The Sulphur markets are covered by ICIS weekly in China and on a global basis. Our market intelligence is gathered by our network of locally based reporters. The China report covers spot domestic prices, while the global report has price assessments for contract prices in Tampa and North Africa, spot prices in the Middle East and China and spot/contract hybrid prices in Vancouver.
Unbiased and independent commentary includes information on shipping activity, demand and supply, regional updates and any other influencing factors at the time. There is also coverage within the monthly Sulphur & Sulphuric Acid Outlook report. You can use this reliable information to keep up-to-date on market movements and make informed business decisions.
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Sulphur: Market overview
Updated to Q2 2018
Supply in the second quarter will largely depend on availability from the Kashagan Oil project. Significant supply from the facility has the ability to fundamentally reverse the supply/demand balance from short to long. The plant has the nameplate capacity to export 1.1m tonnes/year of sulphur internationally. Some sources remain sceptical about the volumes that will be available in Q2 given the long-delayed nature of the project. The first batch of export crude oil shipped from Kashagan in October 2016, itself after suffering several delays.
Production of export sulphur from the Kashagan Oil Field has begun and regular export volumes are now expected, a source familiar with the situation said last week. Around 143,000 tonnes of test volumes were exported from Kashagan from November to mid-February, according to a February North Capian Operating Company (NCOC) press release. NCOC is the Kashagan development consortium’s representative. Partners in the consortium are KazMunayGas (16.88%), Shell (16.81%), Total (16.81%), ExxonMobil (16.81%), Eni (16.81%), CNPC (8.33%) and Inpex (7.56%). Each consortium member will be allocated a share of the product to market individually as they see fit.
Although peak season demand is approaching, China buyers are instead working down inventories in the expectation of further price erosion. Coupled with this, downstream phosphate buyers in India are also working of inventories, which is further limiting China consumption. India sulphur buyers, meanwhile are well covered with stocks into April.
While a bounce-back in China consumption is expected at some point in Q2 because of the peak season in demand, how late in the quarter this occurs is likely to dictate the direction of prices, at least in the short-term. The rollercoaster nature of China prices since Q4 2017 has seen a spike in rolling 12-month China volatility to its highest level since end-June, according to ICIS analysis.
China buying patterns are mirroring downstream India phosphates buyers – their main trading partner – who are also running down inventories rather than making fresh purchases. Price expectations from phosphate fertilizer producers remain lower than current levels, suggesting downward price pressure will remain a feature of both the domestic and import markets moving into April.
The switch to a sweeter crude mix as well as ongoing refinery shutdowns has seen the market tighten moving into quarter two. Nevertheless, global sulphur prices are falling. Although European price movements are typically isolated from price movements elsewhere - because while in other regions sulphur predominantly serves the fertilizer markets in Europe it typically serves caprolactam – sharp global movements in either direction do have a knock-on effect. Sharp price rises in China prices in Q4 dominated Europe contract discussions at the time, and the current falls in China prices are having a similar effect moving into Q2.
Nevertheless, uncertainty over available volumes from the Kashagan Oil field in Kazakhstan is confusion the picture. Significant supply from the facility has the ability to fundamentally reverse the supply/demand balance from short to long. The plant has the nameplate capacity to export 1.1m tonne/year of sulphur internationally. Some sources remain sceptical of the volumes that will be available in the second quarter given the long delayed nature of the project. The first batch of export crude oil shipped from Kashagan in October 2016, itself after suffering several delays.
Production of export sulphur from the Kashagan Oil Field has begun and regular export volumes are now expected.
Russia is expected to begin exporting material again from May. Russia's major trading partner is North Africa, where OCP is the dominant player. There was talk that OCP will bring up its J4 phosphate unit in the coming weeks, but the company could not be immediately reached for confirmation and other sources did not expect the unit to come fully onstream until the third quarter. OCP’s stock levels are understood to remain relatively high following the port disruption, which delayed arrivals, resulting in them remaining inactive in the market. When OCP's J4 unit does come onstream it will increase demand in the market.
Supply in Q2 is expected to be less strained in North America. Refineries will be running harder and therefore producing more sulphur. Suppliers anticipate sending more tonnes offshore from the US Gulf. The turnaround at Canada’s Syncrude should be finished midway through May, bringing production in western Canada back closer to normal levels.
Q2 demand should pick up after multiple holidays in different regions slowed the sulphur trade. Major phosphates demand will begin to pick up, bringing sulphur demand along with it from Vancouver and California. Brazilian buyers have been on the sidelines in recent weeks, but demand is expected to recover moving in to April due to the spring peak season.
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ICIS price assessments are based on information gathered from a wide cross-section of the market, comprising consumers, producers, traders and distributors from more than 250 reporters world-wide. Confirmed deals, verified by both buyer and seller, provide the foundation of our price assessments.
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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.