Producers call for 1¢/lb price hike
By Staff -- Purchasing, 11/4/1999
Producers have nominated a price increase of $1/hundredweight (1¢/lb) for USP and food-grade sodium bicarbonate for October 1, to go into effect in November.The increase was led by IMC Global, of Northbrook, Ill., and followed by the other major sodium carbonate players: Church & Dwight Co., Inc., in Princeton, N.J.; Natrium Products, Inc., of Cortland, N.Y.; and FMC Corp., based in Philadelphia, Pa.
"Overall demand for sodium bicarbonate is still growing at an annual rate of about 4%," says Jim Coward, business director for sodium specialty products at FMC Corp. However, it is important to note that that figure varies dramatically by specific grade and granulation.
"We feel support is there for the latest price-hike proposals," says Coward, adding, "Any downtime in production from one of the major players at this point would certainly tighten things up further," he says.
Another producer agrees, "Supply is tight overall, but it's tighter in certain areas of the sodium bicarbonate market, such as in the specialty grades," says an East Coast sodium bicarbonate producer. "One indicator of tightness is that we have been getting a lot of late or last-minute orders, which is usually because our competitors can't deliver on their orders," says the East Coast producer.
"The price increase has been announced and supported by all the major sodium bicarbonate players, and I don't see a reason why prices shouldn't go up," the producer says.
According to buyers who responded to PURCHASING's exclusive monthly chemical transaction price survey, the current contract price of industrial-grade sodium bicarbonate material is about 18.3¢/lb. That price has remained within slightly more than 1.3¢/lb since this time last year.
Spot-market prices of industrial-grade material have been flat at 18¢/lb on average since the first quarter of 1999, according to buyers, despite tightening supply.
Buyers forecast prices of about 19¢/lb for contracts and spot tags through the first quarter of 2000. From there, prices are likely to remain relatively flat, barring any unforeseen production outages until the third quarter of next year.
For USP-grade sodium bicarbonate, contract prices have declined from 19.6¢/lb in the first quarter of 1999 to the current level of about 14.3¢/lb, according to buyers. Spot-market prices have remained steady at 18¢/lb since the fourth quarter of last year. Most buyers expect USP-grade prices to average about 15.5¢/lb for contracts and remain flat at 18¢/lb on the spot market. In the second quarter of next year, prices will rise to 16¢/lb for contracts and 19¢/lb for spot tags, according to buyers.
Presently, there is approximately 675,000 tons/yr of sodium bicarbonate capacity in the U.S. Supply has generally been tight since April, when Rhodia, Inc., of Cranbury, N.J., sold its sodium bicarbonate production business at its Chicago Heights, Ill., plant, removing about 70,000 tons/yr of capacity from the marketplace.
Most buyers agree that supply is currently tight, but that doesn't mean they have to be happy about price increases. "Every time [a sodium carbonate producer] is bought out, producers expect their employees and customers to pay for it," says a Midwest-based buyer. "Church & Dwight has about 60% to 70% of the market as a result of its deal to close out Rhodia," says the buyer.
"Producers are going to try to jack up prices to whatever they think they can get away with," says a buyer based on the East Coast. "They're trying to make sodium bicarbonate a specialty product when it's not. It's a commodity material," the buyer says.
In other supply news, a 40,000 tons/yr expansion is under way at Church & Dwight's Green River, Wyo., plant. The expansion is scheduled for completion by the end of this year.
Also, IMC Chemical, through a debottlenecking at its White River, Colo., facility, expects to increase capacity to 110,000 tons/yr by late 1999.
The domestic market for sodium bicarbonate is dominated by food end uses. Food uses accounts for about 32% of demand, according to the latest Purchasing data. The second-highest end use is in agriculture as a rumen buffer in cattle feeds. Other applications for sodium bicarbonate include cleaning products, the manufacture of other chemicals, personal-care and pharmaceutical items, water-treatment uses, and in making paint blast media.
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