Chlorine: Cycles

How PVC and caustic play tug of war

What this tab covers How its prices and margins move: past booms and busts with price levels, the spread or margin that the industry watches, the drivers of the cycle and the metrics to track.

Chlorine has no clean public price. The industry prices the ECU, which is one tonne of chlorine plus 1.13 t caustic soda. When PVC and construction are strong, chlorine is valuable and plants run hard, which floods the market with caustic and depresses its price; when PVC is weak, plants cut rates and caustic tightens. The floor is the cash cost of the marginal producer, usually Europe or high-cost Asian plants, set by power prices. The ceiling comes when caustic gets scarce, as in 2021-2022, and alumina and pulp buyers bid up prices. Merchant chlorine can go negative, as in China in 2025, when there is nowhere to put it.

The spread to watch ECU margin (ECU netback minus cash cost)

ECU value = chlorine price (or its derivative netback) + 1.128 x caustic price, minus salt, power and fixed cash costs. In Nov 2025 Argus put the NW Europe ECU cash cost at about $560, roughly equal to an ECU netback of $750 caustic contract plus near-zero chlorine; Asian netbacks at $380-395 caustic were near cash cost for high-cost plants.

Booms and busts

2021-2022
Strong post-pandemic vinyls demand met Europe's gas and power shock. European plants cut to about 70% utilisation, caustic tightened worldwide and alumina refiners in Europe cut output.
US Gulf caustic fob reached about $850/dmt in Oct 2022; NW Europe contract $1,321/dmt; NW Europe ECU cash cost $1,300-1,640 vs Americas about $590 (Argus Aug 2022)
2023-2024
PVC slumped with construction in China and Europe. Europe ran at 59-68% in 2023. Chlorine outlets shrank, and producers ran for caustic, which fell.
European chlorine output fell to 0.59-0.62 Mt a month in early 2023 from about 0.70 Mt in early 2024 (Euro Chlor)
2025
Chinese additions of 900,000 dmt and weak PVC pushed Asian caustic down and merchant chlorine negative; US diaphragm closures and Europe closures began to shrink high-cost capacity.
NE Asia caustic fob $380-393/dmt and US Gulf export $390-440/dmt (Oct 2025); Shandong liquid chlorine minus Yn100-200/t (Argus)
2026
Argus forecast modest firming as US producers cut rates and record US caustic exports went to Latin America; European prices under pressure from US imports.
Argus forecast US Gulf fob $425/dmt and NE Asia fob $395/dmt for March 2026; NW Europe contract $760/dmt

What drives the cycle

PVC and construction demand. About a third of chlorine goes to PVC; when housing and pipes slow in China, chlorine runs out of outlets and operating rates fall.
Power prices. Electricity is about half the cash cost; European power spikes in 2022 pushed ECU costs above $1,600 and shut capacity.
Caustic demand from alumina and pulp. Caustic carries the margin when chlorine is weak; alumina refinery closures (Rio Tinto Yarwun cutting 1.2 Mt/yr from Oct 2026) hit demand.
Regulation and closures. Mercury bans, the US asbestos diaphragm phase-out and EU energy costs remove capacity regardless of demand.

Metrics to track

Metric	Why it matters	Where to track it
Monthly chlorine output and utilisation, Europe	a direct read on European rates	Euro Chlor
China caustic operating rate and liquid chlorine price	China is 47% of output and sets Asian prices	Argus, Mysteel, SunSirs
ECU cash cost by region	shows who is under water	Argus Chlor-Alkali Outlook
PVC prices CFR India and China	chlorine's main outlet	S&P Global Platts, ICIS