Sulphur 388 May-Jun 2020
31 May 2020
New realities
“Some measure of social and economic restriction looks set to be with us for months to come”
Ordinarily I try to choose a different subject each issue for an editorial, but as April lengthens towards May, and here in the northern hemisphere we start to see the first signs of summer, there unfortunately remains only one subject that is obsessing every industry, and that is the Covid-19 pandemic and its impact upon every aspect of our lives. Since our last issue we have all had to come to terms with ‘lockdown’ and ‘social distancing’, as the grim toll of deaths climbs in all regions. Here at BCInsight we are working without an office as best we can, and issues of Sulphur will continue to land in your email inboxes, but paper copies of the magazines may take longer to arrive, if at all, as shipping and customs procedures are tightened all around the world, and I can only apologise and ask that you bear with us.
In the meantime, industry conferences are a thing of the past; regular meets such as SOGAT and TSI’s World Sulphur Symposium are postponed to 2021, and it is anyone’s guess when we will be able to see each other face to face again rather than via a webcam. However, in the two months since our last issue, there are at last some encouraging signs. China’s draconian response to the virus seems to have worked, and restrictions are gradually being lifted there. There is a similar story in New Zealand and some parts of Europe. Other parts of the world, however, including the UK where I am writing, and especially the US, remain deeply in the grip of the pandemic. But without a vaccine, which we are told remains 12-18 months away, the potential for more flare-ups and secondary outbreaks remains a very real one, as Singapore discovered only recently. Some measure of social and economic restriction looks set to be with us for months to come.
In the sulphur industry, the main impact so far seems to have been on the refining sector. Air travel is at a virtual standstill, cruise liners are berthed, the mileage being driven by people in lockdown is greatly reduced, and oil tankers are being used to store excess crude. Even though Russia and Saudi Arabia have patched up their dispute, and the US has agreed to coordinate production cuts, oil demand is down by about 30% compared to 2019. WTI forward prices caused headlines by going negative in April for the first time ever. But looking further forward, investment decisions on large sour gas projects are also being reconsidered. ADNOC’s cancellation of its $1.65 billion Dalma Gas Development Project contracts just two months after awarding them is a sign of where things may go. There could be a large overhang of projects whose timescales are pushed a couple of years further down the line.
Conversely, fertilizer demand seems to be holding up, at least for now, as most countries delineate agriculture as a key industry. Some producers have shut down, especially in India, and supply and labour availability issues will also cause disruption, but a recent report from Fertilizers Canada suggested that 90% of its members had sufficient supply in hand and expected that this season will be normal, if not above average, in terms of fertilizer demand and crop production. This suggests that the forecast sulphur surplus may not materialise after all this year, and we may even see a pick up in sulphur prices this year from their historic lows – there are signs that this is already happening. On the other hand, with copper and other smelters also still producing, acid availability is abundant and prices have fallen into negative territory in some supplier nations, no doubt leading to some substitution for sulphur where possible.
For now, the only certainty is for more volatility going forward, and a difficult working environment for all of us. But as the old adage says: “this, too, shall pass”. Let’s hope it is soon.
