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Sulphur 387 Mar-Apr 2020

31 March 2020

Market Outlook

Market Outlook

Historical price trends $/tonne

SULPHUR

  • Middle East supply will return to normal at the start of the second quarter with bottlenecks in the UAE and maintenance in Saudi Arabia at an end. But this is unlikely to result in lower Middle East f.o.b. prices until the second half of April, if not early May. This is because buyers who found it hard to find March loading cargoes will snap up any April product as soon as it’s made available.
  • Russian tonnes will return to the market in the second quarter with the opening of the Volga Don river system for the transportation season. But, all of this product will be directed to the North African and Latin American contract markets as supplier GazpromExport does not expect to have any sulphur for spot sale in 2Q. This will limit spot activity in the Black and Baltic Seas to small parcels of Russian sulphur from other suppliers and sulphur of Kazakh origin.
  • The evolution and fallout of the coronavirus is still being monitored closely by the market and is the biggest market variable. The impact of the virus has had an influence on freight so far, pushing rates up on routes to China with ship owners less than enthusiastic to send vessels there because of quarantine policies. But, as the virus moves across the globe, rates on other key market routes will likely increase for the same reason, impacting both fob netbacks as well as c.fr prices.

SULPHURIC ACID

  • There are mixed expectations as to if the floor has been met in Asian markets on both an f.o.b. and c.fr level. All eyes are on the Chinese market as any improvement in regional prices are only likely to come when logistics and the general supply chain in the country normalises. But a pause in price softening is expected in Asia in the very near term as significant volumes have recently been picked up on the spot market.
  • Smelter acid has also been displacing burner production in some areas of the country where logistics have permitted it, but not to a great enough extent to reduce pressure on base metal producers completely. There are still further declines expected in the North American markets, especially considering the arbitrage opportunities which are currently open from Asia. But, if the region continues to look towards its more traditional supply markets, increasing freight rates between Europe and the US could slow c.fr price softening.
  • The phosphates sector is of course still one of the biggest influencers no the market and in the long run, until there is a significant recovery, no real recovery will be felt in the sulphuric acid market. But stable to firm demand from the mining sector of the demand-side will mean that some regional prices will find intermittent support.

Latest in Outlook & Reviews

Running the gamut

This issue of Sulphur magazine contains a preview of CRU’s Sulphur + Sulphuric Acid conference in Woodlands, Texas, which is being held from November 3rd to 5th this year, giving delegates the opportunity to meet and discuss some of the trends which are continuing to change the sulphur and sulphuric acid industries. Some of this is echoed in our editorial coverage this issue; the rise of electric vehicles and the continuing electrification of society is changing demand for metals and impacting upon both sulphur and sulphuric acid markets alike. As CRU’s principal analyst Peter Harrison discusses on pages 36-37, battery demand for nickel is leading to a surge in new nickel leaching capacity in Indonesia which is drawing in greatly increased volumes of sulphur, while rising demand for copper is leading to additional volumes of smelter acid from China, India and Indonesia which are impacting the merchant market for acid, as detailed by CRU’s Viviana Alvorado on pages 38-40. In the United States, new lithium mines will require additional sulphur (see pages 22-23). Rare earths and battery metal recovery will form a major topic on the first day of the Sulphur + Sulphuric Acid conference, with speakers from Lithium Americas, one of the pioneers of the new US lithium industry.

Is the world ready for CBAM?

At the end of this year, the European Union’s Carbon Border Adjustment Mechanism (CBAM) will move from its transitional phase into its ‘definitive’ phase, whereby the carbon costs of goods entering the EU will need to be priced in. CBAM requires suppliers to calculate the carbon emissions of their fertilizer (and other, e.g. steel) products, including indirect emissions, for example from electricity consumed in the process, and emissions of precursor or raw materials. They will then need to purchase CBAM certificates to cover embedded emissions above the established free allowance benchmark rates determined by the European Commission: 1.57 tonnes CO2e/tonne ammonia and 0.23 tCO2e/t nitric acid.