Buyers are reporting a huge jump in sulfuric acid prices in Purchasingdata.com’s monthly survey and say tightening supply and increased demand from domestic and overseas markets is to blame.
Sulfuric acid prices in March hit a record high of $329/ton, according to Purchasingdata.com, after trading at $90/ton as recently as October. Buyer Bobbie Fallaw at Devro Castings received a 26% increase from a sulfuric acid supplier this week and says the increase is due to a combination of factors: rising sulfur prices, increasing demand for sulfuric acid from the fertilizer markets, and short supply of sulfuric acid.
“Suppliers are telling us that the increase of ethanol plants will further increase the demand for sulfuric acid,” Fallaw says.
In September, Purchasing.com reported that the biofuels boom, particularly the proliferation of ethanol plants, is having a “double effect” on the demand for sulfuric acid, according to Paul Bacon, business director at Rhodia Eco Services, a French sulfuric acid producer. But a more recent story in February in the Ames (Iowa) Tribune says “the pricing of sulfuric acid, a manufacturing commodity used in the production of metals and fertilizer, has soared due in part to the increased additional demand from the manufacture of ethanol fuel.”
One sulfuric acid buyer at a biotech firm in the Northeast told Purchasing.com this week both of his chemical distributor partners increased prices for sulfuric acid in the first quarter. He said: “They both claim that producer costs have gone up due to higher production costs. Since I am not a huge user of sulfuric acid and our sulfuric acid prices have been steady for the past 18 months, I did not push back very hard regarding this latest increase. I expect prices to hold for at least the rest of the year.”
Automotive tier one supplier Johnson Controls in January raised lead-acid battery prices by 4% and cited a dramatic jump in sulfuric acid prices as one of the reasons.
At least one buyer of sulfuric acid, Frontera Copper in Toronto, says that a strike at a major sulfuric acid supplier has wreaked havoc on its supply and pricing in the first quarter. In a late February update, Frontera said the strike has been ongoing since July and the lack of sulfuric acid supply has impacted its mining capabilities, although the copper firm declined to name the supplier.
Key Compton, president of sulfuric producer Southern States Chemical in Savannah, Ga., says increasing sulfur prices are the primary reason for sulfuric acid prices to rise. Compton says sulfuric buyers may be in for a long ride, as sulfur prices look to remain high for the remainder of 2008 and into 2009, pushing sulfuric acid prices up in the U.S. At a certain point, however, U.S. prices may match those internationally, giving buyers the option to source more sulfuric acid overseas and create more competition.