After many months of steady pricing, producers of sodium bicarbonate in the fourth quarter of 2007 ratcheted up their prices by $30/ton in an effort to offset escalating raw materials and production costs.

The new higher rates for sodium bicarbonate went into effect October 1, and covered all grades of the chemical, including USP and industrial grades. They were made necessary by rising production and transportation costs that have been "squeezing" margins in the industry, says Richard White, marketing and sales director at major bicarbonate producer FMC Corp. in Philadelphia.

But buyers take note: the 5% jump was just enough to cover increased costs, say bicarbonate makers, not ruling out further increases in 2008. At Princeton, N.J.-based Church & Dwight, the largest U.S. manufacturer of sodium bicarbonate, 2007 was a year that saw an "essentially flat" change in margins over the previous year, says Pat Fiedler, the company's vice president for specialty chemicals.

One of the factors cited by producers is the cost of sodium bicarbonate's raw material, soda ash, which has more than doubled in price over the past 18 months while the rising cost of natural gas and electricity used in bicarbonate manufacturing have also become a bigger concern for producers, according to Brad Bunnett, vice president for sales and marketing at Natural Soda in Rifle, Colo.

Producers are also taking a new approach to recouping freight costs, passing more of that burden onto their customers where possible. Buyers of sodium bicarbonate have usually paid a fixed allocation for transportation of the chemical to their plants, even if rates rose above those spelled out in the original contracts. That is changing.

"Our policy is to pass through our transportation increases," says White. In what has become a typical practice in the industry, most large bicarbonate suppliers have adopted an FOB freight system, where the customer pays whatever the freight bill is at the time of delivery. According to Fiedler, Church & Dwight implemented the policy for its customers at the start of 2007.

Price pressure for sodium bicarbonate has been particularly intense at the low-priced, commodity end of the spectrum because many bicarbonate makers are also soda ash producers. Not only is soda ash very expensive right now, says Fiedler, it is "in very short supply." Therefore, he notes, it is tempting for soda ash producers to simply sell their product directly to customers, rather than convert it into commodity-grade sodium bicarbonate, where margins are much smaller. This tightens the supply of sodium bicarbonate in the market.

Rising production costs and tightening supplies, which have driven up bicarbonate prices, continue to hold a  grip on the industry.

While traditional uses (food and animal feed) still dominate the market, miscellaneous uses such as pollution control and hemodialysis is growing faster.

Most of the traditional sodium bicarbonate segments such as baking, pharmaceuticals and personal care products are "pretty solid," says Fiedler, with growth at close to 3%. On the other hand, in another traditional market, animal nutrition, sodium bicarbonate continues to lose ground to lower-priced alternatives such as ground trona or sodium sesquicarbonate, a trend that has been evident for several years. Growth of sodium bicarbonate in animal nutrition is "flat to slightly negative," says Fiedler.

There is "plenty of capacity" for sodium bicarbonate production across the industry, says Fiedler. Percent capacity utilization for the industry, for example, is in the "high 70s," he notes. But Bunnett says supplies of the chemical have "tightened up considerably" over the past three or four years. What was once an over-supplied market is now more in balance, he adds, which is one reason why bicarbonate producers have been able to push through their recent price hikes.

How many more sodium bicarbonate price hikes, if any, are in the cards for the next year is still uncertain. Fiedler says it depends largely on trends in soda ash supplies and pricing. He says that recent talks with soda ash suppliers suggest that 2008 "is going to be a sold-out year" for that commodity, and that 2009 should be similar. Exports of soda ash are particularly strong, Fiedler notes, with buyers in China and Latin America absorbing large amounts of the U.S. production. All of which will contribute to intense upward price pressures on soda ash, and its downstream derivative, sodium bicarbonate.

Sodium bicarbonate purchasers may also have to start worrying about availability. Right now, says White, supplies of bicarbonate are "tightening" in the wake of strong demand. Those tighter supplies, coupled with pricier soda ash, could give sodium bicarbonate producers incentives for another round of rate hikes as the year progresses.