Buyers see flat prices in 2000

By Staff -- Purchasing, 1/13/2000

Hydrogen peroxide pricing is currently stable, and despite some producer price increase attempts expected in the first quarter of 2000, buyers say prices will remain flat at least through the first half of the year.

Prices slipped from about 35¢/lb for contracts and 36¢/lb for spot-market material since the first quarter of 1999, to about 30¢/lb for contracts and about 33¢/lb for spot tags in the fourth quarter, according to data from PURCHASING's monthly chemical transaction price survey.

Prices currently stand at about 30¢/lb for hydrogen peroxide contracts and 34¢/lb on the spot market.

"Producers are nominating across-the-board increases for peroxide, on the order of 2¢-5¢/lb," says Joel Stone, a buyer of food-grade hydrogen peroxide for Opta Food Ingredients, based in Bedford, Mass. "I don't know how producers will justify these increases," he says. Like many hydrogen peroxide buyers, Stone sees flat pricing in the first half of 2000.

By the third quarter, however, producer price increases may begin to take hold, and contract and spot prices could inch up by about 1¢/lb, say buyers.

Demand: Robust

North American demand for hydrogen peroxide has grown steadily in the past few years and will continue to grow. Most analysts predict growth in demand at a rate of 5%-8%/yr through the year 2002.

Demand for hydrogen peroxide for use in the pulp and paper industry, which is by far the largest consumer of hydrogen peroxide, will continue to drive the market.

According to a study by The Freedonia Group, a market research firm located in Cleveland, Ohio, demand for pulp and paper chemicals is expected to grow at a rate of 5.4%/yr through 2001.

In addition, established markets in water treatment and textile bleaching will also show demand growth, but at a more modest pace. Use of hydrogen peroxide in chemical manufacturing processes is essentially flat or growing only slightly, according to analysts.

Supply: Somewhat tight

Hydrogen peroxide supplies are somewhat tight right now. In addition, producers are reporting capacity utilization rates in excess of 93%.

"There have been some recent maintenance turnarounds at FMC Corp. and Solvay Interox," says Stone. "Having these units down in the past couple of months has added to the tightness."

There are five major producers of hydrogen peroxide in North America. They include, Chemprox, a joint venture between Air Liquide and Elf Atochem; Degussa-Huls; Eka Nobel; FMC Corp.; and Solvay Interox. These five companies produce a total capacity of approximately 1.8 billion lb/yr of hydrogen peroxide.

Market: Diverse

The market for hydrogen peroxide is diverse, which accounts for significant growth forecast in the next several years.

The largest market for hydrogen peroxide is in the bleaching of pulp and paper. This market has benefited in the past few years from the movement to replace chlorine gas as a bleaching agent, due to environmental and health concerns. Currently, pulp and paper accounts for about 57% of the total North American market for hydrogen peroxide.

Growth in the hydrogen peroxide market will also come from manufacturers of specialty chemicals, as well as from the textile industry, which uses hydrogen peroxide for fabric bleaching and as a dye fixative.

Other applications include industrial and potable water treatment, environmental contamination cleanup, mining, electronics, and metal processing.

producers and capacities

Producer Annual capacity

(Corp. headquarters) (million lb/yr)

Degussa-Huls Corp. 655

Ridgefield Park, N.J.

Solvay Interox 443

Deer Park, Texas

FMC Corp. 325

Philadelphia, Pa.

Chemprox 310

Philadelphia, Pa.

Eka Nobel 78

Marietta, Ga.

Total 1,811

Source: PURCHASING