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June 24 (Bloomberg) -- Dow Chemical Co. and other U.S. makers of chlorine and caustic soda cut average industry operating rates to 80 percent in May, the lowest rate this year, according to a trade group.

Operating rates for the chemicals known as chlor-alkali fell from April, when factories ran at 90 percent of capacity, The Chlorine Institute, based in Arlington, Virginia, said today in an e-mail. Last month’s output was the lowest since December, when U.S. operating rates were 75 percent.

Demand for chlorine, used to make vinyl products such as siding and PVC pipe, is affected by the pace of housing construction. New home sales tumbled 33 percent last month to a record low annual pace of 300,000, the Commerce Department said in a report yesterday. Caustic soda, produced in tandem with chlorine, is used to make pulp, paper and soap.

Dow Chemical is the world’s largest maker of chlor-alkali, followed by Occidental Petroleum Corp., Olin Corp. and PPG Industries Inc.

In May 2009, chlor-alkali plants ran at 71 percent of capacity, according to the trade group.

To contact the reporter on this story: Jack Kaskey in New York at

To contact the editor responsible for this story: Simon Casey at

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