.

Industrial Info is currently tracking 12 Axiall plants in the U.S. and Canada, with six capital projects in various stages of planning and construction worth approximately $58 million. For more information, see March 11, 2013, article - Newly Formed Axiall Corporation Could Become Major Chlor-Alkali, Vinyl Producer.

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Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.