Chlor-alkali demand benefited from hurricanes, new pulp plants – Olin

HOUSTON (ICIS)–Demand for chlorine derivatives and caustic soda benefited from US hurricanes and two new pulp and paper plants that opened in South America, which provided some bright spots in what has otherwise been a challenging market due to the slowdown in home building and durable goods, US-based Olin said on Friday.

Bleach and hydrochloric acid are used in water treatment and cleaning.

For caustic soda, demand continued to be strong because of demand from alumina and from the pulp and paper industry, said Ken Lane, CEO. He made his comments during an earnings conference call.

Demand from South America has been the most robust, with two recent pulp and paper plant startups, he said.

Lane did not specify the plants.

However, Brazilian producer Suzano started up the largest single pulp production line in the world in Ribas do Rio Pardo, Mato Grosso do Sul state, Brazil.

CHLORINE REMAINS IN TROUGH
Despite the temporary boost from hurricanes, demand for chlorine remains in a trough, with demand below pre-COVID levels, according to Olin.

Looking ahead, the uncertainty that the chemical industry experienced in the second half of 2024 should continue into 2025, Lane said.

Such uncertainty will persist until interest rates fall further.

Higher interest rates have weakened demand for PVC in several key end markets such as housing, automobiles and durables.

In addition, chlorine is used to make titanium dioxide (TiO2), a white pigment that is used to make paints opaque.

Demand will not spring back until lower interest rates lead to a recovery in activity in housing and other markets that are sensitive to rates, Lane said.

BLOW FROM HURRICANE BERYL
Olin expects to take a $135 billion hit from damage that Hurricane Beryl caused to its operations in Freeport, Texas.

During the third quarter, $77 million was connected to chlor-alkalis and $33 million was related to epoxy resins, the company said. During the fourth quarter, $25 million was related to chlor-alkalis.

Olin had conducted an emergency shutdown, the company said. The shutdown caused problems that were not apparent until the company began to restart its operations.

Olin completed those repairs about a week ago, it said. The company also built some temporary infrastructure, which it will continue to operate until the middle of next year.

Thumbnail shows wood, which is used with caustic soda to make pulp. Photo by Global Warming