OxyChem to shutter Niagara Falls chlor-alkali facility

OxyChem, the chemical division of Occidental Petroleum, will shutter its chlor-alkali plant in Niagara Falls because of poor market conditions and high costs to move products out via rail, the company announced Aug. 19.

"This decision was made due to unfavorable regional market conditions as well as unreasonable and continually escalating rail transportation costs," the company said in a statement.

OxyChem did not say when the plant would shut down, but sources familiar with company operations said the shutdown was expected to occur 90 days from the Aug. 19 announcement, which would be November.

That announcement said plant employees would continue to receive pay and benefits for at least three months. The company said the plant continues to have a negative economic outlook despite significant efforts in recent years to "give this facility the opportunity to be viable."

According to Occidental's 2001 annual filing with the US Securities and Exchange Commission, the Niagara Falls plant can produce 335,000 mt/year of chlorine and 371,000 mt/year of caustic soda. The company stopped specifying individual plant capacities in SEC filings after that, instead reported total output per product.

Market sources said rail transportation of chlorine was costly given the volatility of the product, particularly for short routes. Such freight costs can range from $125-$200/st on an average, sources said. Other less volatile products, such as plastic resins, see rates around $66/mt, depending on contract terms.

"It's a major hit on chlorine profitability," a source said.

Another source said rates for chlorine could be at a point where producers seek to reduce how much product they move via rail, focusing on moving it via pipeline. Truck transportation is not a viable option given chlorine's volatility, said the same source, adding that it would be more expensive than rail transportation.

Olin, the world's largest chlor-alkali producer, aims to step back from supplying chlorine for titanium dioxide producers in 2023 as part of a company strategy to exit low-margin contracts and sell into higher-paying markets, according to CEO Scott Sutton. Market sources said high rail rates for chlorine could have helped prompt that decision.

And titanium dioxide producer Tronox's co-CEO, John Romano, said July 29 that the company may build more of its own chlorine production operations in the US amid a chlorine supply squeeze and logistics snags that have reduced its Ti02 production capabilities.

Ti02 is used to make sunscreen, pressed powder makeup and other personal care products.

Chlorine is the first link in the production chain for polyvinyl chloride, a construction staple used to make pipes, window frames, vinyl siding and other products. Chlorine is also used to make hydrochloric acid, bleach, refrigerants, crop protection sprays and for water treatment.

Caustic soda, a byproduct of chlorine production, is a key feedstock for alumina and pulp and paper industries.