International sulphur market set to remain stable

LONDON (ICIS)–The international sulphur market looks set to remain stable in the near term, with limited spot availability from some major Middle East producers countered by limited spot demand from major importer China, sources said on Friday.

“We’ve heard some deals done in the $150s/tonne CFR (cost and freight). Our Shanghai office says there is some demand, but there are not many cargoes coming from the Middle East,” said an international sulphur supplier.  

The sulphur market appears to experiencing some tightness because of a lack of availability from the Middle East, similar to the market of May 2014. However, the traders and speculators that were once the drivers of prices in China are not so visable.

It is downstream consumers, buying on a hand-to-mouth, basis that are keeping price stable.

“Downstream phosphate producers are only coming to the market when they need to replenish stock. So this is keeping prices from moving up or down,” said a China based source.

Sulphur prices in China, which set the tone for the international market, have remained relatively stable through much of the second quarter, despite inventory levels hovering below 1m tonnes for the past three weeks. Port inventories at the ports showed a moderate 36,000 tonne gain and are now currently at 938,000 tonnes.

Some traders were rather perplexed as to why some Middle East producers were talking about tight availability and sold-out positions when refineries are running “full pelt”, according to one player.

“The refineries are running full pelt so there should be no shortage of sulphur out of the Gulf. Where are the cargoes going if they are not moving to China or North Africa?” commented a trader serving the markets in China and India.

One major refiner said the reason was simple, it was fully committed to its contact customers: “It’s simple. If China doesn’t pay the right price [the traders] will take the sulphur somewhere else. We are fully committed to our contact partners and are completely sold out for June.”

Despite calms of tightness, Tasweeq’s tendered for 35,000 tonnes which  was awarded in the low $140s/tonne CFR Ras Laffan. Kuwait Petroleum Corp (KPC) also came to the market with a 20,000-tonne June tender.

In the Americas, no new tenders were recorded and price support stems from a more stable picture internationally, coupled with strong expectations that demand will soon pick up.

Sulphur out of Vancouver is currently valued at $130-140/tonne FOB (free on board).

Mosaic’s remelter in New Wales, Florida,  is understood to be on track for completion around October 2015, with the first sulphur cargo due to arrive in the summer. The cargo will be used for testing purposes and marks the first stage of commissioning.

In Europe, sources agree the market is firmly balanced, although it was suggested cuts in caprolactam production have resulted in additional supply for the market. This appears to be countered by various refinery spring outages.

In relation to its expectation for the third-quarter sulphur contract price, a major producer said: “It’s far too soon to comment on the third quarter contract price. We will not start talking to our customers for at least another month. ”  

The European second-quarter contract price was agreed at $154-165/tonne delivered Benelux.

In the Mediterranean, spot prices continue to hold firm on limited availability.

“Regarding sulphur we are mainly covered with domestic suppliers. We got a better price than a month ago. Our intention was not to buy in July and August. It’s better to buy in the spot market now and this is something were are evaluating,” commented a sulphur buyer.

Spot sulphur prices for the Mediterranean are currently at $150-155/tonne CFR.

Focus article by Julia Meehan