European sulphur Q2 contract price ideas starting to surface

28 March 2014 11:40 Source:ICIS News

LONDON (ICIS)--European sulphur price ideas for second-quarter contracts have started to surface, with buyers and sellers currently $15-20/tonne apart, sources confirmed on Friday.

“I had some preliminary discussions to test the temperature. Producers are coming with price ideas of plus $30/tonne,” said a buyer for the downstream caprolactam market.

In light of the recent downtrend in sulphur prices in the Middle East and China, the buyer said that it expected to see a revision of producers’ price ideas.

“Prices are starting reduce in China... my expectation is the increase should be $15-20/tonne,” the buyer added.

According to sources in the US, initial targets of $40/long ton in CFR (cost and freight) Tampa have been revised down to $15-20/tonne. In the first quarter, the contract settled at $110/long ton.

In the European market, buyers frequently referred to Tampa in the US as a “rationale” for European contract price developments, rather than the price direction of the Asian market.

Tampa is largely a domestic liquid sulphur market, similar to that of Europe, therefore external factors, such a price developments in Asia and the Middle East, do not necessarily impact on price negotiations.

The European first-quarter contract price settled in a $129-140/tonne delivered Benelux.

In relation to the progress of its negotiations, a second buyer said: “Sulphur suppliers want to increase their prices by $30/tonne, but we expect at the end of the negotiation we will see an increase between $20-30/tonne.”

Meanwhile, sulphur suppliers talk of snug availabilty and upward price trends seen across the international sulphur market since the fourth-quarter 2013 as reasons for an increase. But not all market participants believe that the European market is tight.

“The market is not really tight, but it’s not long either,” said one supplier.

“For west Europe there is plenty availability and I have no problems getting material,” said a second sulphur consumer buying for the caprolactam market.

A consumer for the agricultural sector expected sulphur supply to be “tight” during the second quarter, but felt an increase of $30/tonne was too high.

“The producers are asking for $30/tonne - this might have been justified a few weeks ago, but China is coming off,” the consumer said.

By Julia Meehan