Sulphur remains tight globally, plenty of buying interest

13 February 2014 12:51 Source:ICIS News

Sulphur being loaded onto a cargo shipLONDON (ICIS)--The supply of sulphur remains tight globally, due to over-commitments on volume, coupled with refinery production cuts, and continues to boost prices, sources said on Thursday.

“We don’t see any increases in availability in March and we are barely maintaining contract commitments,” said a major Middle East producer in relation to its current inventory levels.

Looking ahead to April, the producer said that there was a possibility that the tight supply situation in the Middle East may persist. 

International traders all speak of rising prices and tight supply, but most see the situation in the market as largely supply, rather than demand driven, since demand for downstream phosphate fertilizers is not particularly strong in Asia.

“Everybody is crying for material,” said one trader.

“There is some good demand at the ARA (Amsterdam-Rotterdam-Antwerp) and prices are jumping up,” the trader added.

A second trader selling to the Mediterranean said: “Buyers a biting your hand off. Repsol is short and Exxon is short.”

The return of key importing region China following the lunar new year holidays has clearly boosted market sentiment.

Spot sulphur prices in China were quoted at $175-185/tonne CFR (cost and freight) China prior to the holidays. However, spot business was heard concluded at $220/tonne CFR China this week.

Not all market followers were convinced that Chinese buyers needed to pay such a high price so soon after their return from the lunar new year holidays, since many producers moved sulphur from storage at port to their factories further inland.

“I spoke to a couple of customers in China and I have given them some material - people saying they don't want to buy at more than $205/tonne CFR - reports that somebody has bought at $220/tonne CFR is wrong information,” said the trader.

“A friend of mine told me a lot of cargo has moved from ports to the plants before New Year. All plants have material and you will see in the next few days if stocks will increase,” the trader added.

Chinese former sulphur inventory levels have increased since they were last recorded on 29 January.

Chinese Formed Sulphur Inventory Levels
(’000 tonnes)

 

13 February

29 January

Fangcheng port

330

190

Zhanjiang port

60

100

Beihai port

34

36

Zhenjiang

190

150

Nantong port

360

400

Qingdao port

250

270

Rizhao port

0

0

Longkou port

10

12

Tianjin port

2

2

Total

1,236

1,160


Another seller, whose business is largely focused on the Chinese market said: "
We have many enquiries from China – people want to ride the wave until mid-April once the Chinese phosphate season is over."

“In the Middle East there are production problems. The Black Sea is cut off until April. There are some who buy rail and this is very, very slow - it’s not the season for the Black Sea,” the trader added.

Middle East producers have all announced price increase for February and for March, thus spurring the upward global price momentum.

Saudi Aramco Trading has set its monthly sulphur price for shipments in March at $190/tonne FOB (free on board) Middle East, up by $40/tonne from February.

Qatar’s Tasweeq sets its monthly Qatar Sulphur price (QSP) for February at $163/tonne FOB Middle East, up $36/tonne from January.

Also in the Middle East, UAE’s (United Arab Emirates) ADNOC (Abu Dhabi National Oil Company) set its OSP (Official Selling Price) for February for the Indian market at $180/tonne FOB, up $40/tonne from January.

Sulphur is an involuntary by-product recovered from oil and gas production. 90% of sulphur is used for the production of sulphuric acid, of which close to 60% is used to make phosphate fertilizers.

By Julia Meehan