International sulphur market gears up for Q4 contract discussions

Focus article by Julia Meehan.

LONDON (ICIS)–The international sulphur market is gearing up for fourth-quarter contract price discussions, while keeping a close eye on major importing region China, sources said on Friday.

“We’re keeping a close eye on what is happening in China. Prices there keep coming down and I would expect that buyers will want this to be reflected in their contract prices,” said one international trader supplying both spot and contract sulphur to the market.

A second source, buying liquid sulphur for the production of caprolactam said, “There are no glimmers or ideas being shared yet, but everybody is looking at the global price development.

“My assumption is if spot prices in China remain where they are there might be a rollover but if prices continue to fall in the next weeks there would be some ground for a reduction. In the worst case it [the contract price] would roll over,” it added.

Spot prices in China have eased in recent weeks as buyers continue consume sulphur on a hand-to-mouth basis. This was clearly evident this week when there was another build of sulphur inventories at the major ports.

Sulphur in China is currently valued at $155-170/tonne CFR (cost and freight) China, the lowest spot price since mid-June 2014.

Major exporters in the Middle East have reduced their export prices in an attempt to ignite fresh demand from China, but it seems that this has done little to generate any fresh demand. However, Middle East producers remain bullish about the market outlook for the fourth quarter.

One producer in the Middle East who recently set its selling price at $151/tonne FOB (free on board) said that it was expecting a “healthy” fourth quarter.

“To be honest we are expecting a healthy quarter-four. Supply may be a little on the tight side. Russian sulphur will stop coming out and Kazakhstan is almost gone so the stock pile has been depleted and there will be less going to China,” the Middle East producer said.

“There will be increased demand in North Africa and South Africa and we have enquires for additional tonnage, but we can’t sell spot because of tight availabilty,” it added.

According to data from China customs, behind Saudi Arabia, Kazakhstan is the second largest exporter of sulphur to China. In the period January to July 2014 China imported 868,506 tonnes of sulphur from Kazakhstan – a 16% year-on-year drop .

In the same period, China imported 1.28m tonnes of sulphur from Saudi Arabia, a 37% year-on-year increase.

Middle East sulphur for the export market is currently valued at $151-155/tonne FOB Middle East following announcements by major producers, Qatar International Petroleum Marketing Company Ltd (Tasweeq), Abu Dhabi National Oil Company (ADNOC) and Saudi Aramco Trading.