TFI '19: Lacklustre demand, European maintenance a headache for sulphuric acid players

Author: Andy Hemphill

2019/09/20

LONDON (ICIS)--The global sulphuric acid market remains bearish overall although tightness is developing in Europe as a slate of maintenance outages removes capacity.

Sweden’s Boliden, Germany’s Aurubis, Polish producer KGHM, Belgium-based Nyrstar and Italy’s Nuova Solmine are just some of the European players that have taken units offline, or are shortly to go offline.

In Spain, Atlantic Copper’s force majeure declaration earlier this month has caused headaches for traders including Ameropa and Tricon, it is understood.

The Atlantic Copper outage has been most clearly felt in Brazil, with offers ticking up by up to $10/tonne on supply concerns; while buyers have also been spotted approaching China and South Korea for cargoes.

Offers into Brazil stood at around $70-75/tonne CFR on the supply concerns, with freight from northwest Europe to Brazil estimated at $34-37/tonne for 15,000-20,000 tonnes, according to sources.

Meanwhile, in southeast Asia, all eyes are on Thai oil and gas major PTT, which is yet to close an import tender for 130,000-200,000 tonnes of sulphuric acid, for delivery in 2020.

Several players confirmed the requirement, adding that PTT is seeking 98% acid only.

There is talk the enquiry will conclude at or slightly after next week’s The Fertilizer Institute (TFI) conference.

Otherwise, southeast Asian spot demand remains limited overall and there is talk of long supply; leading to depressed offer pricing in the high-$30s to low-$40s/tonne CFR.

Elsewhere in Asia, there is talk of Chinese exporters under pressure to move cargoes ahead of the upcoming National Day holiday (1-7 October).

Two Lions said it had sold an unspecified quantity of acid to a buyer at $10-15/tonne FOB (free on board) China.

The buyer is yet to provide a destination for the volumes, although the Chinese producer expects to have additional details within the week.

Sources said the cargo could be destined for India, possibly for buyer Greenstar Fertilizers.

Traders questioned Two Lions’ agreed price, ruling it too low to be workable for a profitable netback, on limited demand and bearish sentiment around the world.

Two Lions planned to re-enter the spot market in late Q3, and has returned to the trade at a time when feedstock Chinese sulphur inventories are at a six-year high, and prices for the raw material are low.

Sulphur port inventories in China have climbed to 2.2m tonnes.

The Chinese domestic market also remains weak, and there is talk of smelters in the north dropping offers by Chinese yuan (CNY) 50/tonne ($7/tonne) on an ex-works basis, to reduce inventories.

Beijing has imposed heavy restrictions on the road transport of dangerous chemicals prior to the National Day break, which is also putting pressure on producers to close business urgently - and making exports more attractive.

Despite the downbeat mood in much of Asia, India is somewhat bucking the trend amid talk of increased demand from opportunistic buyers eager to lock in cargoes.

Some players feel Indian acid demand may top 100,000 tonnes for Q4, and there is talk of volumes already trading for the last quarter of the year.

“When prices tend to go down then Indian customers love to buy, and since they have seen prices recently tick up some feel that they missed the bottom,” one Europe-based acid trader added.

It is a different story in key acid-importing nation Chile , where predictions of increased demand for Q4 have failed to come true.

Inventories remain high and there is talk of buyers continue to push for lower pricing in Q4, although an uptick in freight rates make such levels unworkable for many producers.

Sources said 15,000-20,000-tonne cargoes were trading within the last month around $70-80/tonne CFR (cost and freight) Chile.

The TFI conference runs from 23-25 September in Chicago.

($1 = CNY7.09)