Sulphur prices continue to firm despite China’s absence

04 February 2014 15:10 Source:ICIS News

LONDON (ICIS)--Global sulphur pricing sentiment continues to firm despite the absence of key sulphur importer China, sources said on Tuesday.

“Our position is stated as the same - we are tight on product and most of our commitments go to contact customers,” said a major producer.

“Continuous and further tightness will depend on China and the trade route to India. The picture in the Arab Gulf with major suppliers is continuous tightness,” the producer added.

China is a major importer of sulphur, accounting for around 34% of global trade. But even with the absence of regional buyers in China because of the Lunar New Year holidays, prices continue to move up.

In the United Arab Emirates (UAE), sulphur producer ADNOC (Abu Dhabi National Oil Company) has set its official selling price (OSP) for February at $180/tonne FOB (free on boeard) for the Indian market, up $40/tonne from January.

The announcement followed news that Qatar sulphur producer Tasweeq had set its monthly Qatar Sulphur Price (QSP) at $163/tonne FOB for February, up $36/tonne from January.

In India, Reliance has increased its sulphur price to domestic buyers by Indian rupee (Rs) 1,989/tonne effective from 1 February. Sources calculate this to be equivalent to $195/tonne CFR (cost and freight) west coast India and suggest that other domestic Indian refiners are expected to follow the increase.

On the sulphur tender front, India’s FACT (Fertilizers and Chemicals Travancore Limited) re-tender for 15,000-25,000 tonnes of sulphur for late February-early March delivery to Cochin was awarded to a trader. The tender, which closed on 29 January, was awarded at $210/tonne CFR Cochin for 25,000 tonnes of sulphur, with 180 days credit.

In addition, PPL (Paradeep Phosphates Limited) purchased 30,000 tonnes of sulphur at $195/tonne CFR India from a trader. PPL had previously been in the market on 9 January, with a purchase tender for 35,000 tonnes of sulphur but at the time failed to attract any sellers - at the same time CFR India spot sulphur was valued at $155-159/tonne.

Market tightness has been pronounced across the global sulphur market since the fourth-quarter of 2013 because of a combination of refinery run cuts in the Middle East - creating a back log of orders out of the Middle East - in addition to strong demand in China.

Severe winter weather conditions across other key markets, Canada and Russia, have also caused logistical delays and storage shortages at ports.

Strong sulphur demand in Saudi Arabia for mining company Ma’aden Phosphate Company has also contributed to the restricted flow of availability out of the Middle East.

Ma’aden has just signed five engineering and procurement contracts (EPCs) worth a combined Saudi riyal (SR) 13.8bn ($3.7bn) to kick start the development of its Waad Al Shamal phosphate project.

The project includes a 4.9m tonne/year sulphuric acid plant with three lines; a 1.5m tonne/year phosphoric acid plant with three lines; and a 5.3m tonne/year ore beneficiation plant, Ma’aden said in a statement.

A 3m tonne/year fertilizer plant and a 1.1m tonne/year ammonia plant will also be built at Ras Al Khair as part of the Waad Al Shamal phosphate project.

It is not yet clear what implications this will have on the sulphur market since the fertilizer plant is not due for completion until the fourth quarter of 2016, while the ammonia plant is expected to be completed late 2016.

Sulphur is an involuntary by-product recovered from oil and gas production. 90% of sulphur is used for the production of sulphuric acid, of which close to 60% is used to make phosphate fertilizers.

($1 = SR3.75)

Additional reporting by Pearl Bantillo

By Julia Meehan