Sulfur Market in Brief
Negotiations for third quarter negotiations have been commenced in some regions. There seems to be a united understanding of softer price settlement anticipation for the second quarter in all regions. This may include West Europe as a single exception. West Europe’s negotiations have not commenced yet and its marketers are looking for different outcomes since the market is almost in balance although it could tip to tight easily.
Other markets are expected to witness a drop, especially due to the gloomy outlook for the finished fertilizer sector. However, the extent of this reduction has not been agreed upon. Settlements for the third quarter market are waited for with much anticipation by the market as participants hope they will provide some guidance on future pricing.
Active Forces in the Market
Market Outlook in Next Month
All market participants are still laying eyes on August as the time when market may move away from its flat-to-soft path of so far this year.
Asia
China
The market remains quiet and granular prices are continuing to largely stagnate. But, there has been some trade with a 20,000MT parcel sold to the south at around USD116/MT CFR by a trader and there are reports of two other sales to the south in the mid/high-USD110s/MT CFR, but these prices are in line with previous indications.
Offers are upwards of USD120/MT CFR Yangtze River despite being thin on the ground, against bids in the mid-to-high- USD110s/MT CFR, these are thin also. Mideast granular has been offered into the south at USD117-118/MT CFR. Nonetheless, uncertainty remains and most are waiting for further guidance from third quarter Mideast contract talks before stepping in. The phosphates market is also still weak and is likely to remain so, and as a result, any price boost is unlikely to come from downstream demand.
Crushed lump sulfur of Russian and Turkmen origin is being offered to the Chinese market with Iranian product no longer being offered for export. Prices for crushed lumps are in the range of USD100-105/MT CFR. In the molten sulfur market prices have fallen on the sale of 3,000MT at around USD90/MT CFR. The China CFR price has been assessed at USD90-118/MT.
There has been some movement this week at Sinopec's Puguang with Dazhou prices increased by Yn10/MT to Yn880/MT while Wanzhou prices were held steady for an eighth week at Yn990/MT. Puguang is still operating at around 5,000MT/d of sulfur production. Granular sulfur has traded in the range Yn960-970/MT ex Yangtze River ports this week, largely unchanged on last week. Paper prices have moved to Yn977/MT for August and Yn987/MT for September. July is now thinly traded. Chinese port stocks are at 1.75mn t this week, up 30,000MT on the week.
India
Fertilizer producer Paradeep Phosphate (PPL) closed a spot purchase tender on 17 June. There are reports that the tender has been awarded in the mid/high-USD110s/MT CFR but an award could not be confirmed with all transacting parties at press time. The company was last in the spot market in late-February.
Sulfur consumer and fertilizer producer CIL is also understood to be in the market with demand but nothing has been purchased yet. Prices in the current India CFR range of USD115-120/MT are understood to be in discussion. There is also demand from small consumers for lots under 15,000MT and offers are in excess of USD120/MT CFR.
Middle East
Third quarter contract negotiations are in the very early stages. There are some reports of seller targets at around USD100/MT FOB for contracts with traders, but the buy-side is understood to be seeking lower settlements. In the spot market, the Middle East FOB price has been assessed at USD98-101/MT, on the award of the Muntajat tender and freight rate increases pushing down netbacks as key CFR market prices remain flat-to-soft.
Iran
Iranian sulfur supplier IGCC has awarded its reissued tender to sell 50,000MT of granular sulfur at USD76.50/MT FOB Assaluyeh. The cargo will load during the first half of July.
The company has expressed a preference to warehouse its next produced sulfur until spot prices become more favorable. The FOB Iran price has been assessed at USD70-77/MT. In the freight market are the following checks for cargoes all loading at Bandar Abbas:
25,000-35,000MT granular sulfur prompt loading for shipment to Zhenjiang, China
30,000-50,000MT loading 17-23 June for shipment to South China or CJK, China
25,000-50,000MT loading 25-30 June for shipment to Adabiya, Egypt
20,000MT loading 25-30 June for shipment to Vizag and Haldia, India.
