In the US merchant carbon dioxide (CO2) market, three new or expanded CO2 source plants came onstream in 2019 while other sources were idled or closed, shrinking the net gain from 2018 to less than 1%. One CO2 plant, delayed from 2019, will come on line in 2020, and no new sources have been announced for 2020.
This slow annual capacity growth, whether due to conditions at CO2 sourcing plants or lack of new sources, is not keeping pace with stronger market demand. Within the US merchant CO2 market, changes in CO2 sources and changes in demand regionally will continue to reshape the business in 2020 as they have over the past decade. The CO2 business is comprised of industrial gas companies and specialized CO2 producers and distributors which supply merchant liquid and dry ice to a wide variety of CO2 markets including food, welding and cutting, and oil and gas. US merchant CO2 represents about $1.5bn in sales per year.
At the end of 2019, US nameplate (NP) CO2 capacity reached 36.1 thousand tons per day (ktpd), an increase of less than 1% from 2018, but only about 0.5% per year over the past five years. This lower capacity growth is not keeping up with CO2 demand which is growing closer to 2.5% per year. The result is tight supply during times of planned and unplanned plant outages and seasonal demand spikes and price increases. Three new sources with a total of 950 ktpd came onstream in 2019. Several of those sources came on by mid-2019, in time to help alleviate the high summer demand. Over that same period several sources were idled, shut down, or had reduced feedstock. Players need to strategically plan for future sources of CO2 to alleviate tight supply and plan to supply future growth. In the US, rail transport is critical to bring product from surplus locations to deficit locations and to back up sources when supply is variable.
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