Olin to idle 'significant portion' of Texas chlor-alkali, EDC capacity

Olin is temporarily curtailing a "significant portion" of its ethylene dichloride and related chlor-alkali production at its Freeport, Texas, complex, the company announced June 14.

The world's largest chlor-alkali producer also said it has restarted half of its chlor-alkali unit at its Plaquemine, Louisiana, complex, and expects to bring up other operations at the complex in August.

"With the resumption of its Plaquemine, Louisiana, operations; with high electrical power costs in Texas; and considering the poor quality ethylene dichloride market conditions, Olin has decided to suspend this production," the company said of its decision to curtail output at Freeport.

The company's force majeure declared April 20 on chlor-alkali, EDC and other products throughout its US system remained in effect June 14.

That declaration came two days after a compressor at Olin's Plaquemine chlor-alkali unit caught fire and a chlorine leak occurred, prompting a shutdown of the entire complex.

The chlor-alkali facility can produce up to 970,000 mt/year of chlorine and 1 million mt/year of caustic soda. The site's EDC unit can produce up to 420,000 mt/year.

However, operations at Freeport have much higher output. The chlor-alkali facility can produce up to 2.7 million mt/year of chlorine and 3 million mt/year of caustic soda, and adjacent EDC capacity reaches about 2.58 million mt/year.

US export caustic soda prices were assessed June 14 at $800/dmt FOB USG -- a 13-year high. Export EDC also was assessed June 14 at $800/mt FOB, down from $970/mt FOB in March, which was an all-time high since S&P Global Commodity Insights began assessing the market in 1996.

Olin is the only US EDC producer without downstream production of polyvinyl chloride, a construction staple used to make pipes, window frames, vinyl siding and other products.

Market activity for EDC has been quiet in recent months as integrated PVC producers poured internal EDC output into downstream PVC production, and Olin directed some chlorine output away from EDC to other chlorine derivatives.

The entire Freeport complex was continuing to operate at reduced rates with two of six power generation units shut since mid-February, Olin said June 14.

The company said a portion of that power generation would be restored in the fourth quarter.

It aimed to restart the Plaquemine complex by the end of the second quarter, and the shut power units at Freeport were expected to resume operations in Q4, CEO Scott Sutton had said April 29.

The June 14 announcement specified that Plaquemine's operations other than the chlor-alkali unit would not be restarted until August, and part of the shut power generation capacity would come online in Q4, but not all.

Both caustic soda and EDC availability would remain tight in 2022 given Olin's decision to reduce EDC and related chlor-alkali production at the Freeport site, market sources said.

Chlorine reacted with ethylene makes EDC. Caustic soda is a byproduct of chlorine production and a key feedstock for alumina and pulp and paper industries.

Epoxy capacity also curtailed

The company also is curtailing epoxy and related upstream inputs production at its sites in Freeport and Guaruja, Brazil.

The company said it has experienced weaker-than-anticipated epoxy resin demand in North America and South America.

The Freeport epoxy facility can produce up to 250,000 mt/year, and the Brazil unit can produce up to 30,000 mt/year.

"Olin is unwilling to sell incremental volume into a poor-quality market and operating the epoxy resin facilities at less than 50% operating rates is impractical," it said, which prompted the decision to idle that capacity.

.