Focus article by Bill Bowen
HOUSTON (ICIS)--US hydrochloric acid (HCl) prices jumped higher during the week as plant outages tightened supply in the face of steadily rising demand from the oilfield.
Prices at the plant moved up by an average of $45/wet ton for 22-degree Baume material ex works US Gulf, as three major producers of acid as a by-product suffered outages or planned maintenance turnarounds.
Delivered prices to the oilfield site were heard at a range of $185-200/wet ton DEL, up about $50/ton from April business.
“I think it’s a temporary situation,” one distributor said on Thursday. “But after so long of prices being on the bottom, right now, everybody wants to make money while they can.
“I don’t blame them,” the source said.
Prices inched up through May after producers in late April separately announced increases of $20-30/wet ton, effective immediately or as contracts allowed, most of those taking some of the proposed increases for June.
But now several producers have separately added increases of $45/ton DEL for July contracts and immediately for spot business.
US HCl prices have coasted along a bottom since the collapse of crude oil prices in 2015 and with the decline in drilling activity.
US HCl has seen a surge in demand with the development of shale oil and gas fields. HCl is used to clear out bore holes before the hydraulic fracturing process, which breaks up shale to release the tight petroleum.
Drilling activity bottomed out in May 2016 and has been climbing ever since, slowly increasing demand for acid, according to the rig count by Baker Hughes, the oilfield tool and technology company.
Price increase announcements since late 2016 have had limited acceptance in the market, as some distributors held back to gain market share.
But the recent outages, some caused by high water levels on the Mississippi river that disrupted barge delivery of feedstocks to some plants that make acid as a by-product, have given price increases a better chance of success in the market.
The water is receding, and logistics are improving, market sources in the region said.
"It's getting better," a representative of one of the affected producers said.
Still, at least three significant plants were heard to be suffering outages or reduced production, one of which was planned.
Major US producers of HCl include Olin, Formosa Plastics, Westlake Chemical, BASF, Covestro, Huntsman, Honeywell and Jones-Hamilton.
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