Quarterly Market Fundamentals
The North American chlor-alkali industry operated at 86% of capacity in Q3 compared to 84% in Q2 2014. Consistent with historical results, chlorine demand increased in Q3 due to higher consumption from the vinyl segments and seasonal factors in water treatment segments; Q4 is historically lower.
HCl supply decreased in Q3 due to production issues at several burner and by-product sites. Seasonally high chlorine demand also restricted chlorine availability for burner producers. HCl demand increased as a result of higher drilling and hydraulic fracturing activity in the oil and gas industry.
Caustic soda production in North America increased 2%, mirroring the increase in industry operating rates compared to Q2. In Western Canada, a decline in production due to operating issues was offset by increases in Asian imports. Overall demand in the region remains strong, supported by high operating rates in the pulp and paper sector.
MECU prices held stable in Q3, while HCl prices improved significantly based on a tight supply-demand balance. Entering Q4, price increases were announced on chlorine in the western region, and continentally for HCl and caustic soda. Asian caustic soda import prices are expected to remain largely consistent, while US producers seek modestly higher prices both domestically and in the export market.