Despite numerous challenges, U.S. chloralkali producers appear to be competitive in foreign and domestic markets on the basis of price, quality, and security of supply, says the U.S. International Trade Commission (ITC) in its report Industry and Trade Summary: The Chloralkali Chemicals.

This competitive position has held despite predictions that demand for chlorine, a major product of the chloralkali industry, would plummet as a result of environmental concerns about the toxicity of chlorine-based derivatives. Other problems encountered by the industry include increased foreign competition and increased use of substitutes. For example, growth in demand for soda ash, another major chemical product of the chloralkali industry which is largely used in the production of glass, was curtailed because substitute materials such as plastics and aluminum were making increased inroads in the glass container market.

The ITC, an independent, nonpartisan, factfinding federal agency, recently released the report as part of an ongoing series of reports on the thousands of products imported into and exported from the United States. Following are other highlights of the report:

• In the United States, soda ash is produced from natural sources. Outside the United States, however, soda ash is produced primarily by a synthetic process. Because natural soda ash is substantially less expensive to produce than synthetic soda ash, less energy and labor intensive, and purer and less polluting, U.S. soda ash producers enjoy a significant competitive advantage over most foreign competitors. This has prompted many foreign firms to enter the U.S. market, primarily in the form of joint ventures. Although the industry in 1980 was essentially domestically owned, by early 1996 slightly more than half of the U.S. soda ash industry was foreign owned. In contrast, the U.S. chlorine/caustic soda industry, despite an increased foreign presence, remains predominantly domestically owned.

• Certain end-use applications for chlorine have declined, primarily because of environmental concerns. However, belying earlier predictions that total chlorine use would decline, chlorine consumption increased during 1992-96, generally at a faster rate than demand for its co-product, caustic soda. Industry sources attribute most of this growth to increased demand for PVC plastics used largely in construction. The chlorine/caustic soda industry continues to face public scrutiny over chlorine use and has recently embarked on major research projects assessing the potential toxicity and carcinogenic properties of chlorine chemicals and production processes.

• During 1992-96, the percent of U.S. soda ash production that was exported rose from 32 percent to 38 percent. The growth of U.S. exports of soda ash reflected increased worldwide demand and the competitiveness of the U.S. soda ash industry, despite increased use of glass substitutes and increased recycling of glass. U.S. soda ash producers, however, may face increased competition from foreign producers. For example, in recent years, China has been expanding its capacity and exports of soda ash. U.S. chlorine/caustic soda producers also may face increased competition from foreign producers, especially in the Middle East and Japan.

• In general, U.S. duty rates for the chloralkali chemicals are significantly lower than comparable duty rates in most other countries. In particular, rates in India are especially high and have been cited by industry sources as constituting a significant barrier to trade. According to industry sources, antidumping duties imposed by the European Union (EU) against U.S. soda ash producers have significantly impeded U.S. exports to the EU, but these were abolished in late 1997. Some U.S. producers contend that Japanese soda ash producers have influenced consumers in Japan to limit their purchases of U.S.-origin soda ash.

ITC Industry and Trade Summary reports include information on product uses, U.S. and foreign producers, and tariff treatment of the products being studied; they analyze the basic factors affecting trends in consumption, production, and trade of the commodities, as well as factors bearing on the competitiveness of the U.S. industry in domestic and foreign markets.

This report will be available on the ITC's Internet server at www.usitc.gov. A printed copy may be requested by calling 202-205-1809 or by writing the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Requests may be faxed to 202-205-2104.