Expect more balanced supply/demand

By Staff -- Purchasing, 2/12/1998

As supply and demand gradually become more in line in 1998, domestic hydrogen peroxide prices will begin to firm. Buyers forecast domestic prices will flatten at an average of 38cents/lb for 70% material in the first quarter, according to Purchasing's monthly survey of chemical buyers. Prices will remain stable through the third quarter.

Throughout 1997, domestic hydrogen peroxide prices declined because of oversupply. U.S. bulk contracts averaged 42cents/lb in the first quarter of 1997, then fell to 41cents/lb in the second and third quarters before dropping to of an average of 39cents/lb in the fourth.

Spot tags followed the same trend, averaging 43cents/lb in the first quarter and 41cents/lb in the second and third. In the fourth quarter, spot tags declined to an average of 39cents/lb.

SUPPLY: Ample

There are six major producers of hydrogen peroxide in North America, but that is changing. Degussa is in the process of acquiring DuPont's hydrogen peroxide business. Once the purchase is completed, the five producers will be Chemprox, a joint venture between Air Liquide and Elf Atochem; Degussa; Eka Nobel; FMC Corp.; and Solvay Interox. Total capacity is approximately 1.5 billion lb/yr.

Degussa Corp. has started up a 40 million lb/yr hydrogen peroxide unit in Austria; the company also planned to bring on a 90 million lb/yr unit in Brazil by the beginning of this year. With the pending acquisition of DuPont's hydrogen peroxide business, Degussa has frozen plans for a 143 million lb/yr plant in Quebec.

DEMAND: Growing

Following a sharp drop in 1996, North American consumption of hydrogen peroxide is increasing. Producers estimate demand grew 8%-15% in 1997, pushing consumption up to about 1.32 billion lb.

Over the next several years, hydrogen peroxide demand in North America will continue to grow at rates above GDP. "The economy overall is doing well and the recently issued EPA cluster rules for the pulp and paper industry will enhance the use of hydrogen peroxide in this major market segment," says Wilfried Eul, director of marketing for the peroxygen chemicals division of Degussa.

MARKETS: Varied

Pulp and paper applications account for over half of domestic demand, and will continue to be the fastest growing application. Higher-than-GDP growth is also expected in environmental applications, and specialty grades.

North Americanhydrogen peroxide producers/capacities

(1998, million lb/yr)

DuPont

Memphis, Tenn.

Gibbons, Alberta

Maitland, Ontario 415*

FMC Corp.

Bayport, Tex.

Spring Hill, W.Va.

Prince George, B.C.

Santa Clara, Mexico 383

Solvay Interox

Deer Park, Tex.

Longview, Wash. 336

Chemprox

Becancour, Quebec 160

Degussa Corp.

Theodore, Ala. 160

Eka Nobel

Columbus, Miss. 78

Total 1,532

*Degussa Corp. is in the process of acquiring DuPont's hydrogen peroxide business.

SOURCE: PURCHASING