01 May 2013 21:45 [Source: ICIS news]
HOUSTON (ICIS)--New US regulations for mercury removal for coal-fired power plants should boost demand for activated carbon when the rules take effect in 2015, carbon-black producer Cabot said on Wednesday.
Activated carbon is used to remove mercury in flue-gas streams. The main raw material of activated carbon is coal.
Cabot is seeing strong signs that the new Mercury and Air Toxics Standards (MATS) will be implemented in April 2015, said Patrick Prevost, Cabot CEO. He made his comments during an earnings conference call.
The new rules could cause a four-fold increase in demand for activated carbon, Prevost said.
"We clearly believe that pricing should improve dramatically as a result of that," he said. "As you look forward, there is not enough capacity in the system to meet the demands of 2015 and beyond. That will put a significant amount of pressure on pricing."
For now, North America actually has too much activated-carbon capacity, Prevost said.
In fact, Cabot's second-quarter volumes were down 15%, partly because power plants had switched to natural gas from coal, he said.
The advent of shale gas has caused natural gas prices to drop, and power plants have responded by switching fuels.
In addition, power plants have become more efficient in using activated carbon, so they need to purchase less of the material, Prevost said.
Because utilities are using activated carbon more efficiently, any increase in coal consumption – brought on by rising natural gas prices – would not result in a similar increase in activated coal demand as in years past, Prevost said.
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