The chlor-alkali industry is one of the heaviest users of electricity, second only to aluminium smelters. China accounts currently for 43% of the world’s production of chlorine and caustic soda and is thus a major consumer of electricity for this end use. Businesses that interact with China, whether for caustic soda or chlorine derivatives, must take account of the local costs of production of chlor-alkali. These costs vary widely depending on the location of the plants, with those near centres of coal mining generally benefitting from lower coal prices, which translate into lower power costs.
This industry is not easy to document, with over 300 chlor-alkali units in China (some very small), operated by 237 companies. Tecnon OrbiChem Ltd., with 40 years of experience in the world chlor-alkali industry, and The Lantau Group, a leading advisor on electricity and energy costs in Asia, felt it would be worthwhile to analyse the chlor-alkali producers in China, to provide an overview of the factors shaping the cost structure of the industry.
We have concentrated on the 55 largest operators in this sector, with capacity of 300,000 tons per year of caustic soda, or larger. We have summarised our findings in this study, which benchmarks the 55 companies according to the cost of ECU production, analysing the coal costs, electricity prices and other factors shaping the economics, from Xinjiang in the West to Shanghai in the East. We hope that users of this study will find a unique insight into the relative competitivity of chlor-alkali producers over this wide extension of territory and diversity of operating conditions.
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A sneak peak of what we cover:
1. INTRODUCTION TO CAUSTIC SODA AND CHLORINE WORLDWIDE
1.1 Chlorine and Caustic Soda as Co-products
1.1.1 Pricing dynamics
1.1.2 Cyclicality of the Chlor-alkali Market
1.2 World Trade in Caustic Soda
1.3 World Caustic Soda Demand
1.4 World Caustic Soda Supply
1.5 Chlor-alkali Position of China
1.6. Costs of Production
1.6.1 Assignment of Costs to Caustic Soda and Chlorine
1.6.2 Cell Types
1.6.3 Cost Elements
1.6.3.1 Electric Power
1.6.3.2 Salt
1.7 Market Return from the ECU versus Cost of the ECU
1.8 Comparative Costs of Production of the ECU
1.9 Operating Rates & Pricing for Chlor-Alkali
1.10 Production Costs of the ECU for Chlor-Alkali Plants in China
2. CHLOR-ALKALI INDUSTRY IN CHINA
2.1 Caustic Soda Supply and Demand in China
2.2 Leading Chlor-alkali Producers in China
2.3 Chlor-alkali Plant Utilisation Rate
2.4 Methodology of China Chlor-Alkali ECU Cost Data Collection
3. RESULTS OF THE CHLOR-ALKALI ECU COST INVESTIGATION
4. POWER COST ANALYSIS
4.1 The Importance of Coal
4.2 Cost comparison among regions
4.3 Comparison between self-generated power costs and grid purchased power costs
4.4 Relative Cost and Consumption of Self-generated and Grid Power
5. CHLOR-ALKALI POWER COST OUTLOOK
5.1 Renewable Portfolio Standard (RPS)
5.3 Carbon trading
5.4 Environment protection modifications
5.5 Cross-subsidies
5.6 Power trading and T&D cost
