International sulphur market waits for Middle East price direction

LONDON (ICIS)–The international sulphur market is waiting for some fresh price direction from Middle East producers who are expected to increase their July monthly prices in the coming days, sources said on Friday.

“Let’s wait to see what the Middle East producers do next week. I don’t think we will see big gains, but I expect we will see prices above $190/tonne on a CFR (cost and freight) China basis,” said an Asia-based trader.

Abu Dhabi National Oil Company (ADNOC) and Qatar International Petroleum Marketing Company Ltd (Tasweeq) are both expected to announce their monthly prices in the coming days.

ADNOC set its official selling price (OSP) for June sulphur for the Indian market at $150/tonne FOB (free on board), an increase of $5/tonne from May

Tasweeq announced its Qatar Sulphur Price (QSP) for June at $152/tonne FOB, up $19/tonne from May.

Since these prices were announced back in late May/early June, spot prices have moved up and are now at $160-165/tonne FOB Middle East.

In China, which is the largest global importer of sulphur, spot prices have also started to firm – largely driven by higher prices in the Middle East and renewed demand for downstream phosphates and industrial chemicals.

In May, China imported 104,009 tonnes of sulphur from Saudi Arabia, 30,000 tonnes from Qatar and 25,000 tonnes from Kuwait.

Elsewhere, the international sulphur market seems to be building momentum in terms of price developments and regular monthly tenders have all been agreed at higher levels.

However, most sources are not expecting to see sharp increases, particularly since there are concerns that if Middle East prices move up too fast and too soon, buyers in China will retreat to the sidelines as they did in the first quarter when prices in China hit a 21-month high of $185-215/tonne CFR China.

Meanwhile in Europe, buyers and sellers appear to remain somewhat divided in terms of price expectations for the third quarter.

Sellers are seeking increases of $10-20/tonne based on international gains; while buyers strongly feel that because market fundamentals are unchanged moving from one quarter to the next, contract prices should also remain unchanged.

“I see a rollover. Give me one reason why my contract price should firm,” commented a large contract buyer in Europe 

In the Mediterranean, higher prices were also heard as the market moves away from a balanced-to-long position. Sources active in the Mediterranean said that some tightness was now being felt and this was pushing price ideas higher.

“Not last week, but the week before, things were long and we turned away business because the Med was long. But things are more balanced and the Med is looking steady again and prices have been moving up,” said a trader largely supplying southern Europe and north Africa.

In the US, stocks in California were described as “dry” following the departure of three large cargoes from Long Beach and Stockton.

The US market had been waiting for news of a Brazilian purchase tender recently announced by Anglo American for 40,000 tonnes of sulphur.

The tender was heard to have been awarded  in the mid-170s CFR, which  suggests a US Gulf export range of $140-145/tonne FOB.