Tight supplies and robust demand combined to drive up sulfuric acid transaction prices in 2004 to a cyclical peak of 85¢/lb in the spring of 2005. Since then, domestic production and net imports of the key industrial raw material have been well ahead of demand; so, prices for sulfuric have skidded by 17¢—and may be lower still by the end of summer.

As demand dried up in the first half of this year, excess supply kept a lid on pricing growth. That's why U.S. transaction prices for merchant sulfuric acid averaged 74¢ in the first six months, down from 75¢ for all of 2005. Looking ahead, only 20% of the buyers polled this summer expect to see any increases through autumn. And there are some reports that the economists' consensus forecast of 74¢ on average through 2007 may be too high.

More sulfuric acid (H2SO4) is produced in the U.S. annually than any other inorganic chemical. North American demand in the first half of this year expanded by 5%, slightly better than the midyear 4.5% world growth. But U.S. and Canadian grain and crop farmers haven't bought as much fertilizer this year as producers had hoped and fertilizer-purchasing growth rates now are expected to decline in the second half. The slowdown in the U.S. economy, which commenced in earnest during the second quarter, is likely to continue during the third and fourth quarters. And, if the U.S. economy does stall, so also will the economies of Europe, South America and parts of Asia.

Meanwhile, sulfuric acid, a byproduct of production at copper and zinc smelters, globally will surpass its recent level of output and bring U.S. production close to the last cyclical high of 47,000 metric tons. That's because demand for nonferrous metals is sizzling worldwide. This will keep world supply more than ample to meet demand in China, the world's largest market, the U.S. and Europe—even if there are some cutbacks in industrial and merchant output in the second half.

The biggest use of sulfuric acid remains the manufacture of fertilizer where demand has been steady this year. A July report by the International Fertilizer Industry Association says the firming demand and tight supply of elemental sulphur, a precursor of sulfuric acid, in 2005 has been replaced this year by a relatively balanced global market “where the growth in demand will be close to that of production.”

Sulfuric acid also is one of the high-purity “wet” process chemicals consumed in the manufacture of semiconductors, which is growing by a solid 10% in 2006 since sales of cellular telephones, digital cameras, digital televisions, MP3 players and other electronics are booming. And other solid but slower-growth use is as an oxide remover for steel surfaces being prepared for galvanizing or electroplating. The oil-refining industry also is using sulfuric acid as a catalyst in the alkylation process, one of the alternative technologies that enhances octane and oxygenate gasoline as a replacement for groundwater-polluting methyl tertiary-butyl ether (MTBE).

But, slower consumption growth is evident this year in such other sulfuric acid-consuming arenas as the production of hydrochloric acid, nitric acid, sulfate salts and nitroglycerine and the manufacture of synthetic detergents, dyes and pigments, pulp and paper and certain pharmaceuticals. The acid also is used as the electrolyte in the production of lead-acid batteries, which have slowed this year because of the 2% cutback in North America's first-half automotive production.