TSI World Sulphur Symposium 2023

CONFERENCE REPORT

TSI World Sulphur Symposium 2023

The Sulphur Institute (TSI) held its World Sulphur Symposium in Edinburgh from April 25th to 27th.

This was the first return to a face to face meeting for TSI since 2019’s conference in Prague, after three years of disruption due to the covid pandemic. The venue was the old Caledonian Hotel in Edinburgh, now the Waldorf-Astoria, looking out onto Princes Street and the castle, and the conference came complete with pipers and whisky tasting.

Introducing the conference, TSI president and CEO John Bryant began with presenting the answers to an illuminating questionnaire posed to TSI members, asking them, among other things, what their biggest supply headache was (rail services, sulphur supply, trade flow shifts and associated uncertainties); what impact the Ukraine war and sanctions had had upon them (price volatility, supply security concerns, inflationary pressure on energy prices, and general uncertainty); and what issues and opportunities they were most concerned about (lithium and competition for sulphur, rail transport, supply chain optimisation, the US Inflation Reduction Act, crude slates and price volatility). Asked to rank the most impactful issues on business over the next 12 months, most led with inflation, government policies and decarbonisation, with covid, interestingly, placed last.

Global economic outlook

The conference proper began with a global economic outlook presented by Andrei Potlogea, assistant professor of economics at the University of Edinburgh, once home to Adam Smith himself. Last year had seen the global economy emerge from the pandemic. Demand had outstripped supply, leading to inflation, policy tightening and labour shortages. The Ukraine war had compounded this with disruptions to supply chains, and a spike in food and commodity prices, ameliorated slightly by government price support to households. But economies had proved more resilient than expected, and the energy and commodity price spikes are abating, and shipping rates have fallen back to pre-pandemic levels. China’s economy has also been expanding post-covid. Some weaknesses remain. Inflation is proving persistent, and bank collapses have highlighted financial system fragility. There is high indebtedness, and geopolitical tensions remain high. Global GDP forecasts are for a 2.8% rise this year and 3.0% next, well below trend, and especially sluggish in developed economies. There has been ‘deglobalisation’ and a decline in foreign direct investment since the 2007 financial crisis, and China faces a real estate bubble. Nevertheless, there are reasons for optimism. Labour shortages may drive productivity growth, there is a stock of savings from the pandemic, and some expansionary industrial policies such as the US IRA. There are also signs that a period of technological stagnation may be ending with new developments in vaccines, self-driving cars and artificial intelligence.

Edinburgh Castle.

PHOTO: SONGQUAN DENG/SHUTTERSTOCK.COM

Energy futures

Paul McConnell of S&P Global outlined a range of scenarios for the energy transition out to 2050. In the short term, he said, EU gas demand has fallen in response to the Ukraine crisis and European supply has shifted decisively from Russia to LNG. Despite progress on the energy transition, China continues to produce record amounts of coal. On the other hand, renewables demand has consistently exceeded expectations, and oil demand has fallen more than expected. But questions remained: can developing Asia, especially India, swing the balance on decarbonisation? And can institutions, governments and companies deliver on the commitments they have made? Paul foresaw electrification of end use demand and an expanding role for renewables across all outlooks, but mainly post-2030. Thereafter, liquids demand depends on electric vehicle penetration and gas demand depends on renewable power penetration.

Dry bulk freight

Ghigo Ravano of shipbrokers IFCHOR described the dry bulk freight market, via which most sulphur is traded. Freight rates peaked in mid-2021 and have been in decline since then. Lots of ships were built in the period 2005-2015 leading to overcapacity, since when there has been a major correction and very few ships built in the period 2015-2020. Net fleet growth is very small at present (approximately zero in the Handy-size class). The order book: fleet ratio is at a 10-year low. Many fleet owners are putting off decisions on new ships until it becomes clearer what the future fuel situation will be, with low carbon ammonia and methanol, LNG, biodiesel and even nuclear all under consideration. This may lead to a supply bottleneck in a few years. Demand for minor bulks (including sulphur) has been growing well, with exports up 2% year on year.

