ALREADY FACING flat to low growth, the sulfuric acid market is facing further pressure from the poor conditions in the fertilizer market. Fertilizer, sulfuric acid's primary driver, accounting for between 60 to 75 percent of the acid's total end use, has softened in response to the weak US economy. Pricing remains flat, and industry observers see little improvement this year.
In 2000, consumption of sulfuric acid by the fertilizer industry was reduced by close to 2 percent, compared to 1999, says Al Mulhall, manager, market research, Potash Corp. of Saskatchewan. The fertilizer market comprises almost 70 percent of total sulfuric acid consumption, according to SRI Consulting, Menlo Park, Calif Metallurgical applications account for about 6 percent of consumption, and all other end uses account for the remaining 24 percent. Markets expected to show future growth include copper leaching, caprolactam, methyl methacrylate and batteries. Markets expected to decline include phosphoric acid production, normal superphosphates and pulp and paper.
With the downturn in certain markets, some producers are looking to other value-added uses for sulfuric acid. "The industrial market, is more specialized and people use it to make higher value products. This market, which represents 25 percent of the total sulfuric acid market, is more balanced and almost unaffected by what's going on in the macro market," says Ed Brown, sulfur products market and business operations manager for DuPont.
DuPont sells sulfuric acid to oil refineries, which use it to increase the octane of gasoline, then ship back spent sulfuric acid, which DuPont then reprocesses. "This process is becoming more and more important," Mr. Brown says. He adds that DuPont is investing in technology "to help refiners get more out of a ton of oil." The company resells acid from two companies, Conoco and BP Amoco.
Historically, sulfuric acid has been used in the petroleum industry for treating lubricating oil fractions and for producing high quality, high octane gasoline components by the alkylation of olefins (principally butylenes and propylene) with isobutane, according to SRI Consulting. In the current market, virtually all of the acid used in alkylation is regenerated on-site or sent to an outside regenerator, SRI says.
DuPont's increasing emphasis on technology was an important consideration in the company's decision to redeem its interest in Noranda DuPont LLC, as of June 29. The company, a joint venture between DuPont, Noranda Inc. and Falconbridge Limited, was established in 1998 to market, transport and distribute in North America sulfuric acid produced by all three companies.
"We have more emphasis on technological solutions and placing resources there, while Noranda focused more on the metals industry and on producing sulfuric acid as a byproduct," says Mr. Brown.
An official at Noranda says that the changes [with Noranda DuPont LLC] "should have no material effect on the sulfuric acid market. Our actions do not add or subtract any tonnage from the market and therefore should have a minimal effect, if any."
As a result of poor market conditions, pricing has remained relatively flat. Tampa spot pricing for virgin acid is in the range of $22 to $32 per metric ton. In 2000, pricing ranged from $35 to $46 per ton, with few price increases. The fourth quarter of 2000 saw an increase of $3 to $5 per short ton. "Prior to the second half of 2000, pricing was pretty flat," says one producer. No price increases for 2001 have yet been announced.
The US is a major producer of sulfuric acid and accounts for roughly 30 percent of world production. While US production increased by 25 percent between 1985 and 1997, significant further change is not expected through forecasted year 2003, according to SRI.
"There is some pressure to place tonnage in the market. But there is not necessarily overcapacity. It moves from one point to another," explains one producer.
US annual capacity was roughly 48.4 million metric tons in 1997, and is projected to decline to 46.8 million metric tons by 2003. US production was 45.2 million metric tons in 1997 and is projected to decline to 44.2 million metric tons in 2003.
In 2000, there were more than 40 producers of virgin sulfuric acid, with 13 of these producing at least 1.0 million short tons. Some of the larger virgin producers do not manufacture and sell acid as a merchant player, and many run "partly-captive" operations.
DuPont, one of the largest US sulfuric acid producers, has a total capacity of about 1.5 million tons. That capacity is used as sulfuric acid, upgraded uses and acid the company produces for captive use at its La Porte, Tex., facility. DuPont has five US production plants, none of which have been idled since 1991.
Another very large producer, Rhodia, had roughty 3.2 million short tons of virgin acid capacity in 2000, according to industry estimates. Rhodia does not service the fertilizer market, and concentrates on other uses, including metallurgical applications, such as copper leaching.
The Potash Corp. has four sulfuric acid plants at Aurora, N.C.41 with a combined capacity of 10,500 short tons per day of 100 percent sulfuric acid, and four sulfuric acid plants at White Springs, Fla., which have a combined capacity of 9,500 short tons per day. No capacity changes have been made in the past year. At White Springs, however, where diammonium phosphate production was curtailed in early 2001, two of the sulfuric acid plants there are currently idled.
IMC Global, Inc. does not make and sell sulfuric acid as a merchant player, but produces it exclusively as part of its overall production process for manufacturing phosphoric acid and, ultimately, upgraded or concentrated phosphates. However, the company says that "because of our size in phosphates, IMC is probably the largest purchaser of sulfur in North America and perhaps the world for conversion into sulfuric acid for internal use."
"Demand for sulfur is soft following reduced US phosphate output, due largely to low phosphate import requirements from China, Australia and India. New supplies have entered the market, with Iraq resuming delivery of about 600,000 metric tons per year to Jordan, and Abu Dhabi supplying 400,000 metric tons per year additional product as a result of oil and gas production," says Potash Corp.'s Mr. Mulhall.
Demand for virgin sulfuric acid was roughly 40.3 million tons in 1997, 39.9 million tons in 1998, and is projected at 41.5 million tons in 2002. Historical demand growth for virgin sulfuric acid, from 1993 to 1998, was 0.9 percent each year. Future growth is projected at 1 percent per year through 2002.