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Multiple US chlor-alkali turnarounds in Q1 expected to keep supply tight: sources

Highlights

Producers ended 2021 with thin inventories

Supply seen tight until second quarter

A string of chlor-alkali turnarounds slated for the first quarter of 2022 is expected to keep US caustic soda supply tight amid strong demand, multiple market sources said Jan. 4.

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The outages are expected to keep already low caustic soda inventories thin until the work concludes by the second quarter, sources said.

"We are getting ready to get an unprecedented outage season," a source said. "All back-to-back. I don't see inventories improving until 2Q at least."

US chlor-alkali output faced two major interruptions in 2021 from a deep freeze that hit the US Gulf Coast in February and Hurricane Ida's Aug. 29 landfall in Louisiana. Market sources said producers haven't been able to restore depleted inventories amid consistently strong demand for chlorine and caustic soda.

"Demand is great, inventory is on fumes," a source said.

Olin, the world's largest chlor-alkali producer, has a turnaround slated for January at its McIntosh, Alabama, unit, that will involve a permanent fix to operational issues that prompted the company to declare force majeure on its output in July 2021, according to sources familiar with company operations. The plant can produce up to 550,000 mt/year of caustic soda and 500,500 mt/year of chlorine.

That force majeure remained in effect Jan. 4.

Next up from mid-February to mid-March is a turnaround at Olin's 3 million mt/year chlor-alkali plant in Freeport, Texas, followed by planned work from mid-March to mid-April at the company's Plaquemine, Louisiana, unit that can produce up to 850,000 mt/year of chlorine and 934,066 mt/year of caustic soda, sources familiar with company operations said.

Olin did not respond to a request for comment.

In addition, Formosa Plastics USA has a turnaround on tap to begin in mid-January at its 736,000 mt/year chlor-alkali unit at its Point Comfort, Texas, complex. Shintech also has a turnaround slated for March at its existing Plaquemine operations, which includes a chlor-alkali unit that can produce up to 1.16 million mt/year of chlorine and 1.28 million mt/year of caustic soda.

Westlake Chemical also has a turnaround on tap at its Plaquemine complex, which includes 426,376 mt/year of chlorine and 453,592 mt/year of caustic soda.

Sources familiar with operations at those companies confirmed the turnarounds, and none of the companies responded to requests for comment.

Chlorine is the first link in the production chain for construction staple polyvinyl chloride, which is used to make pipes, window frames, vinyl siding and other products. Caustic soda is a byproduct of chlorine production and a key feedstock for alumina and pulp and paper industries.