Oversupply keeps prices low

By Staff -- Purchasing, 10/7/1999

Sulfuric acid prices have been in decline for more than a year as a result of weak demand and oversupply. Buyers forecast flat prices for the coming year.

Current prices of virgin, 100%-grade sulfuric acid average about $42/ton for contracts and spot tags, according to the latest data from Purchasing's monthly chemical transaction price survey. Buyers forecast flat prices through at least the first half of 2000. In the third quarter of next year, buyers forecast price hikes for contracts and spot tags on the order of about 3¢/lb.

"If the supply and demand situation doesn't change, any price increases in the next year will be modest to the point of being negligible," says George Kinzfogl, vice president of sales at Milport Enterprises, a manufacturer and distributor of industrial chemicals based in Milwaukee, Wis. "I expect prices to remain flat at least through the first half of 2000."

John Ross, raw materials manager at CIBA Specialty chemicals in McIntosh, Ala., says, "We may see some price increases late this year to the early part of next year in the range of $5 to $10/ton."

Supply: Ample

Slipping demand for sulfuric acid has added to an oversupply situation in the domestic market for sulfuric acid. Purchasing professionals are having no problem securing material.

Leadtimes for sulfuric acid averaged about five days in July, the latest data available from Purchasing's monthly leadtimes survey. This is compared to an average of 4.9 days in June and 3.6 days in July 1998.

There are approximately 60 producers of sulfuric acid in the U.S. Of these, the largest include IMC-Agrico Co., Northbrook, Ill.; PCS Nitrogen Fertilizer, L.P., Memphis Tenn.; Rhodia, Inc., Cranbury, N.J.; Cargill Fertilizer, Inc., Riverview, Fla.; and CF Industries, Inc., Long Grove, Ill.

Demand: Weak

"There has been some slippage in demand in recent months for some of the major end uses of sulfuric acid, and that has added to the oversupply of material," says Ross.

Long-term domestic consumption of sulfuric acid is expected to grow at zero to 1% annually. This growth rate has been fairly stable for the last decade, because most end-use markets for sulfuric acid are mature.

Possible areas of modest growth include spent-acid regeneration due to environmental issues and stringent regulations. As states continue to develop tighter gasoline standards, more spent acid could be made available for regeneration.

Also, continued environmental concern over chlorine bleaching in the pulp & paper industry has sparked the use of sulfuric acid in sodium chlorate bleaching.

Markets: Mature

The markets for sulfuric acid are mature. About 70% of sulfuric acid produced in North America is used in the production of fertilizers. Other applications, such as pulp & paper, chemical intermediates, steel, batteries, and electronics account for the remaining 30%.

Producer Annual capacity

(Corporate headquarters) (100%, thousands of metric tonnes)

IMC-Agrico Co. 9,260

Northbrook, Ill.

PCS Nitrogen Fertilizer, Inc. 6,790

Memphis, Tenn.

Rhodia Inc. 2,945

Cranbury, N.J.

Cargill Fertilizer, Inc. 2,765

Riverview, Fla.

CF Industries, Inc. 2,240

Long Grove, Ill.

BHP Copper 1,900

San Francisco, Calif.

Farmland Hydro, L.P. 1,725

Bartow, Fla.

J.R. Simplot Co. 1,365

Boise, Idaho

U.S. Agri-Chemicals Corp. 1,330

Fort Meade, Fla.

DuPont 1,250

Wilmington, Del.

Kennecott Utah Copper Corp. 1,220

Magna, Utah

Gen Tek Inc. 1,195

Parsippany, N.J.

Total 33,98

5SOURCE: 1999 DIRECTORY OF CHEMICAL PRODUCERS, SRI CONSULTING