Chlorine: The Salt of The Earth

Oct 24, 2024

3 min read

ResourceWise : Oct 21, 2024 3:14:21 AM

Used in diverse applications across various industries, including pulp and paper production, chlorine is key to thousands of everyday products. Even when not part of end products, it has often played a key role in the production process.

Chlorine chemistry is used in pharmaceuticals to deliver medicines for heart disease, cancer, and AIDS. Few detergents used to clean our homes and environments would be effective without chlorine input—albeit trace. Chlorine is essential to the production of plastic and silicon in computer chips and solar cells. And, of course, it's a common disinfectant for keeping pool water clean and safe for swimming.

In fact, chlorine is among the most important raw materials in industry today. We have mined the chlorine and caustic soda price and market insight portals in our chemical intelligence platform OrbiChem360 to unravel China's chlor-alkali supply chains and markets.

Chlorine production via electrolysis involves the most basic chemistry. The raw materials fed into the process are salt and water, followed by a powerful electrical current. The gases emitted are captured in tubes and separated.

The electrolysis of common salt in a brine solution co-produces chlorine and caustic soda in roughly equivalent amounts. Essentially, the yield is 1.1 tons of caustic soda (also known as sodium hydroxide) for every ton of chlorine produced.

Source: ResourceWise

Hydrogen—a material poised to revolutionize future energy provision—is also produced. Europe’s chlor-alkali sector, for example, produces over a quarter of a million tons of hydrogen each year. Our blog post Sustainability in the European Chlor-alkali Industry explores the usefulness of the chlor-alkali sector's hydrogen output.

Another useful by-product of the process is hydrochloric acid (HCl), which is used as an acid treatment in the oil industry. The steel sector uses HCl for “pickling”—an acid bath process to remove rust and other impurities from the alloy.

Chlorine is used in the production of a range of organic and inorganic derivatives, including epichlorohydrin (ECH). A key intermediate, ECH is used to produce epoxy resins. Chlorine is also used in the production of the engineering thermoplastic polycarbonate, and the polyurethane feedstock isocyanates

Another key chlorine derivative is ethylene dichloride (EDC)—the precursor for vinyl chloride monomer (VCM). Without an annual input of 55,000 ktpa of EDC (as of 2024), PVC—the third-most widely used synthetic plastic in the world—would not be produced.

Among the wide-ranging uses of PVC—such as automotive body parts and plumbing pipes—one constant though evolving use is in the music industry. And though vinyl records have been around since the early 1900s, it was the 1960s that really made the medium take off.

In record production, PVC pellets are melted and shaped into small discs. Each disc contains just enough vinyl for one record. The disc is fed into a hydraulic vinyl press, which pushes the master recording—or groove—into the surface of the vinyl.

Eight-track, cassette, and CD production eclipsed the vinyl record industry over the next 20 to 30 years. However, vinyl record production has resurfaced in the new millennium.

US vinyl album sales have consistently grown since 2006, with almost 50 million sold in 2023. That is a growth of more than 14 percent compared to the previous year, according to Statista.

COVID-19 brought growth to the chlorine-based disinfectants sector. The industry surged due to chlorine’s antibacterial properties and cost-effectiveness in disrupting the spread of the virus.

There is now a wealth of scientific evidence to confirm chlorine’s effectiveness in killing the COVID-19 virus, and indeed, before the lockdowns early in 2020, there was a sudden rise in demand for caustic soda for water treatment applications.

In chlor-alkali output, the duality of caustic soda and chlorine is a key fundamental. When demand for chlorine and caustic soda is imbalanced, markets tend to be volatile. Balancing both the supply volume and demand requirements of both end-user markets is vital.

This was seen as global economies began to recover from the shock of the COVID-19 outbreak. Chlorine demand—for detergents and bleaches—was seeing a relative boom. Markets that required caustic soda, however, were not recovering quite so quickly.

A similar story played out, but the other way around, following the 2008 financial crash. A moratorium on construction projects forced chlor-alkali plants to operate at lower capacity rates because chlorine wasn't needed for PVC products like pipes and window frames.

Chlorine and caustic soda production go hand in hand. Caustic soda market participants require stability, even buoyancy, in markets that demand chlorine.

When there is a high demand for durable goods and construction, chlorine plants operate at higher utilization rates, and chlorine production capacities increase. This ensures a steady supply of caustic soda, which goes into soaps and detergents and is used in the paper manufacturing industry, for example, in toilet tissue production.

The latter are goods that people, as a rule, continue to buy no matter what happens in the wider economy. However, when building markets collapse, chlorine production goes down. What happens is there's not enough caustic soda available. Caustic soda supply becomes very tight, and its price increases because of that tightness.

With producers reluctant to produce unless ample markets exist for both outputs, demand trends often create tightness in one stream and overproduction in the other.

Of course, prices will be high when customers are competing to source limited supplies of a chemical. Conversely, where there is a glut in supply, prices are pushed downward.

In recent years, the value of China's chlorine has often dropped so low that it has almost become a waste product, namely a compound or substance that must be removed from the site at a cost to the producer. Find out about the dynamics that have led to this situation in our blog post Free Chemicals: A Bizarre Business Practice for Unpredictable Times.