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Caustic soda industry.

Caustic Soda Industry

Caustic Soda manufacturing in Pakistan was started by setting up of the very first unit in Nowshera in 1955 with a rated capacity of 3300 tonnes per annum. With the growth of industrialisation demand for caustic soda showed rapid increase since early 60's. This demand created interest among the entrepreneurs and consequently a large factory for producing Caustic Soda was established in 1964 at Kala Shah Kaku. (Ittehad Chemicals Limited). This unit after modification and expansion has a capacity of producing 49,500 tonnes per annum of Caustic Soda.

The existing sanctioned/installed capacity for caustic soda in the country is 98,000 tonnes as shown in Table-I.

Table : TABLE - I Production Capacity of Caustic Soda
 (Tonnes)
 Annual
Name of Plant Capacity


Ittehad Chemicals
Kala Shah Kaku 49,500
Pakistan PVC Ltd. Gharu 7,200
Sindh Alkalis Ltd. Landhi 3,000
Chemicals Ltd., Charsadda 3,000


Adamjee Paper & BoardMills,
Nowshera 3,000
Sitara Chemicals 12,000
Bela Chemicals Ltd. 15,000
Other Small Units 5,000
 TOTAL: 98,000


Source: Annual Reports of Companies

Out of the above listed units, two units are attached with paper manufacturing units and meet exclusively their own requirements with no surplus for open market. In addition there are small causticising units with a captive capacity of about 6,300 tonnes per annum of caustic soda from soda ash for their own soap manufacturing requirements. That means, there are only five units for the production of Caustic Soda, with a total installed capacity of 91,700 tonnes per annum, to meet the entire open market requirements. Out of these five units, two units namely Ittehad Chemicals and Pakistan PVC based on electrolytic process, while Sindh Alkalis Limited has a Causticising plant attached with the Soda Ash unit which converts the surplus Soda Ash into Caustic Soda with limited production.

Caustic Soda

It is an important chemical used by a large number of industries such as detergents, paper, textile and oil refining. The main raw-material required for manufacturing caustic soda is salt and electric power. Salt is abundantly available in Jhelum District of Punjab. Besides sufficient quantity of salt can also be manufactured from sea water. The supply position of other raw materials needed by the industries is also satisfactory and the imported raw materials constitute only about 13 per cent of the total cost of production.

Caustic Soda in liquid and solid form is one of the most important raw materials used by the soap industry. It is soluble in water and acts as a strong detergent. According to the Industrial Investment Schedule of the Sixth Five Year Plan Capacity for caustic soda has been targeted to increase from 51,000 tonnes to 136,000 tonnes, by the end of the Sixth Five Year Plan envisaging an investment of Rs. 600 million. The capacity has increased to about 149,000 tonnes in 1989-90 with actual production at 74,036 tonnes. The actual production of caustic soda during the last nine years is as follows:

Table : TABLE - II Local Production of Caustic Soda
 Production %
Year (Tonnes) Increase
1981-82 40,548 -
1982-83 41,065 + 1.27
1983-84 39,740 - 3.22
1984-85 46,020 +15.80
1985-86 54,819 +19.11
1986-87 54,889 - 0.12
1987-88 61,344 +11.76
1988-89 66,452 + 8.32
1989-90 74,036 +11.40


Source: Federal Bureau of Statistics

Local production of caustic soda has increased from 40,548 tonnes in 1981-82 to 74,036 tonnes in 1989-90 showing an average growth rate of 8.03 which is very encouraging.

Table : TABLE - III Domestic Availability of Caustic Soda
 (Tonnes)
Year Production Imports Total
1981-82 40,548 28,991 69,539
1982-83 41,065 31,684 72,749
1983-84 39,740 5,240 44,980
1984-85 46,020 4,731 50,751
1985-86 54,819 7,758 62,577
1986-87 54,889 32,932 87,821
1987-88 61,344 8,245 69,589
1988-89 66,452 7,822 74,274
1989-90 74,036 - 74,032


Source: Federal Bureau of Statistics

Domestic availability (Domestic demand) is around 74,032 tonnes during 1989-90 as against 69,539 tonnes during 1981-82. This means that on an average domestic demand has shown an upward trend.

Capacity Utilization

In the past the electrolytic units had to reduce their production because of limited use of chlorine and inadequate outlets of chlorine disposal. Later better utilization of chlorine in the form of Hydrochloric acid and Bleaching powder etc., gave an optimistic future. At present the capacity utilization has improved considerably. The production of caustic soda has registered a growth rate of 8.03 per cent per annum over the past nine years and capacity utilization during 1988-89 worked out to 75.46 per cent. Two new units have come on stream to supply caustic soda. These are Sitara Chemical Faisalabad and Bela Chemicals - Hub Chowki.

