Europe Q2 sulphuric acid contract price ideas wide apart

26 March 2014 17:47 Source:ICIS News

LONDON (ICIS)--European sulphuric acid second-quarter contract price discussions are underway but buying and selling ideas are still wide apart depending on the source of supply, market players said on Wednesday.

A smelter seller said that its contract price ideas compared with that of its customers were “wide apart” and that negotiations might “drag on” as a result.

On the progress of its negotiations, a second smelter producer said: “We have started and even finished some discussions. Our ideas have been an increase from €5-10/tonne - generally customers have recognised the change in the sulphur market.”

Meanwhile, a third smelter producer said that negotiations were ongoing and that it had not concluded any contracts yet.

“We are still in discussions and we've not concluded, but I feel there is an upward potential. We are very short and consumption in Europe is very stable and good,” it said.

On the buying side, a consumer for the agriculture industry said: “Everything is very calm and we will start this week for acid contracts in Europe.

“I think the suppliers will try to increase €5-10/tonne and don't consider the market will allow that. Market fundamentals are really unchanged - a rollover will be the best decision for the purchasers.”

Another buyer consuming for the chemical sector also thought that a rollover was the most suitable option for the market.

“Of course everybody is eyeing the sulphur price - the market is loaded with smelter acid. I think acid will benefit from a rollover. It doesn’t make sense to react to all of these peaks and troughs,” the buyer said.

The first-quarter acid price was agreed at €56-85/tonne CFR (cost and freight) NWE (northwest Europe).

Meanwhile, export spot prices has moved out of negative territory following various exports to South America.

Spot prices moved up by $5/tonne to $0-10/tonne FOB (free on board) NWE following exports to Brazil for Yara’s second quarter contract purchase tender which was agreed in the mid-$50s/tonne CFR (cost and freight) Rio Grande.

“The European market is balanced and the Brazil tender has moved volume out of Europe. On an FOB basis I would say $0-10/tonne,” said an international acid trader.

Another trader selling acid internationally said: “I don't think there is anybody who is going to sell negative [out of Europe] unless they move tomorrow.

“Nothing much will happen because CESCO Week  is approaching . In Brazil, Timac, Yara and Mosaic will be quiet.”

Sulphuric acid is derived from smelters, as well as elemental sulphur.

Traded sulphuric acid is primarily by-product smelter acid. Sulphuric acid from elemental sulphur, produced as an involuntary product from oil and gas exploration, is largely used in fertilizer manufacturing and metal ore processing.

Other sulphuric acid end-uses include, oil refining, wastewater processing, pulp and paper production, lead-battery acid manufacturing, nylon production, and chemical synthesis.

By Julia Meehan