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Chemical revenue for the first quarter of $144.6 million was $11.7 million or 9% higher than in the prior year quarter primarily due to higher sales volumes and pricing for sodium chlorate. First quarter gross profit of $65.7 million was $4.6 million higher than in the prior year quarter due to increased sodium chlorate gross profits. Sodium chlorate gross profits increased due to higher sales volumes from strong demand in all markets and the additional contribution from price increases which were implemented during the past 12 months. Sodium chlorate sales volumes increased by 9,000 tonnes or 7% compared to the prior year quarter due to higher demand from all markets as the supply demand fundamentals remain balanced. Chloralkali/potassium products gross profits were consistent with the prior year quarter as higher sales volumes were offset by lower pricing. Sales volumes increased by 7,000 tonnes or 10% due to improved plant operational performance and increased customer demand. Pricing was weaker than the prior year quarter particularly for chlorine which remains soft.

Cash operating and administrative costs of $32.8 million were $0.8 million or 3% higher than in the prior year quarter due to increased employee compensation costs.

Major Capital Projects

As announced in the first quarter of 2012, Superior has approved an $18 million expansion of hydrochloric acid production capacity at the Port Edwards, Wisconsin chloralkali facility. The existing capacity of 110,000 wet metric tonnes (WMT), or 36,000 dry metric tonnes, will be increased to approximately 220,000 WMT. The expansion project commenced in 2012, with commercial production expected in the first quarter of 2014.

As announced in the third quarter of 2012, Superior has approved a $25 million expansion of the hydrochloric acid production capacity at the Saskatoon, Saskatchewan chloralkali facility. The existing capacity of 70,000 WMT, or 22,000 dry metric tonnes, will be increased to approximately 140,000 WMT. The expansion project commenced in 2012, with commercial production expected in the fourth quarter of 2014.

As of Q1 2013, a total of $2.3 million has been spent on the two projects. Upon completion of both projects, Superior will have total hydrochloric acid production capacity of approximately 360,000 WMT. The two expansions will allow Superior to optimize overall returns at both facilities by converting a larger portion of its chlorine into higher-value hydrochloric acid.

Outlook

Superior expects business conditions in 2013 for its Specialty Chemicals business will be similar to 2012. EBITDA from operations, excluding the impact of the $12.5 million one-time payment from TransCanada received in the third quarter of 2012, is anticipated to be modestly higher in 2013 due to improved performance of the chloralkali product segment as a result of higher gross profits from hydrochloric acid and modestly higher selling prices for caustic soda, which will more than offset reduced pricing for chlorine. Superior continues to see a stable market for sodium chlorate as a result of the current market for pulp. Superior also expects a stable market for chloralkali sales volumes and pricing as North American supply demand fundamentals continue to be balanced. The market for chloralkali continues to be supported by historically low natural gas prices.

In addition to the significant assumptions detailed above, refer to "Risk Factors to Superior" for a detailed review of the significant business risks affecting Superior's Specialty Chemicals' segment.