Imports of Caustic Soda

As the domestic production of Caustic Soda was never sufficient to meet the local market demands, the imports of this chemical were inevitable. The following table shows the imports of this chemical during the last ten years.

Table : TABLE - IV Imports of Caustic Soda
 Quantity Value (Rs. Value
Year 000 Tons) million) Per Kg.
1981-82 18,991 81.914 4.31
1982-83 7,986 24.821 3.10
1983-84 22,664 20.024 0.88
1984-85 26,419 24.226 0.91
1985-86 7,758 22.336 2.87
1986-87 21,333 69.285 3.24
1987-88 5,416 24,780 4.57
1988-89 7,822 73.024 9.33
1989-90 - - -


Source: Foreign Trade of Pakistan

The irregularity in the quantum of Caustic Soda imports is mainly attributable to the changes in import policies of the Government. It has been noted that import policy often allowed large scale imports without taking into consideration of the actual shortfall, arrange supplies at dumping prices. Average import of Caustic Soda per annum comes to about 13,154 tonnes.

The reason why Caustic Soda is available from industrialised countries at dumping rate is the large consumption of Chlorine in those countries, where Caustic Soda is sold as by-product. They make up their expenses forom the sale of Chlorine at higher prices.

Demand of Caustic Soda

According to the estimates of IACP the demand of Caustic Soda is at present 103,840 tonnes, which is projected to increase to 124,163 tonnes in 1992-93. [Tabular Data Omitted]

New Sanctions

The existing demand of caustic soda appears to be 103,840 tonnes according to IACP estimates against the existing capacity of 98,000 tonnes. The shortfall is made up by imports. The aggregate capacity of new sanctioned units works out to be about 66,100 tonnes per annum. The total capacity in production and sanctioned worked out to be 164,100 tonnes per annum. The break-up of this is as follows:

Table : Table-VI Sanctioned & Installed Capacity of Caustic Soda
Capacity Tonnes
Existing Capacity 98,000
Zahid Chemicals 30,600
Basic Chemicals Dhabeji 12,400
Al-Hamd Chemicals 6,000
G.M. Chemicals 8,100
Chaudhry Chemicals 9,000
 Total:- 164,100


Pricing

Price behaviour is highly erratic Price of Caustic Soda showed a sudden upsurge in 1987-88 to 697.50 from 407.00 per 50 kg showing a rise of 71.25 per cent. The price again jumped from Rs. 697.50 to Rs. 930.50 per 80 kg. in 1988-89 and to Rs. 940.00 in 1989-90 showing a rise of 34.76 per cent. The imported caustic soda is subject to customs duty of Rs. 6000 per ton plus 12.5 per cent sales tax.

Table : Table - VII Average Wholesale Prices of Caustic Soda Per Bag of 50 Kg.
 (Rs. per Bag)
Year Price
1981-82 442.37
1982-83 437.50
1983-84 513.00
1984-85 460.00
1985-86 438.75
1986-87 407.00
1987-88 697.50
1988-89 932.50
1989-90 940.00


Source: Federal Bureau of Statistics.

Project Profile

A unit with an annual capacity of 7,680 tons of caustic soda, along with other items like: (1) Liquid Chlorine 1,260 tons, (2) Sodium Hypochlorite 420 tons, (3) Hydrochloric Acid 8,400 tons would be viable proposition

Land: A plot of land measuring 3 acres would be sufficient for the project. The site has to be in an area which enjoys investment incentives and has fully developed infrastructure.

Machinery: Major part of the machinery has to be imported, which will consist of electrolytic system (comprising cells, transfer and concentrate equipments), salt refining equipment, steel dissolver, condensers, absorber, HCL synthesis tower, liquefier and control panels. Among the local items would be storage tanks, pumps and pipes.

Raw Materials: Raw materials required include raw salts, soda ash, hydrochloric acid and some miscellaneous chemicals. Sodium chloride (raw salt) is the basic raw material. It is abundantly available in the northern part of the country as natural common salt. Moreover, it is also produced in the south by evaporating sea water.

Man Power: A total of 36 persons would be needed for the project, among whom 28 would be workers and 8 managerial and non-managerial staff.

Financial Layout

The total cost of the project is estimated as Rs. 89.2 million, inclusive of Rs. 2.9 million as net working capital. Among the fixed cost, foreign exchange requirement of Rs. 48.0 million would be for machinery and for local items another Rs. 10.0 million. Total per year cost of raw material as estimated is Rs. 25.5 million. Estimated per year expenses on manpower would be Rs. 1.6 million. The operating results of the project at 80 per cent capacity utilization would generate a net profit of Rs. 9.2 million, leading to Rs. 16.6 million on full capacity utilization in the fifth year. The rate of return has been estimated as 23.56, and the pay-back period 3.28 years.
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Title Annotation:Pakistan; Industry
Publication:Economic Review
Date:Jun 1, 1991
Words:1640
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