27 July 1998 00:00 [Source: ICB Americas]FMC Corporation will mothball its original 100-million-pound hydrogen peroxide production line at its facility in Bayport, Tex., reducing the company's North American capacity by nearly 25 percent. FMC says the mothballed capacity will not be needed for the foreseeable future and the closure will reduce costs.
The company stresses that the reduction in its capacity will not affect its ability to supply current and anticipated near-term customers, though it partially reduces the substantial capacity underutilization that has plagued both the company and the industry.
FMC expanded the Bayport site by 140 million pounds in 1996 based on demand projections that never materialized. That new capacity will remain in operation.
Other peroxide producers also raised their capacities in anticipation of stringent government legislation to reduce the use of chlorine in pulp bleaching.
Two years ago, EPA was believed to be leaning toward total chlorine free (TCF) bleaching rather than elemental chlorine free (ECF) bleaching, but ECF prevailed. TCF would have required far more hydrogen peroxide than ECF, which allows pulp manufacturers to use chlorine dioxide made from sodium chlorate.
The emergence of ECF bleaching, coupled with a recession in the pulp industry in early 1996, have been the leading causes of oversupply in the peroxide industry. Peroxide producers planned their expansions based on the 10 percent annual growth H2O2 enjoyed over the past decade and an expected continuation of such growth through 2000.
"FMC has commoditized its cost structure over the last 12 to 18 months and significant cost improvements have been achieved in all aspects of our business," says Dan Summers, the company's business manager for hydrogen peroxide. "However, these costs reductions have been unable to offset the failure of expected demand to materialize."
Mr. Summers calls the mothballing of underutilized capacity at Bayport an unpleasant but necessary response to the current market.
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