Mid East, N Africa H2 sulphur settlements unlikely

21 August 2008 14:32  [Source: ICIS news]

LONDON (ICIS news)--It seems increasingly unlikely that North African sulphur buyers will agree all their second half contracts with Middle East suppliers due to differing price ideas, market source said on Thursday.

Nearing the end of the second month of this semester, agreements had still not been confirmed between Tunisia’s Groupe Chimique Tunisien (GCT) and Morocco’s Office Chérifien des Phosphates (OCP) and their Middle East suppliers.

Saudi Arabia’s Aramco reported that it had agreed with OCP at around $740/tonne (€503/tonne) FOB (free on board), but this was yet to be confirmed by the buyer.

This price equates to delivered price just below $800/tonne CFR (cost and freight), in line with OCP’s earlier agreement for Russian sulphur for July-December 2008.

Meanwhile, Kuwaiti Petroleum Corp (KPC) said it had agreed with GCT in the $890s/tonne CFR, but this was denied by the buyer.

Although communication channels were still open between both sides, sources said that it seemed not all contracts would be agreed as parties failed to find a price compromise.

In a falling market, buyers were looking for lower prices, while sellers were looking to keep prices higher.

If the contracts were not agreed it would leave Middle East suppliers with extra availability to sell in a weak market, which could lead to further price erosion.

North African buyers reported to be more or less covered for the sulphur needs by contracts that were already agreed and as such were in no rush to agree to buy highly priced sulphur.

There was some speculation that North African buyers might look to buy spot tonnes later in the year once prices had dropped.

This would not be the first time that no agreements have been found between contract parties. The contracts would be suspended for the second half of the year and then discussions would restart at the end of the year for January-June 2009.

($1= €0.68)

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Author: Rebecca Clarke
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