S&P Global: Energy Transition Drives Chlor-Alkali Market Recovery

Market analysts from S&P Global Commodity Insights recently stated that the clean energy transition is driving structural demand growth for chlor-alkali products. Although the polyvinyl chloride (PVC) resin industry appears to be in a prolonged downturn, 2025 could mark the bottom of the PVC market, with prices expected to rebound thereafter.

Alvin Ang, Director of Inorganics at the company, said: "This year might represent the trough of the PVC industry, with product prices potentially reaching their lowest levels since the beginning of the century." In recent years, the PVC market has been affected by global oversupply and weak construction demand, especially in Asian markets. However, this situation is expected to improve soon. With rising demand in areas such as solar, wind, biofuels, and battery metals, global caustic soda demand will grow steadily, and the PVC market is also poised for a cyclical recovery.

For the broader chlor-alkali industry, PVC resin production remains the largest end-use application globally. However, the adoption of clean energy technologies is creating new sources of demand. For example, in Europe and the United States, PVC flooring is increasingly used as a surface material for underfloor heating systems, offering significant cost-efficiency advantages over traditional fireplace heating. Additionally, the growth of bifacial solar panels is increasing glass consumption, which in turn boosts demand for both caustic soda and chlorine. Alvin Ang noted that by 2028, bifacial solar panel modules are expected to account for around 61% of global solar panel installations. Chlorine is used to purify silicon wafers and enhance glass transparency, while caustic soda neutralizes acidic waste and improves surface smoothness. Wind energy infrastructure development is also driving chlor-alkali demand, particularly through the use of chlor-alkali-based coatings and adhesives in turbines. As global wind power capacity continues to expand, chlor-alkali applications driven by this sector are projected to grow strongly by 2030.

Caustic soda plays an even broader role across the clean energy supply chain, from aluminum refining and biodiesel catalysis to the production of polylactic acid (PLA) bioplastics. Alvin Ang noted that in 2024 alone, global caustic soda demand from the alumina refining sector reached 17.4 million tons. As aluminum plays an increasingly important role in electric vehicles and renewable energy infrastructure, caustic soda demand is expected to continue rising. He said, "The real story is that the energy transition is creating demand and reshaping chlor-alkali production." Meanwhile, PVC remains the preferred material for many infrastructure and end-product applications. Therefore, he believes better times are ahead for the chlor-alkali industry, albeit gradually.

The chlor-alkali industry is also mutually reinforcing with the bioplastics sector. Currently, international efforts toward more sustainable materials are promoting the use of bioplastics such as PLA. Hormozd Kharanja, Executive Director of Chemicals Consulting at S&P Global Commodity Insights, stated that from 2025 to 2030, the global PLA market—including China, Europe, and the United States—is expected to grow at a compound annual growth rate of 9.1%, exceeding 455,000 tons. Kharanja noted that amid continuously rising global chemical and plastic consumption, only 9% of plastic waste is recycled, while 22% is mismanaged, highlighting the urgent need for improved waste management strategies. He believes that using biodegradable polymers like PLA in food packaging and related applications is a viable solution to reduce plastic waste. PLA processing will become a guiding direction for the chlor-alkali industry. Kharanja emphasized that Thailand, rich in cassava resources, could emerge as a bioplastics production hub, as cassava can serve as a primary feedstock for PLA production. However, cassava processing requires caustic soda, presenting opportunities for Thailand's chlor-alkali industry.