The Outlook Sulphur and Sulphuric Acid monthly report forms part of the comprehensive and trustworthy coverage of the Fertilizer markets. The unbiased news and analysis includes sections on market overview, key drivers, regional updates, supply and demand outlooks as well as forecasts and any other factors driving prices. If you are involved with these or related markets, this independent and essential business tool can help you to make crucial strategic decisions. Integer Research produces the Outlook reports on behalf of ICIS.
Updated to Q4 2018
Global sulphur availability is low as a result of a sweeter crude mix – which results in lower crude oil production – high freight rates pricing Iran out of the market, multiple European refinery outages and a lack of volumes through the Black Sea due to vessel availability. This is expected to last throughout the fourth quarter
The main end-use market for China sulphur buyers is the India DAP industry. India DAP demand is expected to be firmer than usual in the final part of this year because the increased cost of phosphoric acid has made it cheaper to import DAP and because around 1m tonnes of India DAP requirements are yet to be covered.
Although production problems at the Grossenkneten gas field have been resolved and sulphur plants in the area have restarted, a number of ongoing refinery outages are expected to keep availability in Europe low. With China demand expected to be strong, international relief is not expected to be forthcoming.
Nuova Solmine’s Scarlino sulphur burner, which produces around 600,000 tonnes of sulphuric acid, began its restart process on 21 September following a six-week maintenance. Full-spec product is expected to be available during the week ending 5 October. This is anticipated to increase demand in the Mediterranean.
Updated to Q3 2018
Supply from the Middle East is expected to remain low as long as technical limitations prevent a switch to a more sour crude mix, and until material begins to flow again from the Black Sea. How long Black Sea tightness will remain is uncertain. Logistical problems have prevented significant volumes leaving Russia during the second quarter because of a lack of available vessels. Gazprom and Austrofin continue to seek solutions to logistical disruption, but have yet to find any.
China is expected to return to the market, at least at the start of the third quarter, on the back of strong downstream phosphates demand. Nevertheless, inventory levels at the end of the second quarter were high, reaching a 17-month peak on 21 June. This may limit the extent of any demand rebound. Coupled with this, OCP’s new sulphur burner as part of its J4 expansion is expected to reach full volumes during the second half (of the quarter?), which could see increased sulphur demand from the phosphates major if sulphuric acid price levels remain economically favourable to sulphur burning. Sulphuric acid prices have been broadly increasing through 2018 on global supply shortages. Sulphuric acid spot availability is expected to remain limited throughout 2018.
Ongoing problems at the Grossenkneten gas fields continue to disrupt production at plants in the vicinity. Operating rates at the affected units are currently understood to be at around 50% with a return to full capacity by the end of July. The European market is expected to remain tight until at least then, although some sources said that current demand levels could see low availability extend through much of the second half of the year. Although third quarter negotiations are yet to begin, the low availability is adding upward pressure, and sources on both sides of the market have previously said that they expect Q3 contract prices to rise as a result. In Russia, the FIFA World Cup is disrupting the rail network in the country. Coupled with this, logistic difficulties with obtaining ships remain.
Local tightness is expected to continue to see the Mediterranean rely on import product during the start of the quarter. Meanwhile, OCP’s new sulphur burner – which is in the start-up phase – could also see additional demand for Europe product. Several sources have also said that the summer shutdown period in the downstream petrochemical chain would be shorter than usual this year, increasing demand during the typically slow summer months.
The US should see stronger sulphur production during the third quarter after a very tight second quarter, since turnaround season is solidly completed and the refineries will be running hard for their peak summer season. Canada may see production struggle depending on how long Syncrude stays down after a lightning strike that hit at the end of the second quarter.
Sulphur demand in Canada will likely increase during the third quarter as India’s phosphates markets kick into peak season. China consumers of sulphur will have to come off of the sidelines and negotiate deals out of Vancouver. US demand will likely remain strong and steady as burners continue running hard domestically.
Updated to Q3 2018
Producers across Asia are fully committed throughout the majority of 2018, with the exception of Two Lions in China, which is sold-out throughout the third quarter. With demand increasing (see below), this is expected to extend availability shortages into the first quarter of 2019. Current sulphuric acid prices would support an increase in sulphur burning to produce sulphuric acid. Nevertheless, shortages of upstream sulphur are preventing this from happening.
