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Forward integration - chlorine derivatives (CPVC/ECH)
What it is
Building downstream capacity that consumes captive chlorine - chlorinated PVC for hot-water piping, epichlorohydrin for epoxy resins, and other chlorinated derivatives. It converts a surplus by-product into a specialty product
India imports much of its CPVC and epichlorohydrin requirement
Impact on industries
- Solves the chlorine netback problem structurally rather than tactically, turning the industry's weakest link into a value stream
- Import substitution opportunity is real, since both CPVC and ECH have been largely imported despite domestic chlorine surplus
- Downstream products earn specialty margins insulated from the ECU cycle
- Capital-intensive with technology and licensing requirements, so integration is a multi-year programme rather than a quick fix
- It is the chlor-alkali version of backward integration - the same logic of converting a market exposure into an internal transfer