Downstream disruption delays North Africa sulphur contract settlements

29 July 2011 13:44  [Source: ICIS news]

Sulphur being loaded onto a cargo shipLONDON (ICIS)--Sulphur suppliers have struggled to conclude third-quarter and second-half 2011 contracts with North African buyers because of disrupted downstream production in Tunisia and weakening spot prices, market sources said on Friday.

Contract negotiations with Morocco’s Office Cherifien des Phosphates (OCP) and Tunisia’s Groupe Chimique Tunisien (GCT) are deadlocked because the two diammonium phosphate (DAP) producers have maintained lower price proposals in sight of falling global spot prices.

Russian sulphur producer Gazprom Export – one of the North African buyers’ largest suppliers – has yet to agree quarterly or half-yearly prices with OCP and GCT, a company source said.

Gazprom Export has, however, agreed to continue moving quantities fixed at the beginning of the year on an annual basis to OCP for a temporary and undisclosed price.

A final price for these shipments will continue to be discussed between the buy and sell side, the source added.

Seller price ideas are in the mid $240s/tonne (low €170s/tonne) CFR (cost & freight), while buyers were previously reported to be countering in the mid $230s/tonne CFR.

In Tunisia, Gazprom Export shipped one cargo to GCT in July but has yet to plan any shipments for August. This is because of continued disruptions of phosphoric acid and DAP production caused by strikes at GCT.

GCT restarted phosphoric acid and limited DAP production at Gabes in eastern Tunisia earlier this week following a stoppage in mid July because of transportation strikes affecting railways and the port.

GCT has a comfortable level of sulphur stocks and is in no hurry to conclude supply contracts, a source said.

Additionally, some delayed sulphur quantities under first-half 2011 contracts have continued to discharge in Tunisia in July, according to a trading source.

Kazakhstan-based Tengizchevroil is another major sulphur supplier to the North African buyers. Contract talks are understood to be ongoing, market sources said.

Other sulphur suppliers in the Middle East and Europe are also in talks with GCT and OCP, and expect to conclude their contracts following settlements between Russian producers and buyers.

Global spot sulphur prices have continued to weaken this week because of slowing demand in major import markets.

The two DAP producers are among the top five sulphur importers in 2010, according to data released by the International Fertilizer Industry Association. OCP imported 4.05m tonnes of sulphur in 2010, while GCT imported 1.87m tonnes, with all the sulphur used for the production of downstream DAP fertilizers.

($1 = €0.70)

For more on sulphur, visit ICIS pricing fertilizers

By: Freda Gordon
44 208 652 3214

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