With India domestic supply virtually dry, buyers have been forced to rely on imports, and since the Tuticorin closure, buying interest has spiked. Supply relief is not expected because of global shortages. Availability is already too low to meet current buying interest. South Korea producers also said that the loss of Tuticorin could see them shift volumes to India and away from China in the mid-term. With a larger pull across southeast Asia, OCP seeking to import large quantities into Morocco to feed their expanded phosphates capacity, and Chile expected to return to the market during the second-half of 2018 once the high inventory levels seen during the first-half are worked down, buying interest is expected to remain firm. Nevertheless, the immediate challenge for consumers remains securing material.
The majority of producers are fully committed on spot volumes for the remainder of 2018. While there is talk of available material from Poland, this could not be confirmed at source.Global sulphuric acid supply is also expected to remain tight throughout the second half of 2018. Producers are expected to continue to concentrate on supplying the domestic contract market at the expense of spot volumes.
With Chile expected to return to the market in the second half of 2018 following limited buying interest in the first half due to high inventory levels, enquiries for European material are expected to rise, particularly given the shortages in Asia in the wake of the Tuticorin permanent closure. Demand from OCP remains strong, with availability remaining the limiting factor. Sources have previously said that OCP’s imports of sulphuric acid could breach the 2m tonne barrier in 2018, given the start up of its new phosphates unit. OCP imported around 1.5m tonnes of sulphuric acid in 2017. Limited sulphur availability because of production problems at the Grossenkneten gas field, lack of Black Sea volumes because of a lack of available vessels and a sweeter crude mix, continue to prevent increased sulphur burning. This is forcing a greater reliance on sulphuric aicd.
It is unclear where overall sulphuric acid supply will be over the course of the third quarter. On one hand, Unity Envirotech’s ammonium sulphate plant will continue to ramp up its consumption of sulphuric acid. On the other hand, several smelters and burners have come out of turnaround recently, which will alleviate some supply tension.
US sulphuric acid demand is expected to stay steady and strong during the third quarter as the US remains in a deficit of the product. The Henry, Illinois ammonium sulphate plant by Unity Envirotech will continue to ramp up and consume more tonnes as time goes by.
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Ammonia is one of the main sources of nitrogen in fertilisers, as it contains 82% of nitrogen (N), which is essential for the life of plants. Ammonia (NH3) is produced through a chemical reaction (electrolysis).
Sulphuric acid is a strong mineral acid with a wide range of uses in industry. Pure sulphuric acid is a colourless, viscous liquid that can cause severe burns and serious eye and skin damage, and is therefore classified as corrosive or hazardous.
Sulphur is used in fertilizers, normally in the form of ammonium sulphate, where there is a deficiency of sulphur in the soil.
Sulphur is also used to make sulphuric acid from sulphur dioxide. Sulphur dioxide is used to make dyes and as a bleaching agent.
Sulphur has a pale yellow appearance and has a slight odour of rotten egg. It is insoluble in water, but soluble in carbon disulphide.
It is found in meteorites, volcanoes, hot springs, and as galena, gypsum, Epsom salts and barite. It is also a minor constituent of fats, body fluids and skeletal minerals.
There are two key sources of processing sulphur. The first is the Frasch process, where sulphur is extracted from underground without mining it.
In the Frasch process, underground deposits of sulphur are forced to the surface using superheated water and steam (to melt the sulphur) and compressed air. This gives molten sulphur, which is allowed to cool in large basins. Purity can reach 99.5%. The process is energy intense.
Another source of sulphur is as a by-product of processing crude oil and natural gas, which contain hydrogen sulphide. It is produced in crush lump, flake and prilled form.
Key industrial uses of sulphur includes production of black gunpowder, asphalt, vulcanisation of natural rubber, as a fungicide and as a fumigant, use in the bleaching of dried fruits and for paper products.
A key use of sulphuric acid is for the production of fertilizers. Other uses include the production of carbon disulphide, sulphur dioxide and phosphorous pentasulphide; pulp and paper; and rubber vulcanising. Sulphuric acid can also be used in its diluted form as battery acid for the automotive sector.
Sulphuric acid is colourless in appearance and of an oily liquid consistency. It is both corrosive and toxic and has the ability to cause serious burns. In addition, it is harmful through inhalation, ingestion and through skin contact.
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