OUTLOOK ’12: Sulphuric acid market to remain stable in 2012

05 January 2012 22:30  [Source: ICIS news]

By Fiona Boyd

HOUSTON (ICIS)--The sulphuric acid industry had a good balance of supply and demand for much of 2011, and sources say the coming year should be no different.

It will all depend on continued stable pricing in related markets, mainly phosphate fertilizers and base metals.

The global economy could put downward pressure on commodity prices, which would also affect demand and prices for sulphur and sulphuric acid.

Sources said sulphur prices should remain firm based on expected tight supply.

Since Chile is the largest importer of offshore sulphuric acid with around 2m tonnes/year imported from offshore sources to support copper production, the country sets the global market price.

Because of healthy copper prices in 2011, demand was strong with spot prices in the fourth quarter at $150–170/tonne CFR (€116–131)  (cost & freight) compared with $125–140/tonne CFR in the fourth quarter of 2010.

Settlements so far for 2012 have been in the $150–155/tonne CFR level compared with the 2011 price of $118–125/tonne CFR.

Sources said higher transportation rates being passed on to consumers is the reason for the increase.

The primary use of sulphuric acid is for the production of phosphate fertilizers. However, sulphuric acid for this use is primarily produced through the burning of sulphur and used internally.

Sulphuric acid that is traded in the global market is primarily by-product recovered from the smelting of base metals – copper, nickel and zinc.

As base metals prices were stable last year, particularly copper, production of sulphuric acid through the processing of these metals resulted in an ample supply to meet strong demand.

The highest concentration of base metals smelters is in Japan, South Korea and Europe, where planned maintenance turnarounds and unplanned outages reduced availability in 2011.

In Europe, seasonal turnarounds and other operational issues at smelters in the summer months resulted in less product being available for the merchant market.

In March 2011, the tsunami and earthquake that struck Japan and caused significant damage impacted the smelter industry.

Around 25% of Japan’s smelter capacity was down following the natural disaster, but demand from end users in Japan was also down, essentially counterbalancing the loss.

Sources said supply from Japan will improve in 2012, absent of any event that significantly impacts production.

Supply in North America will likely be eased in 2012 as well, because of increased domestic production, the resolution of plant issues resulting in less downtime and more availability from neighbouring Mexico.

As a result, the US will have less imports of offshore sulphuric acid in 2012, sources said.

On the demand side, market sources have reported some pullback in demand recently, but this is being viewed as seasonal with consumers drawing down inventories of end products after running at high operating rates throughout 2011.

For more on sulphuric acid visit ICIS pricing fertilizers

By: Fiona Boyd
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