Review of Operations: Chlor-alkali

Caustic soda and chlorine are both produced at one of Asia's largest electrolysis facilities. Caustic soda is used in the manufacture of paper, synthetic fibers, and alumina. In contrast, chlorine is used in a wider range of industries, including raw materials for PVC resin, sterilization, and bleaching.

Business Vision

Tosoh owns one of the largest electrolysis facilities in Asia at its Nanyo Plant, contributing to industrial and social development and maintaining a healthy living environment through the stable supply of caustic soda and chlorine derivatives. Demand for our products is expected to increase due to the economic growth in Southeast Asia and other countries. Moving forward, the Tosoh Group will continue to capitalize on such opportunities to expand its business.

The chemical industry involves the production of chemicals through the electrolysis of industrial salt, making it an energy-intensive industry. Therefore, reducing CO₂ emissions from self-generated power facilities is considered a crucial challenge for business continuity.

Tosoh aims to stabilize earnings by promoting energy diversification and energy conservation, along with reducing CO₂ emissions. This strategy seeks to achieve both growth and decarbonization.

Medium-Term Business Policy (FY2023—FY2025)

• Strengthen the domestic business foundation to secure stable earnings
• Expand overseas operations to increase earnings

Japan’s top share—Caustic soda

Medium-Term Business Policy Initiatives

To hold on to our top share in the domestic caustic soda market and ensure appropriate profit levels, Tosoh will supply materials for domestic semiconductors and EV battery cathode production—for which demand is rising—and conduct production and sales activities commensurate with demand.

Demand for caustic soda and PVC also continues to grow in the Southeast Asian market, therefore, the company is seriously considering building a new electrolysis and PVC plant to accommodate this expected demand. This in turn will further strengthen the Tosoh Group’s business foundation, as the company aims to optimize its production structure and logistics network.

As part of Tosoh’s initiatives toward achieving decarbonization, we are taking a host of measures to reduce CO₂ emissions—including the company’s commitment to constructing a new biomass power generation facility—and will continue diversifying its energy sources.

We will also strive to effectively utilize waste by incorporating construction waste and densified fuel derived from refuse-derived paper and plastics (RPF).

Products Certified as Solutions to Social Issues

• PVC resin for plastic sashes
• PVC resin for pipes and fittings
• Licensing of technology for energy-saving brine electrolyzer

For more details, please visit Social Issue Solutions section

Differentiation Strategies

Boost Production Capacity at Electrolysis Facilities
Establish a stable supply system to meet demand from the Philippines

Demand for caustic soda and chlorine is growing in the Philippines, as used in industrial applications, water and sewage system disinfection in line with infrastructure development, and in bleaching agents. Mabuhay Vinyl Corporation (88% owned by Tosoh), the lone electrolysis manufacturer in the Philippines, has increased its production capacity and established a stable supply system to satisfy increased demand for caustic soda and chlorine derivatives.

With regard to the expansion of electrolysis production capacity, reducing the consumption of electricity and steam and effectively leveraging hydroelectric power generation will result in reduced CO₂ emissions even before any increase in production capacity is implemented.

Tosoh will fulfill its responsibility as a main supplier by responding to robust growth in demand, while at the same time, augmenting the company’s contribution to society by reducing CO₂ emissions.

Optimize Domestic Production System, CO₂ Countermeasures, Primary Fuel

Tosoh strengthened its existing stable supply structure by reinforcing its business foundation and domestic complex infrastructure. Moreover, the company appropriately passed higher raw material, fuel, and other costs onto product prices, thereby maintaining good profitability.

Decarbonization is an important issue for electrolysis plants—a power-intensive enterprise. To address this issue, the company plans to promote a gradual transition to alternative energy sources such as biomass, liquefied natural gas (LNG), carbon-free hydrogen, and ammonia that emit less CO₂. We will also consider the introduction of renewable energy sources such as solar and wind power more seriously to further promote decarbonization.

S Balance Between Caustic Soda and Chlorine Products

In electrolysis facilities, caustic soda and chlorine are produced in a constant ratio. Therefore, prevailing demand for one or the other may periodically result in limited production.

Tosoh offers a host of chlorine derivatives, such as PVC resin, calcium hypochlorite, hypochlorous acid soda and liquid chlorine, hydrochloric acid and calcium chloride. The supply-demand balance for these products enables the manufacturing facility to maintain a highly stable plant operation schedule.

S Competitive Infrastructure

In addition to our large Nanyo Complex, Tosoh delivers products to users nationwide from our Yokkaichi Complex and Tohoku Tosoh Chemical (Sakata City, Yamagata Prefecture) production facilities, ensuring a stable and reliable supply.

The Nanyo Complex has the largest port facilities of any single Tosoh facility and maintains high logistics efficiency from vital raw material procurement to product shipment. The company has installed caustic soda storage tanks throughout Japan and has established a delivery network to meet the diverse demands of our users.

Tosoh has one of Japan’s largest caustic soda inventory and shipping facilities for overseas supply located in Etajima City, Hiroshima Prefecture. The company has also established an efficient export system to satisfy major caustic soda consumption in Australia and Southeast Asia.

Polyurethane is utilized in various applications, including automobiles, home appliances, residences, and industrial materials. It successfully contributes to energy conservation and weight reduction.

