US CO2 market will tighten

It’s looking like a long hot summer ahead for the US carbon dioxide (CO2) market, with some areas in the states witnessing a tightening in supply.

The tightening comes amidst an apparent contamination in the raw gas, meaning CO2 firms operating in liquefaction and purification are faced with a contaminated product and cannot fully operate at this time.

It is understood a Tier One industrial gas company in the Mississippi area, where the so-called Jackson Dome has a very significant number of large plants near 1,000 tonnes per day, is experiencing contamination in the raw gas, with similar situations also affecting other plants in the US.

Described as a ‘dire’ situation, the shortage is already being felt by the poultry industry and will soon undoubtably start to strongly hit the wider food and beverage market.

there are a number of ways that CO2 can become contaminated by other compounds, such as oil and grease vapour, rust and pipe scale and plasticiser compounds.

failure to address contamination issues can leave a product at risk of bad tastes, strange odours, spoilage, and product recalls.

In addition to contamination issues, Rushing alluded to more typical ammonia plant challenges, adding.

Ammonia production is a key sourcing route for CO2 production. In fact, ammonia plants have traditionally been one a large sources of food-grade CO2 and while in the past decade other sources of CO2 have been invested in, including those raw gas streams from chemical operations and bioethanol plants, ammonia remains one of the largest sources.

Any shutdown in ammonia/fertiliser plants for an extended period naturally has an impact on the CO2 supply chain at some stage, as we have seen many times; CO2 shortages are almost an annual occurrence, as anyone in the industry knows.

Ammonia is a seasonal feedstock, with the peak production output for fertilisers generally from August to March, or during the winter months; hence why fertiliser companies often plan maintenance or shutdowns from April through to July.

Ammonia as a feedstock occupies a far greater share of the European sourcing pathways for CO2, with bioethanol a more dominant feedstock in the US, however such a fine tightrope of supply and demand means any disruptions to sourcing can have a significant impact. 

The longer this continues, the more difficult supplies will become. As to when it will be resolved, all I can say is that any time since the start of this contamination is too long; all of this leads to much higher prices, allocations, and significant shortages of product.

The above headwinds are also being paired with the ongoing issues related to trailer and driver shortages in various regions of the country, meaning both supliers and customers are going to see business challenges heightened in the coming months.

from:gasworld