Sulphuric acid pricing split as bears migrate to southeast Asia

LONDON (ICIS)–A gulf has opened between European and Asian sulphuric acid prices as bearish sentiment settles in southeast Asia.

Just two weeks after Q1 acid supply contracts settled in Europe at an increase, a trader was heard this week finalising a half-year supply contract with its regular buyers at an €8/tonne hike from H2 2018.

The agreement is understood to be in the low-€70s/tonne CFR (cost and freight) for H1 2019.

A trader also made mention of other half-year contracts “in the high €70s/tonne CFR”.

European sulphur burners are said to be running at near-full capacity, thanks to lower-priced sulphur feedstock, and in the spot market there is talk of northwest Europe offers above $90/tonne FOB (free on board), and bids in the $80s/tonne.

Much of the bullish sentiment appears to stem from a backlog in deliveries – some from as late as Q4 2018 – combined with a lack of trucks and drivers, and widespread poor weather.

There is some contention that these higher prices will be difficult to maintain into Q2 2019, if sulphur pricing remains notably low.

That said, demand will likely increase as fertilizer producers – among a number of other industries – stock up for spring. Maintenance outages may also impact supply into Q2.

Meanwhile, it’s a very different story in southeast Asia.

In Japan, spot acid availability remains tight, and prompt demand lacking.

Japanese producers are largely committed for Q1 – including some manufacturers who are committed to as late as H2 2019.

There is some limited spot availability – with at least one trader working to finalise a supply agreement with a southeast Asian buyer, selling ex-China burned acid.

The same source discussed southeast Asian spot pricing in the $80s/tonne CFR; adding that offers are under bearish pressure from lower feedstock sulphur pricing.

A South Korean producer confirmed buyer bids at $80-85/tonne CFR from southeast Asia, but it is uncertain if any trades have been concluded at this level.

A Swiss trader later confirmed concluded cargoes at $90/tonne CFR, and discussed a bid-offer range of $87.50-92.50/tonne CFR for southeast Asia.

Declining South Korea/Japan FOB spot offers may also be a response to higher freight costs to Chile and other destinations.

Looking further ahead, the market is openly cautious about prospects for Q2 and Q3, with factors including the Tuticorin smelter outage in India, overdue upgrades to Chilean smelters, and delayed Indian contract negotiations keeping players guessing.