Kuwait
Sulfur producer KPC is expected to start 3Q contract negotiations in the coming days. The company has five cargoes for loading this quarter which will be priced based on negotiations as well as the company's monthly Kuwait Sulfur Price.
Operations at Kuwait's 265,000 b/d Mina Abdullah refinery have been affected by an interruption to seawater supply, which is used to cool production units at the plant. But exports from the refinery have not been impacted, state-owned refiner KNPC said.
Qatar
State-owned marketer Muntajat has awarded its latest sales tender for a July loading cargo at USD101/MT FOB Ras Laffan.
The last tender was awarded just below USD105/MT FOB.
UAE
Adnoc Logistics & Services are in the freight market with a check for 50,000MT loading Ruwais 19-21 June for shipment to Jorf Lasfar or Jorf Lasfar and Safi, Morocco. This is linked to term contract supply. Loading at Ruwais port continues to be slow because of the reduced capacity.
Africa
Some spot demand has been reported in the North African market for full size cargoes. Buying interest is indicated at the top end of the current assessed range of USD88-99/MT. For quarterly contracts, negotiations are in the very early stages, or yet to start at all depending on origin of product. A drop on second quarter prices is expected to be concluded and cargoes of Polish origin will be shipped on formula.
Morocco
Morocco's sulfur imports increased by 27pc in the January April period, to 2.2mn t, as capacity expansion efforts at OCP’s Jorf Phosphates Hub took effect. Around 1.47mn t was delivered to Jorf Lasfar port alone. Middle East suppliers dominated Morocco's supply chain, and the UAE remained the regional lead, delivering around 51pc, at around 1.13mn t and up by 59pc on prior-year deliveries. Imports from the UAE come from sulfur producer Adnoc, which has a long-term sulfur supply agreement with OCP, which was signed in December 2017.
Imports from Saudi Arabia increased by 148pc to 347,000MT, while those from Kuwait remained flat at 57,000MT, reflecting Kuwaiti state-owned sulfur supplier KPC’s steady quarterly contract shipments to OCP. FSU supply accounted for around 20pc of Morocco’s overall imports. Kazakhstan was the regional lead, but its deliveries dropped by 10pc to 303,000MT.
Deliveries from Poland also dropped - by a larger 18pc - to 107,000MT. Polish sulfur comes from frasch mining operations at the Grupa Azoty owned Osiek elemental sulfur mine, and the company typically ships one sulfur cargo at month of around 25,000- 28,000MT in size to OCP, through quarterly contracts. Supply from Spain slumped to just 59,000MT, down by 58pc.
For April, Morocco imported 454,000MT, flat on last April. The UAE delivered 267,000MT, up by 58pc. Imports from Kazakhstan and Saudi Arabia increased by 77pc and 52pc respectively, to 82,000MT and 69,000MT. But imports from Spain dropped by 85pc, to just 8,000MT.
South Africa
Price indications for current negotiations are in the range of USD110-115/MT CFR Richards Bay.
Freight Market Overview
Fertilizer freight rates held relatively steady this week though booking activity in the Atlantic basin did push rates slightly up in that region. High sulfur 380cst material from the port of Rotterdam dropped as low as USD342/MT on Tuesday - though it did tick back to USD350/MT on Wednesday - compared to USD355.50/MT level on Wednesday last week.
This is still well below the USD388.50/MT level from the last Thursday in May. Prices for Singapore and Shanghai grades have shown the same trend. Time charter rates in the Atlantic have trended slightly higher not just on the back of the drop in fuel prices but on the back of slightly increased demand, particularly in the east coast of South America. The cost of freight between Brazil/Argentina and the UK continent reached USD14,000/d while the rate to the Mediterranean was discussed at USD15,000/d.
Fertilizer fixtures were limited this week but booking activity typically enters a seasonal lull during July and early August, when shipment volumes are low and rates tend to dip. Charterers with non-urgent cargoes may wait until these dates to secure vessels, which might be available below current levels.
Report By: Naeemeh Ferdowsi
