Author Argus

Chlor-Alkali experts George Eisenhauer and Bernard Law talk to Lauren Williamson, VP, Product, about the outlook for chlor-alkali, including

  • Current trends and their effect on the chlor-alkali market and its key drivers over the next 12-24 months 
  • How Argus approaches its 5-year chlor-alkali forecast and what industry should be looking out for 
  • The top three factors Argus is focusing on for the remainder of the year 


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Lauren: Hello, I'm Lauren Williamson, VP of Product with the Argus Chemical Sector. And you're listening to our latest edition of "Chemical Conversations" featuring our chlor-alkali experts, George Eisenhauer and Bernard Law. They'll be discussing the views of our latest price forecast services in the Argus Chlor-Alkali Outlook. George, let me turn to you first. So far, in 2023, we've seen the world transition to a new normal with COVID-19 becoming endemic, China lifting COVID-related restrictions, and a protracted conflict in Russia-Ukraine fundamentally altering energy trade dynamics. The world is watching really strong inflationary factors right now and how that might affect consumer demand. So can you tell us how have these trends affected the chlor-alkali market? And what are some of the drivers we should be watching for over the next 12 to 24 months?

George: The next 12 months, 24-month outlook that we just published takes into account some of these factors that you had mentioned about COVID-19 lifting, and the fact that we're coming into, so to speak, the new normal market for chlor-alkali. We've gone through a very significant energy transition from Europe, and the dynamics in China picking up a lot of the slack, the opportunities, I should say, for material going from Asia into Europe. The U.S. is also looking at the market and responding as well. So our view right now is that the market is coming off of this very high price level that we've seen for the last couple of months since the invasion of Ukraine. But the market is becoming more stable, a little bit more linked to the market. Supply is returning. So we're going back to a more normal price forecast.

Lauren: And now let me move over to you, Bernard. An important part of the Chlor-Alkali Outlook service is the publication of a five-year price forecast. Maybe you could tell us a bit about how you approached constructing the view for this time period. And what are some of the major dynamics that the industry should really be looking out for over that time horizon?

Bernard: In fact, what we're looking at...let's trace back a little bit last year, and we have seen a three price spike. And these three price spike, they hit the historical high. So, these three spikes actually is like a wake-up call for the industry. And at the same time, it is an indication for the world that Northeast Asia could be a region for the world that we rely on whenever there's a supply crisis. And at this juncture of time, there's no new capacity being built right now. We get exceptions, a few of them in China, which have much inland capacity that will impact on export. Now, what we're looking at without the arbitrage that we see, the market has returned to traditional metrics. So we expect the prices to go on the flatter trends, for few reasons. And we do not see that the caustic price is going to collapse, because then we're going to see quite a bit of support at least for the next 24 months. Now, the reason for that is that the weak vinyl that producers had relied heavily on the caustic for the margin. And number two is that you can really see that the demand itself on the industry is relatively consistent right now and you don't see a drop in the demand in both the export market and domestic consumption itself. So, especially for the aluminum industry, battery materials, and so on. That supported the export prices so far even though there's signs of recession. So, it looks like the prices are holding well right now. That will give caustic some support for the next 24 months. However, the prices are expected to come down only in 2026 and 2027 period when more and more new capacity are taking shape. That will put pressure on caustic soda prices, especially in China, India, the Middle East, and Indonesia. And that would actually drive the prices downwards.

Lauren: Let's focus a little bit closer in on 2023, give us the top three factors you'll be focusing on in the Chlor-Alkali Outlook service for the remainder of this year.

George: A couple of things that we're looking at, of course, the economy and how the economy reacts to the rising interest rates. And that's going to be a very strong factor on the demand for chlorine, more specifically into vinyls, PVC, for example. And that's going to have a knock-on effect on supply, or limiting supply, or providing excess supply of caustic soda to the market. We always have to follow the chlor-alkali lifecycle. And right now, we're at the bottom of the cycle where we're seeing weak caustic demand, weak chlorine demand. And over the next six to nine months, we expect the cycle to start to improve, which is a little bit counter to what a lot of other economists are saying that we expect the overall economy to slow down but because we've essentially been in a manufacturing recession releasing the chlor-alkali space since last year, we're expecting to see a little bit of improvement in the market as we go through the rest of 2023.

Bernard: In Asia, we expect the price for the market for caustic soda to be relatively firm at this juncture. But we don't expect the price to collapse neither do we expect the price to surge higher either. We see this recovery on the second half of the year, especially in China, that will help to lift the demand. And whenever the demand picks up, this will push the prices higher. And at the same time, we are looking at the vinyls cycle. In Asia, we don't expect vinyls to do that well, and somehow that in 2023 itself, the producer had to rely more on caustic for the ECU margin. So, we can look at 2023 on flatter price trends.

Lauren: George and Bernard, thank you for sharing your views with us today and giving us a glimpse into those trends that are currently affecting the chlor-alkali price forecast. And to our listeners, if you want more information, please visit us at