OUTLOOK ’19: US HCl market expects stronger demand, firming prices

HOUSTON (ICIS)–The US hydrochloric acid (HCl) market is anticipating a growth year in 2019, with firmer oil prices and greater demand for acid in the hydraulic fracturing drilling process.

That demand would float on top of solid demand from industrial users and users of acid to process other chemicals, stressing US supplies and pushing prices higher.

US HCl prices firmed by an average 20% over the past 12 months, as rising oil prices increase drilling activity.  The ICIS assessment now puts the range at $130-175/wet ton ex works US Gulf.

This has helped even out some contract levels, where prices are more comparable among similar-size volume users, even among industrial users, to levels more in line with demand.

But oilfield demand growth – and retraction – have been the driving factor in the market regarding prices.

Acid is used in the hydraulic fracturing process to further widen the cracks and crevices in shale rock to make the most of the hydraulic pounding and to release the most oil or natural gas trapped in the rock.

The coming year holds expectations of more activity in US energy fields.

US exploration companies have widely said they plan to expand drilling operations in 2019. Generally firmer oil prices are expected for the year with sanctions on Iran being part of the catalyst and economic need among oil-producing countries for higher prices driving providing further upward pressure.

Higher oil prices make drilling operations more feasible.

However, oilfield users have found ways to reduce the amount of acid they use on each bore hole and have found other efficiencies that save time and costs throughout the drilling process. Therefore, the demand growth is expected to be steadier than in 2014, when oil prices shot skyward and HCl demand also went through the roof, along with prices.

Acid prices are not expected to spike, as they did then, to $600/wet ton – or to even above $1,000/wet ton for acid delivered to oil wells needing prompt delivery or face severe cost increases by stalled operations. Buyers are smarter, now.

Exploration service companies are also watching acid prices and availability and are buying more wisely as distribution systems widen with new tanks and terminals in West Texas and New Mexico, and acid is more readily available throughout the drilling region.

Major US acid producers include Olin, Huntsman, BASF, Covestro, OxyChem and others.

Focus article by Bill Bowen

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