Modest rise in China sulphur prices, despite bullish expectations

18 February 2011 13:36  [Source: ICIS news]

LONDON (ICIS)--China sulphur prices have shown moderate increases despite bullish expectations as buyers return after the Lunar New Year holidays, sources said on Friday.

Chinese prices moved up to $210-215/tonne (€155-159/tonne) CFR (cost and freight) on limited activity this week, sources said. The range was up around $7-12/tonne from the levels recorded before the holidays.

Late last week, around 10,000-15,000 tonnes of Canadian sulphur were sold at Nantong port in the mid $210s/tonne CFR for early March delivery, sources added.

The upward trend in China prices was down to several reasons.

Sulphur demand is higher ahead of the spring fertilizer application season, typically between February and May, because fertilizer producers have to rebuild their sulphur stocks for phosphate fertilizer production.

Supply has also been tight in major producer markets, including the Middle East and Canada, lending support to prices.

Additionally, the downstream phosphate fertilizer market was expected to remain firm through the first half of 2011, supported by tight supply, healthy demand and firm commodity prices.

These factors had led to expectations of more aggressive buying following the end of the holidays. However, fertilizer producers were buying cautiously because inventory levels at domestic ports were holding firm at a safety level of 1.92m tonnes.

Price expectations for the remainder of the first quarter were split. Some remained optimistic and expected more buyers to return to the market next week.

Others feared that domestic prices would soon peak, because the current range had already surpassed the highest level achieved in 2010.

Another worry to add to the Chinese market was that around 70-80% of the stocks at major domestic port Nantong, totalling 500,000 tonnes, were currently held by traders.

The Lunar New Year fell on 2-8 February this year, and all celebrations officially ended on 17 February.

($1 = €0.74)

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By: Freda Gordon
44 208 652 3214

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