Iron supply hangs
David O'Connell, director of Water Treatment Solutions, examines the external factors threatening to unbalance the market for iron coagulants
All major water utilities purchase iron coagulants as a primary chemical for water treatment - in the UK alone, their estimated consumption was more than 200,000 tonnes in 2003. Iron coagulants perform a variety of roles, including the removal of impurities by precipitating metal salts in raw water and forming semi-solid mass, which can then be removed. They are also used to remove phosphates, allowing utilities to meet water quality directives. Both the supply and demand for iron coagulants has begun to alter radically in recent months and dramatic changes are forecast in the next two to three years. These raise serious issues for users, suppliers and the regulatory authorities.
Three main iron coagulants are currently available, which are, in ascending order of price, ferrous chloride, ferric sulphate and ferric chloride. Both ferrous chloride and ferric sulphate are significant by-products of other industrial processes, with low intrinsic production costs. In fact, transport costs can often be the major influence on product pricing. Ferric chloride has some technical advantages compared to the other two but is more expensive to produce. The utilities' choice of coagulant has largely been based upon raw water quality and the extent to which the cheaper products meet the consent and treatment requirements, price, location and the relatively conservative nature of the sector.Demand and supply
Demand for iron coagulants is growing for several reasons. Water consumption, and therefore treatment, is growing with the population. EU legislation and the ageing water and sewerage infrastructure means the utilities have to implement massive capital investment programmes. More water treatment generally requires more chemicals, including iron coagulants. Although estimates of increased consumption vary from region to region, total iron consumption could well be around 300,000 tonnes by 2010 in the UK. Iron coagulant supply is, however, in decline and faces further threats before 2010.
Ferric sulphate in particular is a by-product of a major industrial process whose capacity will be reduced by 50% in early 2005. The raw material for ferric sulphate can and is being imported to replace indigenous manufacture. However the raw material is difficult to handle and there are substantial logistical issues and costs.
To add to the supply-side pressures, EU legislation in the cement sector that comes into effect in 2005 is creating a substantial new demand for ferrous sulphate, the precursor to ferric sulphate. Cement contains chrome (VI), which is considered to be extremely harmful to skin. To reduce the risk of contamination, dry ferrous chloride will be added to cement to reduce chrome (VI) to chrome (III) Although relatively small volumes of cement are sold in bags, the cement industry has elected to treat most cement production with ferrous sulphate. Ferrous sulphate needs to be dried to meet the cement industry's requirements and is expected to provide much higher financial returns to suppliers than the prices in the water sector have typically generated. It is difficult to estimate the eventual demand for ferrous sulphate in the cement sector but in the UK manufacturers are likely to use up to 50,000t/pa.
The water utilities can upgrade from ferric sulphate to ferric chloride in many applications, but the ferric chloride production process requires scrap steel, which has become expensive because dealers can export to China. Chinese demand for scrap is so voracious that there are stories of drain covers are being stolen for sale in export markets. As ferric chloride demand is strong, the main UK supplier is seeking support from users against the cost uncertainties. Like the other coagulants, ferric chloride is difficult to import because it requires specialist chemical haulage.Alternative chemicals
Coagulant users can also try other types of chemicals. Aluminum-based coagulants are extensively used in parts of Europe. However, their use in phosphate removal is severely restricted in some regions.
Aluminum products also tend to be more expensive to use as there is less metal content per product tonne. Coagulant users are also considering whether to increase the application of flocculants. Flocculants are generally used in the treatment process after coagulation but they have been upwards of 30 times the price of the coagulant on a per tonne basis and are used in much smaller quantities. In late 2004, flocculants have experienced the product shortages and price inflation affecting many organic chemicals Therefore flocculants are not providing utilities with any escape from the coagulants issues.
Three years ago, many experts felt that coagulant demand would begin falling by 2005, as biological treatment would start to replace chemical treatment. However, biological treatment requires massive capital investment. The financial pressures on the utilities to meet the forthcoming 2005-2010 investment programmes are such that, even with higher unit costs per tonne, chemicals are unlikely to be replaced by biological treatment.
There will be an imbalance between supply and demand during the next five years, and particularly from 2006-2007 onwards as new treatment works come online. No doubt suppliers will make investments to meet some of the demand, but the chemical industry will be under pressure from its shareholders not to over invest after identifying new demand and subsequently fail to perform financially. A new level of technical, commercial and financial co-operation will be required between users, suppliers and regulators to use the most suitable coagulant at each point of use and meet the needs of all.