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Sulphur 414 Sep-Oct 2024

30 September 2024

Market Outlook

Market Outlook

Historical price trends $/tonne

SULPHUR

Muntajat announced its QSP for September at $125/t f.o.b., an increase of $19/t from its August price. This was following its tender earlier this week, which market sources indicated to have achieved at or around $130s/t f.o.b. Over the past two weeks, KPC in Kuwait closed two sales tenders, with both indicated awarded in the high $120s/t f.o.b. Middle East spot f.o.b. prices are at their highest level since March 2023 and have climbed 58% over the past two months.

At the same time, Chinese delivered prices climbed slightly higher to $140145/t c.fr amid latest indications, while Indonesian prices remained unchanged in the range of $140-145/t c.fr this week.

Most traders remain confident of further price increases across the globe over the coming weeks due to strong downstream markets driving increasing demand, particularly given good affordability as phosphates prices continue to climb.

Nevertheless. good overall availability should limit the upside to prices, particularly as China stocks remain high, even though a rail strike in Canada as well as refinery maintenance in Kazakhstan may tighten availability a little.

SULPHURIC ACID

Global spot prices are likely to remain relatively firm over the coming weeks. Strong Moroccan offtake has added support to some benchmarks, with further support coming from Chile’s recent return and persistently strong offtake for Saudi Arabia. Domestic acid production is set to increase in some key import markets, though this is more weighted to later in the year. Affordability relative to downstream markets is broadly acceptable, but looks particularly bad when compared with upstream sulphur.

Chinese sulphur burners are setting prices in the traded market, while the lack of domestic smelter acid supply due to raw material shortages is also reducing export availability and pushing up prices. China requires high acid prices to draw out more volume, as domestic sales offer favourable pricing, thereby limiting the potential downside for spot business.

Production issues at smelters in Japan and South Korea has restricted spot tonnes. This has allowed sellers to resist lower bids. However, high freight rates, rising supply in other Asian countries and concerns over phosphate markets may weigh on prices.

In the longer term, growth in smelter acid production is being limited by a shortage of copper concentrate. new smelter capacity in Asia is expected to be commissioned, but tightness in the copper concentrate market will limit its operations in 2024. Increased competition and declining acid import requirements are expected to cut Chinese acid exports in 2025. Consistent traded demand and weaker European exports have maintained market tightness, which will delay price declines to 2025.

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Price Trends

Global sulphur prices were mostly assessed flat in mid-January, with only slight changes for China, Indonesia and India, while the first quarter contracts for the Middle East, North Africa and Tampa increased from the previous quarter. Overall, the number of transactions taking place globally has declined as subdued demand has limited trading activity in most delivered markets. The current sulphur price environment has been shaped by the combination of rising Chinese demand and higher Middle East f.o.b. prices in the second half of last year. As a result, some consumer markets such as Indonesia and India have been subject to upward pressure in order to remain attractive destinations. But demand remained lacklustre across delivered markets, leaving prices relatively stable.

Protectionism casts a shadow over the new year

The start of a new year is a traditional time to take stock of the previous 12 months and look ahead to the next. In this regard, CRU’s most recent annual client survey, conducted at the end of December last year, makes interesting reading as to your own concerns for 2025 and beyond. There were numerous responses across commodity and financial sectors, and broadly based worldwide, if slightly skewed towards Europe and North America, but across all of these the key worry for the coming year clearly emerged as trade tariffs and protectionism. This is perhaps unsurprising, given incoming US president Donald Trump’s avowed intent to impose blanket 20% tariffs on all goods entering the US, and up to 60% on China. While most clients did not think tariffs would rise as much as some of Trump’s rhetoric might suggest, most expect rises of 5-10% across the board, and Asian businesses are most concerned. CRU’s most recent position paper on US tariffs highlights some of the internal political and legal challenges in implementing these, but does acknowledge that some rises will be inevitable, and may well produce the kind of reciprocal measures last seen in the previous Trump administration’s trade war with China and the EU in 2018.