North Africa Q4 sulphur contracts roll over

LONDON (ICIS)–Fourth-quarter North Africa sulphur contracts have rolled over give or take $1/tonne, sources confirmed on Wednesday.

The Q4 contract price settled at $68-75/tonne CFR (cost & freight).

While not disclosing the actual price, major phosphates producer Office Cherifien des Phosphates (OCP) of Morocco said it had finalised its Q4 contracts.

“We are almost done and we are more or less plus or minus $1/tonne, so a rollover overall,” OCP confirmed.

OCP estimates it will consume in excess of 5m tonnes of sulphur in 2016 as it expands it phosphates operations at Jorf Lasfar.

Q4 contract talks had been rather protracted because major contract buyers in North Africa have been contending with falling phosphates prices. Meanwhile, sulphur producers have been pushing for price increases on the back of international gains in the value of sulphur during the third quarter.

One producer had been pushing for an increase, not only because of international gains, but also because of rising barge freight prices which it needed to incorporate in its sales price.

“We can confirm a rollover [with customers in North Africa],” the producer confirmed.

“A rollover of the contract price is worse for us because of the growing freight rates,” the producer added.

The producer said freight was currently $3-4/tonne higher because of strong demand for the transportation of Russian grain exports.

Talking about the progress of its Q4 negotiations, Groupe Chimique Tunisien (GCT) said: “We expect to get a rollover more or less. I have settled with the AG (Arab Gulf) but not with others.”

“I might postpone until November, until the situation becomes clearer, but the overall expectation is to get a rollover. The situation on production is still around 50% of full capacity and we don’t expect to exceed this level. Maybe by early next year our target is to get 70% [operating rates].

“We started Q4 [phosphates production] at 40% and may go up to 60-70%, so the average for Q4 will be 50%.”

GCT has been running its phosphates production at reduced rates because of shortages in the supply of phosphate rock due to an ongoing industrial dispute.

GCT typically purchases 2m tonnes/year of sulphur, but owing to production cuts through much of 2016, the figure is expected to be closer to 1m tonne this year.