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Sulphur 405 Mar-Apr 2023

31 March 2023

Market Outlook

Historical price trends $/tonne

SULPHUR

  • Chinese domestic sulphur supply growth remains strong. Production is expected to rise in 2023, putting pressure on import demand potential. In 2022 total imports were 7.6 million tonnes, with a stable view for the year ahead.
  • In the processed phosphates market, the consensus view is that exports from China will begin to normalise in April-May with restrictions eased and the domestic season ended, but there has been no official confirmation of this. The expected increase in Chinese supply and concern over the pricing of DAP is a bearish factor for the market.
  • New sulphur supply is expected online in Oman with commissioning and testing of the Duqm refinery under way, ahead of the start of commercial operations at the end of the year. Sulphur capacity is expected to ramp up between 202425. The Middle East region will add over 1.6 million t/a of new capacity this year, leading to an uptick in export availability.
  • Sulphur supply from Canada to offshore markets is expected to be supported by additional forming capacity with the expected start-up of the South Cheecham project in Alberta later this year.
  • Outlook: Prices are expected to continue to soften in the short term with limited spot demand emerging while second quarter contract negotiations are underway. The global market is expected to be broadly balanced later in the second quarter, with the potential for sulphur prices to recover in June if demand rises as expected.

SULPHURIC ACID

  • High energy costs continue to impact some downstream sectors for acid. BASF has announced the permanent closure of its caprolactam plant and associated fertilizer facilities at its Ludwigshafen site in Germany. Energy costs added an additional pressure on margins and competitiveness.
  • Indonesian nickel high pressure acid leach operations have been active in the acid spot market, a trend expected to continue for the short term. Halmahera Persada Lygend booked four cargoes for mid-late April shipment. Tsingshan also booked volumes for April-May delivery.
  • Base metals prices declined in March with huge uncertainty in financial markets caused by the failure of two US banks spooking investors. Efforts towards stabilization allayed anxiety slowing price drops on 16 March.
  • Outlook: The price downturn is expected to turn to stability by the second quarter with incremental recovery expected. With sulphur prices stable to soft in the short term, this may encourage buyers to the acid market during this period. The rate and pace of Chinese smelter acid capacity additions will be a key influence for the short term outlook as well as the return of China to the processed phosphate export market.

Latest in Outlook & Reviews

Running the gamut

This issue of Sulphur magazine contains a preview of CRU’s Sulphur + Sulphuric Acid conference in Woodlands, Texas, which is being held from November 3rd to 5th this year, giving delegates the opportunity to meet and discuss some of the trends which are continuing to change the sulphur and sulphuric acid industries. Some of this is echoed in our editorial coverage this issue; the rise of electric vehicles and the continuing electrification of society is changing demand for metals and impacting upon both sulphur and sulphuric acid markets alike. As CRU’s principal analyst Peter Harrison discusses on pages 36-37, battery demand for nickel is leading to a surge in new nickel leaching capacity in Indonesia which is drawing in greatly increased volumes of sulphur, while rising demand for copper is leading to additional volumes of smelter acid from China, India and Indonesia which are impacting the merchant market for acid, as detailed by CRU’s Viviana Alvorado on pages 38-40. In the United States, new lithium mines will require additional sulphur (see pages 22-23). Rare earths and battery metal recovery will form a major topic on the first day of the Sulphur + Sulphuric Acid conference, with speakers from Lithium Americas, one of the pioneers of the new US lithium industry.

Is the world ready for CBAM?

At the end of this year, the European Union’s Carbon Border Adjustment Mechanism (CBAM) will move from its transitional phase into its ‘definitive’ phase, whereby the carbon costs of goods entering the EU will need to be priced in. CBAM requires suppliers to calculate the carbon emissions of their fertilizer (and other, e.g. steel) products, including indirect emissions, for example from electricity consumed in the process, and emissions of precursor or raw materials. They will then need to purchase CBAM certificates to cover embedded emissions above the established free allowance benchmark rates determined by the European Commission: 1.57 tonnes CO2e/tonne ammonia and 0.23 tCO2e/t nitric acid.