Prices are ready to rise
By Staff -- Purchasing, 1/14/1999 2:00:00 AM
PRICES: Flat, will rise
Over the past two years, oversupply caused hydrogen peroxide contract and spot prices to drop. During most of 1998, supply and demand began gradually to come in line, and according to data for the month of December from Purchasing's CPI chemical transaction survey, average prices are flat at about 36¢/lb.
However, proposed price increases by some major hydrogen peroxide suppliers have been scheduled to take effect this month. Buyers will see hydrogen peroxide prices rise 3¢-5¢/lb on average for bulk contracts, reaching 39¢-41¢/lb. Spot prices will follow the same trend, according to our data.
Price increases of $100/ton in the U.S. and CAN$170/metric tonne in Canada by Eka Nobel have been proposed for January 1, 1999. Also, Elf Atochem North America Inc. is raising its prices by 5¢/lb (on a 100% basis).
The price hikes are part of suppliers' strategy to raise hydrogen peroxide prices to levels where future investments in new capacity are economically feasible, according to suppliers.
SUPPLY: In pace with demand
There are five major producers of hydrogen peroxide in North America. They include: Chemprox, a joint venture between Air Liquide and Elf Atochem; Degussa, which recently acquired the hydrogen peroxide business of DuPont earlier this year to become the largest domestic supplier; Eka Nobel, a business unit of Akzo Nobel; FMC Corp.; and Solvay Interox. These five companies produce a total capacity of approximately 1.5 billion lb/yr of hydrogen peroxide.
Earlier this year, Elf Atochem purchased one of DuPont's hydrogen peroxide plants, located in Memphis, Tenn. That plant has a total capacity of about 70,000 tons/yr. This operation, in the wake of the acquisition of Air Liquide's hydrogen peroxide activity at the beginning of the year, will make Elf Atochem the world's third-largest hydrogen peroxide producer.
According to a spokesperson at a major domestic hydrogen peroxide producer, operating rates are currently at approximately 90%-95%.
DEMAND: Growing
North American demand for hydrogen peroxide has grown steadily in the past few years and will continue to grow, keeping just ahead of overall growth in gross domestic product (GDP).
According to a study by The Freedonia Group, a market research firm located in Cleveland, Ohio, demand for pulp and paper chemicals--by far the largest market for hydrogen peroxide--is expected to grow at a rate of 5.4%/yr through 2001. Technological changes sparked by a legislation push for alternatives to chlorine in pulp bleaching are responsible for this growth, and hydrogen peroxide is widely considered the most viable chlorine alternative for bleaching applications.
MARKETS: Diverse
More than half (about 55%) of the domestic demand for hydrogen peroxide is used by the pulp and paper industry for bleaching purposes. This market segment is the most significant consumer of hydrogen peroxide and it will continue to be the fastest growing market at least through the year 2000.
Other applications for hydrogen peroxide include textiles and bleaching-related markets (20%), drinking water and industrial wastewater treatment (15%), and indirect uses and other chemicals, including chemical intermediates (10%).
North American hydrogen peroxide producers/capacities
(1998, million lb/yr)
Degussa Corp. 575
FMC Corp. 283
Solvay Interox 236
Chemprox 160
Eka Nobel 78
Total Capacity 1,332
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