Sulphur Q4 prices to rise on tight supply amid unclear China demand

30 September 2011 16:48  [Source: ICIS news]

LONDON (ICIS)--Global sulphur producers have proposed price hikes for fourth quarter contracts on tight supply and healthy demand, although uncertain Chinese demand will hinder the amount of any increases, market sources said on Friday.

Initial sulphur contract talks have begun, and global producers have all targeted increases on third quarter levels, citing tight supply due to winter weather conditions and increasing demand from the downstream phosphate fertilizer sector.

Canada is the largest sulphur export market in the world, but its shipments will be restricted during the winter months due to logistical problems in the western region.

Because of this, suppliers are reportedly looking for an increase of at least $5-10/tonne from third quarter levels between $225/tonne (€167/tonne) and the high-$230s/tonne FOB (free on board). 

“The level of increases we are targeting will be in line with Middle East producers. Buyers in China are cautious and will try to lower the price, but we are not in a hurry to conclude,” a Canadian sulphur supplier said.

Also due to winter weather conditions, Black Sea producers have expected reduction in shipments during the fourth quarter and have favoured an increase for new contracts.

“The Volga Don river system usually closes around November as the river freezes,” a source with a major Black Sea producer said.

GazpromExport and its marketing company Austrofin have expected contract talks to take place in early to mid-October, and will target increases from the $220s/tonne to the $250s/tonne CFR (cost and freight) range agreed for the third quarter.

In the Middle East, Saudi Aramco is the largest sulphur exporter. However, more of its export availability will be devoted to the Ma’aden Phosphate Co plant as it continues to ramp up DAP (di-ammonium phosphate) fertilizer production.

Although full DAP production at the Ma’aden plant is expected for 2012, Aramco is already delivering around 1,500 tonnes/day to the plant and hence has less availability for other term customers. The plant will take up to 1.4m tonnes/year of sulphur when running at full capacity.

Aramco is understood to have approached its clients indirectly for preliminary contract talks, and its initial price ideas are in the range $220-225/tonne FOB, up $10/tonne from the third quarter.

Despite tight supply, demand from the world’s largest sulphur import market, China, remains uncertain due to an unclear governmental decision on its fertilizer export tax system. Unconfirmed amendments to the tax system could hamper phosphate fertilizer production, hence the demand for raw material sulphur.

Most contract negotiations are expected to fully take place after the Chinese national holidays end on 7 October.

($1 = €0.74)

For more on sulphur visit ICIS pricing fertilizers


By: Freda Gordon
44 208 652 3214



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