This Week’s Market Buzz

• Demand for raw frac sand is forecast to increase more than 4 percent per year to nearly 100 billion lb. in 2021, according to “Proppants Market in North America,” a new study from The Freedonia Group, a Cleveland-based industry research firm. In value terms, raw frac sand is expected to grow 10 percent per year to more than $3 billion in 2021, reflecting substantial gains in average prices as well as volume growth. Healthy growth is forecast for all types of raw frac sand, although both Northern White and Brady sand will see competition from new mines coming online in West Texas. Growth will be driven by robust gains for this other raw sand, which is expected to show increases of 12 percent per year through 2021. While both Canada and the United States will see demand gains through 2021, the United States is by far the larger user of the material. According to analyst Dan Debelius, “In 2016, the United States accounted for 88 percent of raw frac sand demand.”

• Permian Basin drillers could see logistics costs drop by as much as 40 percent as the planned construction of several frac sand mines in West Texas means hydraulic fracturing in the area will no longer depend on expensive rail transportation to bring sand from Wisconsin. Oil companies pay up to $140 to have a ton of sand shipped by rail to West Texas, but that cost could drop to $85 per ton once producers will be able to buy sand from local mines and haul it by truck, according to IHS Markit.

• Preferred Sands has filed an S-1 form with the U.S. Securities and Exchange Commission (SEC) regarding its initial public offering (IPO). No pricing details were given in the filing, but the offering is valued up to $100 million, although this number is usually just a placeholder. The company intends to list its shares on the New York Stock Exchange under the symbol PSND.

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