TFI '19: Sulphur sentiment dampened by weak downstream demand, high stocks

Author: Erica Sesay

2019/09/20

LONDON (ICIS)--The global sulphur market continues to be faced with persistently weak demand from the end-use phosphates market and high inventories.

Trading activity has been thin and sentiment bearish ahead of next week’s The Fertilizer Institute (TFI) conference in Chicago.

There was an initial knee-jerk reaction to attacks on Saudi Arabian oil facilities on the Huaxicun Commodity Contracts Exchange on Monday, with prices increasing by Chinese yuan (CNY) 32/tonne ($4.5/tonne) to CNY674/tonne.

By 16:20 in Beijing on Thursday, prices had slipped to CNY643/tonne.

The decline dampened physical spot trading sentiment, with prices for granular sulphur at ports along China's Yangtze River falling to CNY630/tonne.

Sinopec’s Puguang gas field prices for trucks of sulphur decreased to CNY610/tonne EXW (ex-works) in Dazhou and CNY640/tonne at Wanzhou port, both down by CNY30/tonne from the previous week.

No new deals were heard in the import market as ample supply and poor demand from the end-use phosphate fertilizer sector continues. Port inventories remain above 2m tonnes - a six-year high.

Chinese production of end-use products diammonium phosphate (DAP) and monoammonium phosphate (MAP) is still at around 50-55% of capacity.

The Golden Week holiday in the first week of October will further limit sulphur demand in the coming weeks.

The Chinese spot CFR (cost & freight) price is at its lowest level since July 2016.

In the Middle East, the recent attacks in Saudi Arabia had little impact on the sulphur industry, as supply continues to outweigh demand.

In Qatar, market participants continue to await the outcome of Muntajat’s monthly tender for market direction.

Middle East sulphur contract prices have been on a downtrend since October 2018. Since then, the price has dropped by $105/tonne or 61%.

The Arab Gulf’s major sulphur producers are expected to announce October contract prices by the end of the month.

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India has re-entered the market after a one-month absence, with Coromandel announcing a new purchase tender for 37,000 tonnes, which closed on 18 September. The tender has yet to be awarded.

In North America, talk has begun to circulate about pouring to block amid high inventories and extremely bearish sentiment. However, it appears no actual steps toward the contingency plan have been taken in Galveston, where pouring operations are located.

Sulphur production in the US dropped by 16% in June compared with the previous year, according to US Geological Survey (USGS) data. Month on month, production was slightly lower than in May.

No fresh deals were heard in the US and Canada.

Trading activity was also thin in other key markets.

Quarterly discussions are expected to begin soon for European and North African contract prices.

($1 = CNY7.09)

Focus article by Erica Sesay

Additional reporting by Rita Wang, Annalise Porter