Mideast sulphur producers seek Americas buyers for Q2

30 April 2010 10:55  [Source: ICIS news]

Piles of bulk sulphurLONDON (ICIS news)--Middle East sulphur producers are targeting South and North American buyers for second quarter shipments in order to offset weaker demand in China and the prolonged disagreement on contract prices with Chinese buyers, market sources said on Friday.

Producers have started concluding second quarter business in the $150s/tonne (€110s/tonne) FOB (free on board) with buyers in South and North America as well as China, they said.

Prices are around $70/tonne higher than first quarter levels due to tighter sulphur availability across the Middle East.

An official at Abu Dhabi National Oil Co (Adnoc) said it had finalised all its second quarter sulphur availability in the $150s/tonne FOB for shipment to South and North America, instead of with Chinese buyers, as they were able to achieve a higher net back.

Current Chinese price ideas are in the $150-160/tonne CFR (cost and freight) range, which given current freight indications around $40/tonne would imply a net back of around $110-120/tonne FOB.

Meanwhile, Saudi producer Aramco said it had concluded more second quarter contracts this week, with buyers in China and other destinations, in the range of $151-156/tonne FOB. Aramco started agreeing second quarter contracts last week.

The producer said availability which was not agreed under contracts would be diverted to Brazil and the US, with price ideas in the high-$150s/tonne FOB.

At the same time, Kuwait Petroleum Corp (KPC) said it had renewed some sulphur contracts for the second quarter at $150-160/tonne FOB, but had yet to conclude all its contracts as negotiations were progressing with remaining buyers in China and India.

An official at Qatari sulphur seller Tasweeq said it had begun concluding its contracts with buyers and traders from Japan and Europe, as talks with Chinese contract buyers continued.

Traders and Chinese buyers who were yet to agree second quarter contracts with Middle East producers said prices in the $150s/tonne FOB were too high for a market that has been severely impacted by bad weather conditions and lower downstream phosphates production.

There were also expectations that the South and North American markets could not replace the high volume Chinese market, particularly as Brazilian spot demand has recently slowed down due to a nearly full inventory. As a result, producers may have to alter their price ideas in order to secure some business to China.

($1 = €0.76)

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