Chemical Profile - Sodium Chlorate

09 February 2004 00:00  [Source: ICB Americas]

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SODIUM CHLORATE    February 9, 2004

PRODUCER	CAPACITY*
United States
Atofina, Portland, Ore. (idle)	58
Eka Chemicals, Columbus, Miss.	225
Eka Chemicals, Moses Lake, Wash.	65
Finnchem USA, Augusta, Ga.	150
Finnchem USA, Eastover, S.C.	90
Georgia Gulf, Plaquemine, La. (idle)	27
Kerr-McGee, Hamilton, Miss.	150
Nexen Chemicals, Taft, La. (idle)	135
Erco Worldwide, Valdosta, Ga.	115
Western Electrochemical, Cedar City, Utah	7
Total United States	1,022
Canada
Erco Worldwide, Bruderheim, Alberta	83
Erco Worldwide, Hargrave, Manitoba	44
B.C. Chemicals, Prince George, British Columbia	85
Eka Nobel Canada, Magog, Quebec	165
Eka Nobel Canada, Valleyfield, Quebec	125
Nexen Chemicals, Amherstburg, Ontario	55
Nexen Chemicals, Beauharnois, Quebec	48
Nexen Chemicals, Brandon, Manitoba	190
Nexen Chemicals, Bruderheim, Alberta	75
Nexen Chemicals, Nanaimo, British Columbia	20
PCI Chemicals, Dalhousie, New Brunswick	24
St. Anne Chemical, Nackawic, New Brunswick	11
Erco Worldwide, Buckingham, Quebec	132
Erco Worldwide, Grand Prairie, Alberta	55
Erco Worldwide, Vancouver, British Columbia	101
Erco Worldwide, Saskatoon, Saskatchewan	55
Erco Worldwide, Thunder Bay, Ontario	55
Total Canada	1,323

Integrated with pulp mill ClO2 generators

(Seven sites, U.S. and Canada)115

Total, North America2,460

Last year, Erco Worldwide (a division of Superior Erco Inc., Calgary, Alberta, Canada) acquired Albchem Holdings Ltd. with its chlorate plants in Bruderheim, Alberta, Canada, and Hargrave, Manitoba, Canada. In 2002, Superior purchased the former Sterling Pulp Chemicals Inc. with chlorate plants in Valdosta, Ga.; Buckingham, Quebec, Canada, Grand Prairie, Alberta, Canada; Vancouver, British Columbia, Canada; Saskatoon, Saskatchewan, Canada; and Thunder Bay, Ontario, Canada. Atofina's plant in Portland, Ore., was formerly Elf Atochem. Atofina was formed in 2000 by the merger of Elf Atochem with TotalFina. In 2001, the company mothballed its plant in Portland, Ore., due to high energy costs. Finnchem USA purchased the Huron Tech Corp. in 2000 and acquired chlorate plants in Augusta, Ga., and Eastover, S.C., with capacities of 145 thousand and 90 thousand short tons, respectively. Huron Tech closed a smaller plant in Claiborne, Ala., with 40 thousand tons of capacity, when the company commissioned its new facility in Eastover, in 1999. In 2002, Georgia Gulf Corp. idled its 27 thousand ton sodium chlorate plant at Plaquemine, La., and Nexen Chemicals idled 50 thousand tons, of a total 130 thousand, at Taft. La. Nexen was the CXY Chemicals division of Occidental Petroleum Corp. until it was renamed in November 2000. In 2002, Nexen increased production capability at its Brandon, Manitoba, Canada, facility by 77 thousand tons, raising total capacity at that site to 190 thousand short tons. In 2003, Nexen idled the remaining capacity at Taft, La., 70 thousand short tons. Eka Chemicals is an operating unit of Akzo Nobel (Arnhem, the Netherlands). Western Electrochemical Company's production at Cedar City, Utah, is captive and used to produce ammonium, potassium and sodium perchlorates. Profile last published 2/22/99; this revision, 2/9/04.

DEMAND
(Estimated US demand)
2001: 1,370 thousand short tons; 2002: 1,405 thousand short tons; 2006: 1,580 thousand short tons, projected. Demand equals production plus imports (2001: 545 thousand short tons; 2002: 581 thousand short tons) less exports (2001: 36 thousand short tons; 2002: 44 thousand short tons).

PRICE
Historical (1997-2002): High, $450 per ton, list, bulk, crystal, t.c./t.t., works; low, $450 per ton, same basis. Current: $450 per ton, same basis. Current contract: $385 to $450 per ton, same basis.

GROWTH
Historical (1997-2002): 2.9 percent per year; Future: 3.0 percent per year through 2006.*Thousand short tons per year, both solution and crystal material, 100 percent NaClO3 basis. Commercial production is by electrolysis of a sodium chloride solution using diaphragm cells.

USES
Pulp bleaching, 96 percent; miscellaneous, including perchlorates and sodium chlorite, herbicides and uranium mining, 4 percent. For pulp bleaching, sodium chlorate is used to manufacture chlorine dioxide, the bleaching agent, on-site at the pulp mill.

STRENGTH
In 1998, the Environmental Protection Agency ruled that chlorine, which had come under attack because of concerns about dioxins and organic halides in pulp mill effluents, could be replaced with chlorine dioxide. The choice of elemental chlorine free (ECF) bleaching over total chlorine-free bleaching, boosted the demand for sodium chlorate, a precursor for the production of chlorine dioxide. The deadline for implementing the environmentally friendly technology passed in April 2001. Until April 2001, the conversion to ECF bleaching was a key demand driver in the sodium chlorate market. Since then, the sodium chlorate industry has stabilized and future growth will parallel the demand for bleached paper products. For 2003, the economy grew at 3.1 percent-the best performance since 2000 and an improvement over the 2.2 percent increase in 2002. As the pulp and paper industry is directly tied to the country's GDP, sodium chlorate will do well with the continuing economic recovery.

WEAKNESS
Spikes in energy costs during the past several years have reduced producer margins, driving price increases. Unfortunately, the product is consumed by another energy intensive industry, pulp and paper, which cannot easily pass increases on to customers. Increasing energy costs in recent years prompted several plants in the U.S. to be idled. These plants amount to about 20 percent of U.S. capacity.

OUTLOOK
With several plants idled because of their locations in high energy cost areas, the industry is now tight on the supply side. The overall operating rate is better than 90 percent. Imported material, chiefly from Canada, will make up near-term growth requirements. Sodium chlorate demand growth is anticipated to be 4 percent this year as the economy continues to improve and paper inventories are replenished, requiring more bleached wood pulp. For 2005 and beyond, sodium chlorate will keep pace with the pulp and paper industry, which should mirror GDP growth. Long term, however, pulp production will decline in the U.S. as it moves to offshore areas such as South East Asia and Latin America. Demand for sodium chlorate will likewise decline. For the forecasted period, demand growth for sodium chlorate is expected to be 3 percent per year.