IFA '12: Asia sulphuric acid market shows signs of improvement

23 May 2012 10:52  [Source: ICIS news]

By Gabriela Wheeler

DOHA, Qatar (ICIS)--Sentiment in the sulphuric acid market in Asia has shown some improvement, despite lingering concerns about oversupply, sources said on the sidelines of the International Fertilizers Association (IFA) conference in Doha on Wednesday.

Inventories are more manageable and several suppliers reported a well-balanced supply/demand ratio for the month of May, amid a lack of surplus availability for spot business. 

This has allowed South Korean and Japanese suppliers to stand firm by their selling indications at around $20/tonne (€16/tonne) FOB (free on board) and higher.

The sulphuric acid market in Asia has seen prices fall sharply from the last quarter of 2011 because most smelters in the region are running at full rates, but demand has been weak in the downstream phosphate fertilizers, industrial applications and base metals segments, resulting in a supply overhang, sources said.

"We are currently fulfilling our contract commitments and don't have any extra product to sell on a spot basis," a Korea Zinc company source said. 

"Demand from China has improved slightly and buyers are taking their full contract volumes," the producer added.

A source at trading company Interacid agreed, saying that the seller had seen prices stabilise and demand improve slightly over the last few weeks. 

Shipments into Chile, which is a key importer of Asian sulphuric acid, were proceeding as scheduled.

Buying ideas from traders have moved up, with a producer reporting bids at $20-25/tonne FOB northeast Asia for spot tonnage, although no deals were reported at this level. 

Bids had fallen to levels at $5-10/tonne FOB in February this year because of a lack of buying interest against ample supply, and remained at this level until early May.

On the contract front, a number of second quarter 2012 supply contracts have been finalised between Korean and Japanese suppliers and their customers in China, following protracted negotiations. 

An agreement had been delayed because buyers were hoping to achieve decreases from first quarter levels, while suppliers were targeting a rollover.

A number of suppliers reported that contracts have been agreed at a rollover, with prices cited in the $40s/tonne CFR China. 

The final price depends on volumes and whether the shipments are being made to southern or northern China, sources said.

The contract agreements at a rollover were seen as another sign that the market was improving and that prices have stabilised for the time being, but both buyers and sellers continue to watch the supply/demand balance carefully as the scale could be easily tipped towards an oversupply situation, sources said.

($1 = €0.79) 

By: Gabriela Wheeler
+65 6789 8828

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