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Utilities face 'significant' chemical supply issueser fie

4/9/2009 Technical, National News

from Water Technology Online www.watertechonline.com

ALEXANDRIA, VA — Drinking water and wastewater utilities have been experiencing a “significant” chemical supply issue, namely price increases and shortages, in the last several years, according to a new report seeking to help utilities develop strategies to address the issue.

Supply of Critical Drinking Water and Wastewater Treatment Chemicals – A White Paper for Understanding Recent Chemical Price Increases and Shortages [Rapid Response Project #4225], funded in part by Water Environment Research Foundation (WERF), examines what is known about the emerging chemical supply issue, and the driving forces behind it.

According to the paper’s executive summary, the emerging chemical supply issue has “implications for utility finance, regulatory compliance, public and environmental health, security, and long-term utility sustainability.”

Influencing the behavior of the water treatment market since 2003 were two factors: the worldwide commodity price boom from 2003-2008 and the subsequent bust in mid-2008. According to the paper, prior to the bust the shortage of water treatment chemicals, such as phosphorus, was attributed to competing demands for the same input; following the bust, shortages were led by lack of production in some processes that generate byproducts used for water treatment, such as fluoride and caustic soda.

The paper is based on two surveys of water and wastewater utilities: a US survey conducted in January 2009 and a UK survey conducted one month later. Each survey asked respondents to compare current unit cost for treatment chemicals with unit cost one year ago.

Regarding the US survey:

● Phosphoric acid showed the largest average percent price increase of any chemical in the survey, at 227 percent, based on responses from 11 utilities reporting phosphoric acid use. The largest reported increase was 586 percent, and the lowest was 0 percent (a long-term contract may have been in place), with the lowest non-zero increase at 95 percent.

● Caustic soda showed an 81 average percent price increase, with responses from 23 utilities reporting caustic soda use.

● Thirty-six utilities reported using fluoride; the greatest number of utilities reported using one chemical: fluorosilicic acid. Its average reported price increase was 45 percent.

UK water and wastewater utilities were invited to respond to the same survey with slight revisions. Seven out of 26 utilities responded to the UK survey; they said the two chemicals with the greatest price increases are:

● Phosphoric acid, with an average percent increase at 175 percent, based on five utilities reporting phosphoric acid use.

● Caustic soda, with a 52 percent average increase, based on six utilities reporting caustic soda use.

WERF said the paper, completed in conjunction with research partners the American Water Works Association (AWWA) and the UK Water Industry Research Limited (UKWIR), also describes more about the treatment chemical supply issue, such as identifying critical knowledge gaps and potential research needs; identifying important stakeholders and potential sources of information that can help inform; and clarifying the issue. The authors developed recommendations for next steps toward resolving or effectively managing the issue.

This report was posted on the WERF Web site in March, and can be accessed for free. WERF said a fully edited printed report will be made available this summer.

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