18 March 2011 20:23 [Source: ICIS news]
The earthquake and tsunami, which hit Japan on 11 March, has led to disruptions to refinery operations and their sulphur production, although the severity of the impact has yet to unfold, sources said.
Sulphur supply from Cosmo Oil’s ?xml:namespace>
“[The disaster] will have an impact on the sulphur market. In the short term, prices may be impacted due to psychological worries [of product shortage],” a source with a major Chinese sulphur end-user said.
The likely result of reduced Japanese sulphur in the market was the further tightening of global supply, in which major export markets - including
One sulphur importer to be hit by the
The earthquake came at a time when quarterly contract negotiations typically begin.
Current spot price levels in
This compared to first-quarter contract prices in the $170s-180s/tonne FOB.
If Chinese buyers need to compensate for any potential loss from
“With the explosion and fires at refineries, I think one month [of interruption] is extremely optimistic. With all the rebuilding being required [for some refineries] it could be years before some are operational. As a result, we're seeing increases already in [sulphuric] acid [demand],” a major Canadian sulphur supplier said.
The situation in
Overall, around 25% of
A possible outcome of this was for sulphuric acid importers to increase sulphur consumption. This would allow the importers to raise their own acid production, in order to keep up with downstream demand.
This has already been seen in
Further down the production chain, sulphuric acid is a raw material for phosphate fertilizer production. However, the direct impact on this front seems less significant so far.
US phosphate producers have contractual agreements with
Most of this is imported from the
“Sure it has had a psychological effect on the market – but the grain market has started to rebound already,” the producer added.
Additional reporting by Fiona Boyd in
($1 = €0.71)
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