Business Vision

With Tosoh’s production and sales activities proceeding at full speed for its main products, it is extremely important for the company to formulate a sustainable growth strategy. Moreover, since the company’s urethane business earnings depend heavily on overseas market conditions for Methylene Diphenyl Diisocyanate (MDI), we are now looking to stabilize this business. Therefore, manufacturing, sales, and research will work collectively to stabilize and maximize profits and expand the business by reinforcing the foundation of MDI, thus growing the functional urethane business, and cultivating new businesses. With respect to climate change issues, we will endeavor to reduce GHG emissions by establishing improved manufacturing methods for polyurethane raw materials, such as isocyanates, that employ CO₂ as a raw material and by improving our existing manufacturing processes.

In addition to expanding capacity for existing businesses, the entire Urethane Division will work collectively and with a sense of urgency to fully establish new isocyanate businesses and promote product development using biomass materials with the objective to cultivate new businesses.

Medium-Term Business Policy (FY2023–FY2025)

MDI

• Diversify customer base to stabilize earnings
• Promote CO₂ feedstock

Functional urethanes

• Expand revenue base through increased competitive advantage and capacity expansion

Japan’s top share—MDI is used as a urethane raw material

Medium-Term Business Policy Initiatives

MDI Business Initiatives

With production and sales activities in full swing, Tosoh will work hard to bolster sales in Southeast Asia and India, where we anticipate a steady growth in demand. As part of this effort, the company plans to promote the construction of new splitters (distillation separation equipment) to become Southeast Asia’s sole MDI manufacturing company. Meanwhile, when considering domestic sales, we will continue to augment and upgrade our logistics infrastructure, placing the upmost importance on ensuring a consistent an dependable supply.

Products Certified as Social Issues Solution

• Polymeric and modified MDI for heat insulators in building material applications
• MDI Woodcure® series particle board adhesives used in building materials and furniture

Toward Specialty Business Operating Income in Excess of ¥100 Billion

Tosoh intends to proactively expand the scale of the company’s business by bolstering its solutions business. We intend to do this by developing more environmentally friendly products, creating added value, and fortifying the company’s market presence. We also plan to introduce our main product line, HDI paint curing agents, into the global marketplace. In pursuing this, competitive advantages include the agent’s non-yellowing properties, its standout feature. Additionally, being water-based and low-viscosity facilitates low-temperature curing, presenting customers the attraction of reduced VOC emissions and energy consumption.

Further downstream, for polyurethane resins, we plan to focus our attention on business development based on proposals that develop a range of grades that satisfy those characteristics required. Tosoh will also position recyclable thermoplastic polyurethane elastomers in addition to establishing self-polymerizing, energy-saving thermosetting elastomers as core products.

Differentiation Strategies

Initiatives and Social Contributions Related to Producing Urethane Raw Materials Using CO₂ as a Raw Material

Tosoh has decided to construct a facility at the Nanyo Complex to recover CO₂ from combustion gas and utilize it as a raw material. The objective for such a procedure is to benefit from its practical use of producing carbon monoxide (CO), a raw material for isocyanate products—a Tosoh mainstay— operation is scheduled to begin in the fall of 2024. By using this product instead of petrochemical feedstock, the company aims to reduce the carbon footprint associated with the production of polyurethane products that utilize Tosoh isocyanate products.

This initiative is being developed as part of the NEDO Green Innovation Fund Project, aiming to create production technologies for isocyanate, dialkyl carbonate, and other polyurethane raw materials by utilizing factory exhaust gas instead of phosgene. The project includes plans for constructing a pilot plant in 2026 and a commercial plant in 2030 or beyond.

Moreover, in response to growing market demand for environmentally friendly products, Tosoh intends to develop new urethane products using castor oil and other biomass raw materials. Simultaneously, the company is exploring the possibility of obtaining relevant certification.

Global Expansion of HDI and Contribution to Society

HDI, primarily utilized as a paint curing agent, provides a high performance essential for paints in terms of aesthetic and substrate protection. It ensures no yellowing and offers superior resistance to weathering. Tosoh’s lineup features a variety of curing agents modified with HDI monomers, as well as environmentally friendly agents that are water-based, featuring low viscosity, and enabling low-temperature curing. The company is also focusing on developing customized products to satisfy various customer needs.

Continued growth is forecast in the demand for paints—particularly in emerging countries. The same is thought to be true for HDI curing agents. As demand continues rising in high-end applications such as new car paints, automotive repair, and construction, Tosoh will look to rapidly expand its derivative products. The company is also actively involved in developing technologies that employ CO₂ as a raw material and will endeavor to create products that address sustainability.

S Functional Product Lineup with Distinctive Features

As Tosoh operates both isocyanate and polyol businesses, this enables the company to satisfy specific customer needs in system design. And, since we beat competitors to the market with many of our products, we are completely trusted by our customers.

Further developments include creating and introducing new environmentally friendly products utilizing bio-based raw materials, and responding to diversifying needs associated with changes in the automotive industry, centered on the world’s transition to electric vehicles (EVs).

O Demand Growth in China, Southeast Asia and India

China, with its population of 1.4 billion and robust demand for urethanes, is the world's largest consumer of MDI. China also produces and exports a wide variety of products globally, therefore steady growth in demand for MDI continues.

Similarly, while demand volume in Southeast Asia and India is not as high as in China, the economic growth rate in that region is still rather high—at 5–8%—and the growth rate of MDI is expected to surpass that figure. Particular growth in demand is evident for insulation in building construction and electric refrigerators, resin for shoe soles, and spandex applications, and MDI demand is forecast to rise in line with higher living standards in the forementioned regions.