In 2006, China surpassed America to be the world's largest producer of PVC and caustic alkali, whose proportions of PVC and caustic alkali production capacity in the world was up to 27% and 25% respectively.

In 2000-2006, domestic PVC demand kept an annual growth rate of 14%, and the output grew 23% annually. The dependence of home PVC industry on imports decreased from 40% to 10%. Domestic PVC production capacity expanded like global PVC production capacity. In 2005, domestic PVC production capacity growth reached the peak. The annual growth rate amounted to 54%. It is predicted that PVC production capacity in China will arrive at 15.2 million tons and 18.8 million tons respectively in 2007 and 2008, with a respective annual growth rate of 31.3% and 23.7%.

In 2000-2006, domestic growth of caustic alkali demand and output kept stable. The annual growth rates stood at 15% and 16% respectively. It is expected that domestic caustic alkali production capacity expansion will reach the peak in 2007 and 2008, with a respective production capacity of 22.84 million tons and 28.83 million tons. The average annual growth rate will be 26%. There will be a drop in production capacity expansion in 2009, with a year-on-year rise of 7% to 30.86 million tons.

Domestic chlor-alkali enterprises are mostly small-sized. In 2006, the average production scale of domestic PVC producers was only 130,000 tons per year, far lower than the world's average level of 260,000 tons per year. The average production capacity scale of Chinese caustic alkali enterprises was merely 60,000 tons. Along with production expansion of enterprises in 2007, the output of PVC enterprises and caustic alkali enterprises with annual production capacity of less than 100,000 tons takes 16% and 21% respectively.

Production Capacity Distribution of Caustic Alkali Worldwide, 2006

Global Demand and Growth of PVC and Caustic Alkali

Composition of Domestic PVC Demand, 2006

2. Overall Analysis of China Chlor-alkali Industry
2.1Fast Continuous Expansion of Chlor-alkali Production Capacity
2.2 The Increasing Demand still Can not Digest Excessive Production Capacity
2.3 The Principle of Inferior Loses and Superior Wins Promotes Industrial Cluster
2.4 Exportation of Chlor-alkali Products 

3. Analysis of Industrial Development
3.1 Carbide-method PVC being the Mainstream
3.2 Political Support for the Transfer of Chlor-alkali Industry into Western Regions with Abundant Resources
3.3 Being Far from East China being the Development Advantage of Xinjiang Autonomous Region

4. Effects of "Energy Conservation, Emission Reduction" Policy on Chlor-alkali Industry
4.1Increasing Production Cost and Product Price
4.2 Causing Structure Change in Chlor-alkali Industry
4.2.1Discarding Behindhand Production Capacity; accelerating the upgrading of the Industry
4.2.2 Promoting the Transfer of Chlor-alkali Industry towards China's Western Regions
4.2.3 Setting Higher Requirements for Industrial Access

5. Analysis on the Prices of Chlor-alkali Products
5.1Obvious Seasonal Fluctuations of PVC Price
5.2 Sharp Fluctuation of PVC Price in Short Term
5.3 Distinct Regional Features of Caustic Alkali Price

6. Analysis of Companies in the Industry