According to a recent report from the American Chemical Weekly, rising energy and electricity costs are putting significant pressure on sodium chlorate producers across North America, particularly smaller companies that may not have the financial flexibility to absorb these increases. As a result, several plants are facing potential shutdowns or reduced operations.
Over 60% of the region's sodium chlorate production capacity is located in Canada, making the industry especially vulnerable to local economic conditions. The surge in energy and transportation costs has hit production hard, while the strengthening Canadian dollar has further squeezed margins. Recently, Canexus closed its 54,000-ton-per-year sodium chlorate plant in Ontario, and Erco is planning to shut down its 48,000-ton facility in the same province next year. In some cases, electricity costs have forced plants to operate at just 30% of their full capacity.
Industry analysts believe that even with further consolidation in production, supply and demand could remain balanced, as high energy prices might also force some downstream pulp mills to reduce output or close. This dynamic has led to a 3% to 5% price increase for sodium chlorate as sellers adjust to tighter margins.
North American demand for sodium chlorate is expected to grow by 1% to 1.5% this year, while export demand is projected to rise by 5% to 10%. Notably, exports to Japan have surged by approximately 25%, driven by the country’s shift toward chlorine-free bleaching in its pulp mills. Pulp production accounts for over 90% of total sodium chlorate demand.
In the medium term, declining paper mill activity in North America may lead to reduced domestic demand, but exports are expected to stay strong. Countries like Japan, South America, and parts of Asia continue to rely on imported sodium chlorate due to high energy costs or insufficient local infrastructure for production. This creates long-term opportunities for North American producers, despite current challenges.
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