The Outlook Sulphur and Sulphuric Acid monthly report forms part of the comprehensive and trustworthy coverage of the Fertilizer markets. The unbiased news and analysis includes sections on market overview, key drivers, regional updates, supply and demand outlooks as well as forecasts and any other factors driving prices. If you are involved with these or related markets, this independent and essential business tool can help you to make crucial strategic decisions. Integer Research produces the Outlook reports on behalf of ICIS.
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The Outlook Sulphur and Sulphuric Acid: Market overview
Updated to Q4 2017
Continued stock building in China in the coming months to avoid charges from the new environmental tax (see demand section), coupled with Russian barge shipments drawing to a close at the end of October because of winter conditions is expected to keep availability limited in the fourth quarter, despite the end of the peak downstream demand season. Coupled with this, one Russian distributor said that it may be unable to meet OCP’s fourth quarter demands because of weather related waterways closures, which could result in OCP turning to the spot market with additional requirements.
In China, the approach of the implementation of a new environmental tax and end-user shortages is expected to keep demand strong at least through October, according to several market players. China buyers are understood to already be pre-buying for the downstream spring 2018 season to dampen the impact of China’s new environmental tax. Under the new tax regime, which takes effect from 1 January 2018, producers will be charged yuan (CNY) 5/tonne of coal waste, CNY1,000/tonne of hazardous waste, CNY1.2 per unit of atmospheric pollution, and CNY1.4 per water pollution unit.
Russian winter barge restrictions are due to come into effect at the end of October, which will limit supply from the region. In recent weeks, traditional exporters to the Mediterranean have preferred to offer to other locations because of higher profitability, and with Asia and the Middle East expected to remain tight, this is likely to last in to the fourth quarter. In northwest Europe, supply and demand are broadly balanced and expected to remain steady during the quarter.
European demand is expected to remain covered by contractual volumes and the market to remain balanced. In the Mediterranean, buying interest is expected to remain low. According to a distributor, Russia may be unable to meet OCP's requirements for material in the fourth quarter due to winter loading restrictions, which is likely to see it look to the spot market for additional requirements.
Pacific Coast Terminals in Vancouver will be shut for maintenance during the first part of the fourth quarter, so even if supply is available, nothing can load out of that berth for two weeks. The Heartland project, if completed on time, will be online by the end of the year and bring significantly more prilling capacity. In the US, it is understood that at least one refiner brought forward a multi-week turnaround while it was already down due to the hurricanes.
The US may see some shift in demand as Brazil, which typically takes significant tonnage from the US Gulf, began to look to California for tonnes. However, nothing has been heard concluded. After Mosaic declared force majeure on phosphates products following Hurricane Irma, it is unclear what its demand requirements for sulphur will be in the coming months. In Canada, demand from China is not expected to decrease.
Updated to Q4 2017
Asian supply remains extremely tight and is expected to remain that way until the first quarter of 2018 due to a heavy outage schedule (see smelter section). However, several sources said they expect availability in South Korea and Japan to improve gradually across the fourth quarter as maintenances come to an end.
With tight supply expected to last until at least the first quarter of 2018, underlying demand remains difficult to gauge, as material outside of contract is unavailable.
The majority of European producers are sold out of spot material until the end of 2017 amid a heavy global turnaround schedule in the fourth quarter, particularly in Asia, and a focus on servicing contracted volumes. Sellers are seeing an increase in inquiries from non-typical trading partners, with India frequently mentioned, although these have yet to translate into firm business.
European producers are expected to continue to focus on contracted volumes during the fourth quarter, with the majority having no spot availability outside of small loads. In Chile, the majority of buyers remain covered for product, limiting activity. KGHM is understood to be looking for 10,000 tonnes of product for December delivery and Mantos Copper is looking for 20,000 tonnes for November/December delivery, although this is being met with little available material on offer. In Brazil, demand remains strong.
Supply in the US seemed to be trending more toward balanced from tight as the fourth quarter commenced, with the potato harvest season ending and most of the year’s planned turnarounds now complete. The last two turnarounds for 2017 will be Freeport McMoRan in Arizona and a short half-week maintenance for Kennecott in Utah. Vale in Canada is now functioning with just one furnace after transitioning down from two, as planned.
With supply balancing out, higher levels of demand are not expected at the end of the year. Metals prices have also come off after spiking to strong levels. The US market is mainly domestic at this time, making it somewhat buffered from the global tightness and high demand currently being seen, because it mainly pulls tonnes from Canada, which sends very little acid elsewhere.
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The Outlook Sulphur and Sulphuric Acid news & analysis
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The Outlook Methodology
About The Outlook Sulphur and Sulphuric Acid
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.
A key use of sulphuric acid is for the production of fertilizers. Other uses include the production of carbon disulphide, sulphur dioxide and phosphorous pentasulphide; pulp and paper; and rubber vulcanising. Sulphuric acid can also be used in its diluted form as battery acid for the automotive sector.
Sulphuric acid is colourless in appearance and of an oily liquid consistency. It is both corrosive and toxic and has the ability to cause serious burns. In addition, it is harmful through inhalation, ingestion and through skin contact.