Wary sulphuric acid players watch as Chinalco prepares tight shipment schedule

Author: Andy Hemphill

2019/04/16

LONDON (ICIS)--Indian fertilizer producer IFFCO has confirmed it has purchased two sulphuric acid cargoes from China’s Southeast Copper - a subsidiary of metals major Chinalco - via international traders, sources said on Tuesday.

The cargoes are Southeast Copper's first export volumes, and the process of preparing the shipments is under close observation by traders, buyers, and rival producers alike.

The two cargoes - 20,000 and 25,000 tonnes - are expected to arrive at Paradip, India, in May.

Tricon has confirmed it is to handle one of the two cargoes. Trammo would be linked to the second, sources said.

The price agreed stands in the mid-$70s/tonne CFR (cost and freight) India, with freight at $28-29/tonne, according to sources.

This nets back to around $45-47/tonne FOB (free on board) China.

The first cargo is loading on the Fairchem Friesian at China’s Putian port this week - although it is not clear which trader’s cargo the vessel is taking on.

Chinalco operates a copper smelter at Southeast Copper Co in Ningde Zhangwan Industrial Zone, Fujian province, with an approximately 400,000 tonnes/year copper production capacity.

Chinalco was not available for comment at the time of writing.

Fujian is well supplied for acid, leading Chinalco to consider exporting some of Ningde's estimated 1.2m tonnes/year acid capacity.

Southeast is planning to ship five cargoes through April and May. However, “they won’t find that easy ... it's too much”, a source at a rival sulphuric acid producer said.

Chinalco’s berth at Ningde in Fujian province is not ready for export cargoes, and Southeast was forced to dispatch the volumes to Putian instead - almost 200km (120 miles) by road, according to sources.

A pool of Chinese traders have loaned tank space at Putian to Southeast, amounting to around 42,000 tonnes of storage, market players added.

“[Chinalco] can do the first two cargoes, but after that, they’ll need to have plenty of tanker [trucks] to bring the acid to Putian. They have a lot to organise … transport will be an issue,” the source at a Chinese acid exporter said.

News of the new export player’s shipments has led to unease among acid players amid an already bearish market.

“I don’t know which way [the Asian acid] price direction will go now. We’re going to wait a little longer to see where [the price level] is going,” the source concluded.

Chinese spot acid export prices had already been in decline, even before news of Chinalco’s sale, as they were weighed down by poor downstream demand from fertilizer and chemical producers, both in China and abroad.

As well as Chinalco, the addition of new sulphuric acid capacity in China has become a talking point for the global market of late, with one trader describing potential new export players’ intentions as "the million-dollar question".

Exporting acid from China presents numerous logistical challenges, owing to the often great distances involved.

Equally, exporting acid from the country requires to have tank and berth capability at ports, which many prospective exporters currently lack.

Focus article by Andy Hemphill