Supply is being impacted by multiple plant maintenance and temporary shutdowns, which is impacting independent gas distributors and customers in the food and drink industry.
Some major industrial gas companies are on force majeure in certain states like Arizona, and there are ethanol and ammonia plants down in the Midwest, with some customers on 50% allocation, according to sources.
Customers on the East Coast have been impacted, while over on the West Coast California also has some plants down.
CO2 demand in northern California has outpaced production so the product is being brought into the area via rail car and road, which adds to distribution costs and is driving up CO2 prices, according to sources close to the situation.
In California, gasworld understands the Stockton and Keyes CO2 plants have been closed while some ammonia plants across the US are reduced following the planting season.
American Carbonation Corporation is a supplier of liquid CO2 and related equipment and services from its Palmer, Massachusetts base and its customers include beverage and food businesses. American Carbonation Corporation, which serves Mid-Atlantic States and New England, has been experiencing supply shortages which impact its CO2 and dry ice customers.
Tim Koerner, Chief Sales and Service Officer at American Carbonation Corporation, told gasworld, “It is definitely one of the worst supply shortages we have seen. We service the Northeast for CO2 and dry ice and the demand is well outstripping the supply. We’ve heard the West Coast is also in a dire situation for CO2 supply.”
Steve Atkins, Executive Vice-President, Gases at nexAir, says the Tennessee-based, industrial and medical gas distributor has been able to buy additional liquid CO2 (LCO2) to meet increased demand.
“We are seeing an overall tightening of LCO2 supply in the Southeastern US,” Atkins told gasworld.
“We have been flooded with calls since May-June from competitively served customers requesting LCO2 or dry ice. There have been several CO2 plants affected by feedstock and equipment issues. There are several CO2 plants and customers under allocation. One of our suppliers can only get 100% of their volume which has been challenging with growing customer volumes and supporting new business.
“nexAir has not been affected from our two main sources and we have been able to purchase additional LCO2 to meet increase ice demand and spot LCO2 loads. The only allocation (50%) we have today is from Linde out of their Florida rail depot. This has been challenging but we have not had any customer or plant runouts.”
nexAir has 73 locations across eight states including in Tennessee, Arkansas, Mississippi, Alabama, Florida, Georgia, and Kentucky.
Atkins added, “Peak CO2 season, May to October, means extra challenges for CO2 suppliers. Demand goes up and plants don’t run as well or efficiently in the warm/hot months. Throw in a few plant interruptions, and many customers suffer from reduced supply.”
The US experienced CO2 shortages and concerns last year (May-October) after shutdowns to stop the spread of coronavirus (Covid-19) resulted in a drop in ethanol production, and Koerner believes the CO2 is still being impacted by these shutdowns.
“Going into March 2020, pre Covid shutdowns, I would say industry nationwide was at best operating on a small margin between supply and demand,” Koerner said.
“Anytime a plant went down, it would have a domino effect but we were able to weather shutdowns OK, we rarely had to have an allocation out to customers for product. Since March 2020, everything has changed. Many of the ethanol plants that shutdown in the beginning of the lockdowns did not end up coming back.
“Also during this period demand surged for dry ice [due to Covid vaccine transport, home food delivery services, other pharmaceutical use]. Here in the northeast the largest local ethanol plant located in Fulton, New York never came back after it shut down in March 2020. That has been a killer for supply up here in the northeast. Messer rails in product now from elsewhere which takes away volume from other parts of the country.”
Koerner says American Carbonation Corporation’s customers are on CO2 allocation because of plant shutdowns and is also concerned about the situation in Canada.
“Right now, I can count three CO2 plants down that supply the northeast,” Koerner said.
“We are on an allocation to our customers and it seems like nobody is getting the product they want because demand has increased if anything. Rail service in Canada is also very rough at this point. We’ve been cut back to half our normal switches up there over the last month, they can’t seem to get the help they need to run normal operations. Our local railroad here in New England has been great to work with and service has been stellar over the Covid period but if they can’t get the cars in from the Canadians, there isn’t much they can do. I think it’s a matter of getting people back to work north of the border. I can only speak to Quebec service, I’m not sure if this is country wide up there.”
Koerner added, “The Canadian rail service is a fixable thing but the CO2 supply is not something you can snap your fingers and fix overnight.”
Sam Rushing, President of Advanced Cryogenics, Ltd, says he has been told of CO2 shortages across the US.
“We are in a time of CO2 shortages once again, with shortages on the West Coast, the Midwest, and the Mid-Atlantic and Northeast,” Rushing told gasworld.
“In the Northeast, the plant sourced from ethanol in Fulton never reopened since the initial shutdown driven by Covid in the spring of 2020 – much of this is due to economics surrounding higher corn prices hauled in from the Midwest verus local supplies. Shortages are also because of the loss of product from the hydrogen source in St Johns, NB, and the ethanol source in Pennsylvania is apparently not producing product. I am also told some of this is due to an untimely turnaround period for both the ethanol. As to the turnaround, this should ease for some plants within a couple of weeks, I am told. The Canadian railroads are also having problems shipping filled cars, some are stuck along their lines, and one of the reasons is personnel and Covid. This would mean problems for product availability in eastern Canada.”
Rushing added, “As to the Midwest, I understand ethanol sources are unable to supply in some cases, as well as those on the west coast which in part is due to seasonal turnarounds. The turnarounds should be completed in a couple of weeks, however price spikes are said to be significant in some cases, as well as allocations underway.”