GCT Tunisia renegotiating sulphur prices for Q4

02 October 2008 16:04  [Source: ICIS news]

By Rebecca Clarke

 

LONDON (ICIS news)--Groupe Chimique Tunisien (GCT) is renegotiating prices for fourth quarter sulphur deliveries under contracts that were initially agreed for the whole of the second half of the year due to falling international sulphur prices, market sources said on Thursday.

 

The Tunisian phosphate producer was close to agreeing a fourth quarter price of $490-495/tonne (€348-351/tonne) CFR (cost and freight) for Kazakh and Russian sulphur, down from the price agreed at just below $800/tonne CFR earlier in the year, sources said. 

 

There were also unconfirmed reports that GCT had agreed a fourth quarter contract with Abu Dhabi National Oil Co (Adnoc) for 90,000 tonnes of sulphur at a price around $200/tonne CFR.

 

But this was widely viewed with scepticism within the market, with sources wondering why GCT would agree a price close to $500/tonne CFR with one supplier and $200/tonne CFR with another.

 

European suppliers of sulphur to GCT said that at present there were not renegotiating any contracts, noting that the contract was agreed for the whole of the second half of the year and that a delivery schedule was in place.

 

GCT asked its suppliers if they would renegotiate prices for quarter four as spot prices had dropped dramatically since the July-December 2008 contracts had been agreed in the middle of the year.

 

The Adnoc monthly sulphur price has dropped from a high of $820/tonne FOB (free on board) in July to $580/tonne FOB in September and expectations that it will fall to around $400/tonne FOB for October. 

 

The request also came on the back of news that fellow phosphate producer Morocco’s Office Chérifien des Phosphates (OCP) had agreed its major supply contract with Saudi producer Aramco on a quarterly rather than half yearly basis this time round.

 

Suppliers were initially expected to reject GCT’s requests given that contracts had already been agreed for the whole of the second half of the year.

 

In addition, during the first six months of the year suppliers did not ask for contracts to be renegotiated for the second quarter, despite prices having risen significantly since the start of the year.

 

However, given the weak demand in the market at present suppliers may have decided that renegotiating the price with GCT was preferable to trying to find another buyer for the tonnes, sources speculated.

 

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Author: Rebecca Clarke
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