CHLORINE IS THE NEW GOLD TENDIE MAKER. $OLN
While we have all heard of the chlorine shortage, I am convinced we have incorrectly concluded the cause for the shortage. It is my belief that as a result of COVID overwhelming the entire healthcare industry (especially hospitals), the product that healthcare relies on most (chlorine and chlor alkali) became overwhelmed as a result. The true cause of this shortage is simply the effect of the overwhelming strain this pandemic placed on the entire healthcare industry. Information below helps provide clarity on how vital chlor alkali is to the healthcare industry.
Chlorine and Life-Saving Drugs
From the computers used in admissions to the sutures used in surgeries, chlorine is a vital part of hospital operations and patient treatments. In fact, probably no other institution relies as much on chlorine as hospitals. Hospital pharmacies are full of medications that rely on chlorine chemistry. Today, about 85 percent of all pharmaceuticals contain or are made using chlorine, including medications that treat heart disease, hypertension, cancer, AIDS, arthritis, pneumonia, depression, diabetes, allergies, meningitis, glaucoma, osteoporosis and ulcers.
Acetaminophen, the most widely used pain reliever in hospitals, is made with chlorine. Sodium chloride is also used in every COVID vaccine.
Chlorine and Medical Equipment
Chlorine is essential to a wide variety of hospital equipment. An estimated 25 percent of all medical devices in hospitals are made using chlorine, including some of the most widely used equipment:
· IV and blood bags. Chlorine-based plastics are used to make the millions of blood and IV bags used by hospitals and blood banks each year.
- Sterile tubing and packaging. Chlorine-based plastics are also used to make these essential devices.
Chlorine compounds are used widely to maintain hospital cleanliness and prevent thousands of life-threatening infections. As a bleach and medicinal aid, chlorine compounds:
· Prevent bacterial contamination of patients’ burns and wounds
· Disinfect kidney dialysis machines
· Clean and disinfect work surfaces and equipment in medical laboratories
· Kill deadly bacteria, such as Legionnaire’s Disease, that can live in hospital water and air conditioning systems.
Chlorine in the Operating Room
Chlorine plays a number of critical roles in the operating room:
· Anesthesia. Anesthetics, such as Anactine Flopak, are made with chlorine.
General cleaning and disinfection. Infections are a significant threat in hospitals. Chlorine-based cleansers disinfect work surfaces and equipment.
· Sutures and other surgical equipment. Chlorine helps make nylon, an essential material in surgical sutures, artificial blood vessels and osmotic membranes. And vinyl, a chlorine-based plastic, is used in heart catheters.
- Electronic instruments. Computers and electronic devices play an increasingly important role in the operating room and hospital patient care, and chlorine provides one of the crucial building blocks in the manufacture of semiconductors used in these life-saving electronic instruments.”
It’s obvious that chlorine plays an irreplaceable role in healthcare and the safety of our healthcare workers, and safety has never been more crucial than during COVID. It is my belief that to ensure safety for healthcare workers and availability of chlorine dependent products used in healthcare, Biden used the Defense Production Act to require companies that produce critical chlor alkali raw materials to prioritize production for the healthcare industry and combatting COVID.
BIDEN ADMINISTRATION’S EXPECTED USE OF THE DPA
- The Biden administration has publicly stated that it intends to use the DPA to combat the COVID-19 pandemic. In particular, the administration is likely to use the DPA to accelerate COVID-19-related supply chains.
- The administration has identified 12 categories of critical supplies that will accelerate the manufacture, delivery, and administration of COVID-19 vaccines.
- The six vaccine candidates being developed as part of Operation Warp Speed, as well as companies manufacturing COVID-19 therapeutics, have priority DPA ratings.
- On January 21, 2021, President Joe Biden signed an executive order that directs federal agencies to use all available legal authorities, including the DPA, to fill supply shortfalls that are critical to the COVID-19 pandemic response.
With chlor alkali producers being forced to prioritize chlorine based raw material production for the healthcare industry and COVID pandemic, all other industries dependent on chlor alkali have been left behind to experience a complete lack of the same raw materials. The impacts are detailed below.
The computer chip shortage is being caused by the chlorine shortage. Here’s how: Trichlorosilane: Cornerstone Chemical for Electronics and High-Tech Toys (americanchemistry.com)
Silicon chlorides are some of the cornerstone chemicals of the Information Age. Trichlorosilane (HSiCl3) is an intermediate compound used to produce extremely pure silicon, from which computer chips, the "brains" of electronic devices and high-tech toys, are manufactured. The famous high-tech industrial area of California, Silicon Valley, was named for the chemical element that has revolutionized the way we communicate and play. And chlorine has played an essential role in the high-tech revolution.
The aluminum shortage is being caused by the chlorine shortage. Here’s how: Aluminum Chloride | Aluminum Sulfate | Aluminum Manufacturers – Chlorine based chemical used primarily in the production of aluminum metal. Chlorine is also used in the recycling of aluminum.
The plastic shortage, especially PVC (polyvinyl chloride) is being caused by the chlorine shortage. Here’s how: Polymer Raw Material Shortage for 90% of Converters (plasticsconverters.eu)
According to EuPC Managing Director Alexandre Dangis, “Manufacturers of plastic products all over Europe are experiencing serious bottlenecks in the supply of raw materials since the beginning of this year. Delivery problems have become increasingly widespread, affecting raw materials for example (not limited) such as Polypropylene, Polyvinyl Chloride, and Polyethylene, as well as special additives that are crucial for the manufacture of compounds and plastic products. The serious market disruptions currently taking place all over Europe are a symptom of the structural imbalance in Europe between the local production of and demand for raw materials and additives. Without restoration of that balance, periodic recurrence of gross disruption of the production chain is highly likely.
All of the 3 raw materials mentioned above are chlorine based.
The cat food shortage is being caused by the chlorine shortage. Here’s how: Functions and Requirements of Chlorine in Cats | Pet Care Advisors – Chlorine is used in cat food as they are highly attracted to it.
The chicken shortage is being caused by the chlorine shortage. Here’s how: Chlorinated chicken explained: why do the Americans treat their poultry with chlorine? | Analysis & Features | The Grocer – The US Poultry Industry chlorinates chicken as a part of the disinfection process.
This dependency on chlor alkali to fight COVID isn’t just happening in America. Below are links to numerous countries around the globe using chlorine and chlorine based products heavily to fight COVID.
China National Health Commission Allows Emergency Listing of Four Types of Disinfectants during the Prevention and Control of the Covid-19 – News and Articles – Chemical Inspection and Regulation Service | Enabling Chemical Compliance for A Safer World | CIRS (cirs-reach.com) – China
Sierra Leone doctors treating COVID-19 patients launch strike | Coronavirus pandemic News | Al Jazeera – Sierra Leona treatment centers using chlorine treatments
With this information, it is my belief that chlor alkali manufacturers will continue to experience overwhelming demand nearly impossible to satisfy for the next 2 years plus. This demand will of course create record breaking revenues and profit margins for the industry. As the largest chlor alkali producer in the world, Olin Corporation (ticker symbol $OLN) is in perfect position to reap the most reward. I am highly confident that gross revenue / net profits will significantly exceed expectations for all of 2021, 2022 and likely 2023.
Disclaimer: The author is long $OLN.
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May 22, 2021 at 04:12PM