US sulphuric acid market balanced amid pandemic despite reduced feedstocks, production

HOUSTON (ICIS)–The US sulphuric acid market has remained mostly balanced despite a chaotic month of coronavirus worries, feedstock constraints and varying demand requirements throughout the region.

Feedstock sulphur supply continues to tighten, with refinery rates remaining at record lows. The Energy Information Administration (EIA) this week placed utilisation rates at 69.6%, an increase from last week, but still a sharp decrease from 87.3% last month.

Reduced feedstock production, coupled with decreased smelter production, has tightened sulphuric acid supply.

On the flip side, weak demand from copper, automotive and refining sectors have lent some balance to the market. Curbing overall demand from being weaker are strong areas in agriculture, water treatment and paper industries.

There is talk that imported acid has been acquired to ease supply tightness for some buyers, although this is unconfirmed. US imports of acid have been sharply higher this year so far, according to the ICIS Supply & Demand Database.

US: top sulphuric acid suppliers (tonnes) Jan-Feb

Country	2019	2020	% Change
Canada	257,535	296,300	15
Mexico	78,614	105,739	35
Spain	19,592	61,603	214
South Korea	0	55,518	∞
Finland	7,500	34,586	361
World total	414,889	614,207	48

SATCO’s new acid terminal in Stockton, California, could help maintain balance if the market tightens further since this provides additional supply options from Asia. However, in Japan, it is understood smelters have no spot material available for export until July.

On the US operations side, Freeport-McMoRan is lowering its mining rates in North America by 20% as global copper pricing plummets to record lows, and the New Mexico Chino mine operations remain suspended.

Since the Lone Star copper leaching project is already 90% complete, Freeport will not defer work on the facilities. However, there is talk in the market that it will proceed more slowly than expected, pushing off that source of new acid consumption.

Additionally, the Excelsior in-situ copper project has been suspended, which consumes acid.

Acid production will be affected by a flash converting furnace at Rio Tinto’s Kennecott, Utah, operations requiring a complete rebuild this year.

The unit sustained damage from an earthquake on 18 March, and there have since been mixed reports in the market on whether sulphuric acid is currently being produced at the operations or not.

If sulphur burners are able to procure sufficient feedstock supply, they are well-poised to fill gaps left by smelters.

Sulphur purchase prices moved up in April, with major buyers Mosaic and Nutrien each separately settled their Tampa Q2 sulphur contracts at an $18/long ton increase from Q1 2020.

Focus article by Annalise Porter