Lime Demand Strengthens

20 December 2004 00:01  [Source: ICB Americas]

The domestic lime market is being pressured by high energy costs and tougher government regulations, but demand has increased by more than a million metric tons for the second year in a row. Consumption had declined for four successive years before it rose by 7 percent in 2003 and another 4 to 5 percent in 2004.

Michael Miller, lime specialist for the US Geological Survey’s minerals information team, says the market has been strong this year, led by vigorous demand from the steel sector. “We are estimating that domestic production, which accounts for 99 percent of US consumption, will increase by more than 1 million metric tons in 2004 to about 20.4 million metric tons,” he says. For 2005, demand should remain healthy, although the market is unlikely to grow as rapidly as it did in 2004.

Environmental regulations are pressuring the market. In 2003, the Environmental Protection Agency (EPA) issued tighter rules on air pollution from lime plants. New plants have to comply immediately, while existing plants have until January 2007. Also in 2003, the National Lime Association (NLA) signed an agreement with the Department of Energy to voluntarily reduce carbon dioxide emissions by 8 percent between 2002 and 2012.

“It was understood that the lime industry cannot reduce emissions from the calcination of limestone, so the agreement focused on achieving energy-related reductions in emissions,” Mr. Miller says. “In response to this agreement, in 2004, NLA members held discussions on an array of methods to reduce emissions of carbon dioxide from lime plants.”

Energy costs are also having a major impact on the lime industry. The run-up in natural gas prices has prompted the industry to switch almost entirely to coal and coke for firing kilns, and higher prices for transportation fuels have raised delivery costs and the costs of operating quarries and plants.

“Coal prices and supply are a major cause for concern,” a lime producer says. “Coal is in tight supply, and natural gas is, of course, much worse, although the industry has largely switched away from gas.” He adds that price increases for lime have been successful, but they have only balanced energy costs, and producers are “still playing catch-up” on maintenance.

Mr. Miller says that based on preliminary data supplied by the five largest lime manufacturers, the government projects that quicklime prices for the year will be around $65 per metric ton, an increase of 6 percent compared to 2003. “Average unit values for hydrate are more volatile depending on how much hydrate is produced and sold into the soil stabilization market, primarily in Texas,” he adds.

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