Sulphur as a nutrient

Wednesday ended with a paper by Dr Ismail Cakmak from Sabanci University in Turkey, leading into an afternoon seminar on sulphur nutrition. Ismail pointed to some factors readers of sulphur may be all too familiar with: rates of atmospheric sulphur deposition in e.g. the US have fallen from 6.6 kg/ha in 1989 to just 1.6 kg/ha in 2017 as power plant flue gas scrubbing and lower sulphur content of fuels reduce SO2 emissions. This is leading to increasing requirements for sulphur application to fields and sulphur deficiency in some areas. He ran down the biochemistry of sulphur deficiency. Plants’ biological response to e.g drought/water stress depends on sulphate-containing compounds. Low plant sulphur levels lead to greater water loss from leaves. Likewise plant disease response relies on sulphur-containing compounds as natural bacteriocides or fungicides, and healthy levels of sulphur lead to greater disease tolerance. Plants with low sulphur are also more susceptible to iron and zinc deficiency in soils, something that affects up to one third of all cultivated soils, especially in Africa and India. Sulphur-containing chelates allow insoluble Fe/Zn to become soluble and carried into plants. Sulphur also correlates with nitrogen uptake, with sulphur containing amino acids responsible for conversion via protein synthesis. This also leads to less nitrate leaching and lower nitrate concentrations in plants which can have deleterious human health effects. Finally, sulphur-deficient plants also have large concentrations of asparagine ammonia acid, which converts to acrylamide when heated (e.g. fried or cooked potatoes), a compound no regarded as a probable carcinogen. There are some issues. Plants high in sulphur have a lower molybdenum and selenium uptake, possibly indicating the need for microdosing in sulphur-containing fertilizers.

Dr Malcolm Hawkesford from Rothamsted Research in the UK expanded on the synergy between nitrogen and sulphur. Sulphur can lead to a reduction in nitrogen leaching of 60-70%, and a reduction in N2O generation in the field by 40%. N2O emissions spike when the nitrogen supply in the soil is in excess of plant demand.

Lithium ion batteries

Anna Fleming form Benchmark Minerals presented an outlook for batteries metals, particularly lithium. Demand for these obviously depends upon the uptake of electric vehicles. Anna estimated that the EV share of new vehicles produced in 2023 was 17% (up from 13% last year), but could be 100% by 2040 assuming no raw material supply constraints. Lithium ion batteries’ production has increased 8% year on year since 2017 while price has decreased by 14% year on year as new technologies and economies of scale are developed. Batteries remain the largest cost driver for EVs, and raw materials are the largest cost (ca 70%) for batteries. Demand for lithium is projected to increase 12% year on year. Lithium ore supply currently comes mainly from China and Australia, but there are new projects in Europe, North America, Africa and Brazil as well as these locations. Current mine developments look set to meet projected demand out to 2028, but thereafter many more new projects need to be developed if demand is not to outstrip supply. As the supply chain scrambles to keep pace, the threat of price volatility escalates. There are also potential issues with shortages of equipment, infrastructure and skilled labour and potential impacts on project economics.

Phosphate outlook

The phosphate market presentation was given by the always entertaining Andy Jung of Mosaic. Agricultural commodity prices were still elevated compared to 2021, he said, even after coming down from price spikes caused by the Ukraine invasion. Agricultural demand looks flat this year compared to last, but stock: use ratios are at their lowest for 20 years, supporting a rebound in phosphate demand. Weather could also be a wild card. After three years of La Nina, this year looks to be an El Nino year, with potential drought in Asia, especially India and northern Brazil, but drought relief in southern Brazil and North America. Other factors influencing grain markets include increasing use of biorefineries and sustainable aviation fuel. Phosphate prices are now in line with their level in 2021, with affordability improved. Overall demand for 2023 was likely to be a return to around a 2021 level after last year’s falls due to high prices and supply constraints. Mosaic is also seeing a growth in demand for sulphur enhanced products. China remains the key swing supply factor. China’s MAP and DAP production continues to decline due to environmental pressures and a switch to industrial production (e.g. lithium iron phosphate batteries). Chinese phosphate exports have fallen from around 10.5 million t/a to 6 million t/a in 2022. There may be a rebound this year but only to 7.5 million t/a.

Sulphur and sulphuric acid

Finally Freda Gordon and Fiona Boyd of Acuity gave the sulphur and sulphuric acid market presentation. Sulphur prices peaked in 2022 due to supply disruption from Ukraine leading to demand destruction. This in turn led to a drop in prices by 76% from June to September last year. After an overcorrection prices picked up in 4Q 2022, but have seen a steady decline in 1Q 2023. Trade flows have reshuffled due to the sanctions on Russia, with Russian and Kazakhstan sulphur exports via Ust-Luga challenged as fewer shippers are willing to handle cargoes. Kazakh product is now being shipped via ports like Taman and Batumi on the Black Sea, the latter in Georgia, to places such as Egypt, Brazil, South Africa and eastwards to Asia. Longer term, supply looks to be down in the western hemisphere due to refinery closures and up in the Middle East and Asia, again in no small part due to refinery capacity growth. Sulphur supply will rise from 67.4 million t/a in 2022 to 69 million t/a this year, and demand from 65 million t/a to 67 million t/a, Freda said. On the demand side, there are phosphate expansions in Morocco and Egypt, and new metals demand from Indonesia and the African copper belt, offset in part by new smelter capacity. China in particular is seeing a sulphur supply surge due to refineries and sour gas sulphur.