North America Sodium Chlorate: During the fourth quarter of 2012, pulp markets generally enjoyed modestly stronger demand and improved conditions over the previous quarter. Some new capacity was restarted in the fourth quarter, but its impact on the markets was mostly offset by the announced capacity closures at two Canadian mills. Combined producer inventories in December held at 32 days, which is considered to be a well-balanced level given current fundamentals. Softwood pulp levels rose by three days from November to December ending at 29 days, while hardwood inventories decreased by five days over the same period, ending at 34 days. Producers of both fibre types took advantage of the favourable dynamics to introduce price increases, attempting to regain some of the pricing erosion incurred earlier in the year. There is the potential for additional price increases in 2013 if current conditions are sustained. Global pulp shipments closed the year on a positive note, with an increase of 2.6% over 2011 volumes. Much of the growth in 2012 was due to another strong year for Chinese imports which increased by 9.7% year-over-year.
As bleached pulp production was stable throughout the quarter, demand for sodium chlorate was also stable. Exports of sodium chlorate from North America in 2012 were 9% lower than 2011 volumes. While North American domestic demand for sodium chlorate was impacted by recent mill closures in Canada, the overall net impact was positive for the year due to the new demand that came online in the third and fourth quarters. Operating rates for the North American sodium chlorate industry are expected to remain strong, at approximately 95% for 2013.
North America Chlor-alkali: The North American chlor-alkali industry operated at an estimated 82% of capacity in the fourth quarter of 2012, compared to 83% in the third quarter and 77% in the fourth quarter of 2011. Industry capacity utilization did not decline as much as expected in the fourth quarter due to stronger demand for Polyvinyl Chloride ("PVC"). Utilization rates increased to 88% in December and are expected to hold in the mid-80's% through the first quarter of 2013 due to higher demand and inventory restocking in advance of the construction season.
North American hydrochloric acid supply was reduced in the fourth quarter of 2012 due to several planned maintenance outages in the U.S. gulf coast region. In the Pacific Northwest region, new burner capacity at a competitive facility was commissioned and began production. Hydrochloric acid demand was balanced with improved oil well fracturing activity in Western Canada increasing demand but being partially offset by reduced drilling and fracturing in the U.S. Supply in the first quarter of 2013 is expected to increase due to higher operating rates from the by-product producers in the U.S. gulf coast region while demand is also expected to improve in Western Canada due to an increase in fracturing activity.
North American caustic soda production was marginally reduced in the fourth quarter of 2012, consistent with lower chlorine operating rates while demand remained strong from most consuming segments. Export supply from Asia to the west coast of Canada and the U.S. increased late in the fourth quarter due to apparent weakness in domestic demand in China and Japan, as well as in export demand from China and Japan to other regions.
MECU prices did not change in the fourth quarter of 2012 from the prior quarter. Prices for caustic soda and hydrochloric acid are expected to decline in the first quarter of 2013 due to oversupply conditions.
Most Popular Stories
- Twitter Names Woman to Board
- NSA Tracks 5 Billion Cellphone Records a Day
- Nelson Mandela Dies After Momentous Life
- Ford Mustang Still Packs Power
- W.H. Corrects Itself on Unclegate
- Nelson Mandela Dead at 95
- Fast-Food Workers Want $15 an Hour
- Roybal-Allard Tours Gordon Brush Plant
- Aspen Contracting Adding 300 Jobs
- Pope Francis Says He'll Fight Child Sex Abuse