FocusChina’s sulphur prices to be firm in May amid rising prices

06 May 2011 06:12  [Source: ICIS news]

By Amanda Zhang & Natalie Hui

SHANGHAI (ICIS)--China’s sulphur market will be firm in May amid rising international prices, high downstream demand and shrinking stocks at ports, industry sources said on Friday.

The market price of sulphur is expected to stay firm in May, but its forecast to soften in June will  depend on the prices of nitrogen phosphorus, industry sources said.

The sulphur price in the Jiangsu market has risen by yuan (CNY) 100-150/tonne ($15-23) to CNY1,770-1,870/tonne on 1 April-5 May, according to Chemease, an ICIS service in China.

The sulphur price rose by $10-40/tonne (€7-28) to $230-245/tonne CFR (cost & freight) CMP (China Main Port) on 1-28 April, according to data from Chemease.

The active international market is a result of global tight supply, which has subsequently caused a domino effect on the Chinese market.

The strong demand has been exerting upward pressure on domestic sulphur prices in China since July 2010, industry sources said.

In China, 70% of its sulphur demand is dependent on imported cargoes.

Abu Dhabi National Oil Company’s (Adnoc) May sulphur contract price for the Indian market has been lifted by $15/tonne to $240/tonne FOB (free on board) Ruwais on 3 May, compared with the April price of $225/tonne FOB.

The major downstream monoammonium phosphate (MAP) sector accounts for 60% of China’s sulphur consumption, where the operation of its MAP units is higher than expected because of the strong demand for nitrogen phosphorus compound fertilizer, industry sources said.

Nitrogen phosphorus is produced from MAP.

China has exported 190,200 tonnes of nitrogen phosphorous in the first quarter of this year, which is more than triple the amount compared with the same period last year, China Customs data showed.

“At present, domestic buyers prefer to purchase domestic cargoes to imports because of the price advantage,” a Chinese trader said. This has decreased the arrivals of imports at Chinese ports during April, he added.

The inventory of sulphur at China’s domestic ports was a total of 1.8m tonnes at the beginning of April, but it decreased to 1.7m tonnes by the end of the month, according to Chemease.

The shrinking stock of sulphur at the Chinese ports will impact the selling sentiment of domestic producers, who are opting to keep their prices firm, industry sources said.

Downstream MAP producers are earning limited profits because of the rising feedstock sulphur prices. Their nitrogen phosphorus compound fertilizer prices have not increased in step with that of sulphur.

The mainstream prices of MAP products were offered at CNY3,300-3,400/tonne EXW (ex-works) while the production cost was priced at CNY3,200-3,300/tonne, the sources added.

“We will resist purchasing feedstock sulphur if we face limited profits or even make a loss in the near term,” an MAP producer in east China said.

Sulphur is a raw material used in the production of phosphates fertilizers.

The major sulphur producers in China include Sinopec Qilu Petrochemical, Sinopec Guangzhou Petrochemical and Sinopec Qingdao branch.

($1 = CNY6.50/$1 = €0.70)

For more on sulphur, visit ICIS chemical intelligence
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Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Amanda Zhang
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