Sulfur Market in Brief
Another week still with softening prices in several regions and softening sentiment almost globally. Observing spot business price falls in the market West of Suez, most notably in China, where prices have now fallen to top out at USD105/MT CFR for granular sulfur.
In the west, key end-users are covered by contract supply and there are some expectations that they will not step in to the spot market again until the fourth quarter, which could put even more pressure on spot prices in the coming months.
Next week, the spot sales tender from Qatari state-owned marketer Muntajat will provide more guidance on the Middle East spot price and is also likely to help set the tone for the August monthly lifting price announcements.
Active Forces in the Market
Market Outlook in Next Month
With prices continuing to fall in the spot market, and sentiment continuing to turn towards bearish, large parts of the market are hesitant to make predictions. Both buy and sell-side participants are in wait-and-see mode with eyes particularly focused on Chinese end-users as to if DAP production cuts are to come to fruition. If they do, then in third quarter 870,000MT of sulfur demand will be removed from the Chinese market.
Asia
China
The China CFR price has dropped again this week on confirmed business as well as sliding bid and offer levels. In the river, granular bids are at a maximum of USD105/MT CFR, and there are unconfirmed reports of firm offers being made in the high-USD100s/MT CFR.
In the south, there is minimal buying interest from end users, but one granular cargo of Middle East origin has been confirmed sold in the low-USD100s/MT CFR for July shipment. There are also indications that some traders are bringing tones to the Chinese market to sell on a Yn/MT basis from ports amid thin demand for larger lots on a CFR basis. The crushed lump market remains practically non-existent because of weak general demand, in hand with environmental limitations.
For molten sulfur, confirmed business lacks this week, but mid-August shipments are expected to be negotiated in the coming weeks. The China CFR price has been assessed at USD85-105/MT. The outlook continues to be weak for the Chinese market, according to market participants, particularly as there are no clear signs as to when prices are going to stop falling as demand is down and domestic inventories remain healthy.
The MV New Island arrived at Zhanjiang port on 14 July. The vessel has a deadweight of 47,304t and loaded at Ruwais port, UAE. The MV Jin Fu Xing 66 arrived at Jingkou port on 14 July. It loaded 16,500MT of sulfur at Mailiao port, Taiwan in early July.
Domestic market
Sinopec has increased prices at Puguang's Wanzhou site this week by Yn10/MT to Yn880/MT, but has held prices steady at Dazhou at Yn830/MT. The site is still operating at about 5,000t/d. Port prices slipped back down at the start of this week following a slight bump up at the end of last to Yn835-840/MT, equivalent to very low-USD100s/MT CFR. A 10,000t lot was sold for end-August dates at Yn845/MT but it falls outside of the assessment time frame.
Crushed lump port prices are at a discount of Yn60-70/MT from granular product. Bags of crushed lump sulfur are only being accepted at Dafeng port, which is causing some logistical problems for sellers and buyers alike as transportation costs are high. Paper prices dropped on 15 July but bounced back up on 16 July to trade at Yn848/MT for August and Yn857/MT for September. They then continued to fluctuate across the week but at press time August was priced at Yn840/MT and September nearer Yn850/MT.
Port stocks are still holding over 2mn t but have slipped by 20,000t on the week to 2.08mn t, but market participants have indicated they are closer to 2.17mn t. With regards to the DAP production cut target amongst the 2+6 group, a team of 18 inspectors has been formed and will be placed in DAP plants to crosscheck production rates on a daily basis to ensure that the proposed cuts are enforced. The inspectors are understood to have been in place since 17 July and the number of inspectors per plant is based upon the company's DAP production capacity.
India
There are mixed reports this week regarding the status of IRC Agro's spot purchase tender which closed on 8 July. There are reports it has been awarded in the low-USD120s/MT CFR, but the sell-side indicates the deal is not yet finalized. Fertilizer producer Sai Phosphate is also understood to have secured around 5,000t near USD120/MT CFR from a trader and it has been discovered that previously, Andhara Sugar secured 10,000t from a trader in the high-USD110s/MT CFR.
There is also a new bit of buying interest in the market with CIL seeking up to 20,000t for August. With small lots being sold near USD120/MT CFR it is indicated by market participants that full size cargoes will no longer achieve prices at this level. The India CFR price has therefore been assessed down slightly to USD112-117/MT.
The monsoon status has now improved and the rains are looking better than anticipated just 10-15 days ago. There are still mixed expectations from domestic producers with some looking at lower demand whilst others are already sold out for the rest of this quarter, but geographical location plays a part in this. Domestic producers do not however expect to see domestic Indian sulfur prices rise because of the weak sentiment in the wider global sulfur market.
Middle East
The Middle East fob third quarter contract range is so far indicated at USD76-100/MT fob. The top end is supported by settlements with traders whilst the bottom end is the netback from prices so far indicated settled with North African consumers in the high-USD90s/MT CFR to low-USD100s/MT CFR.
But, contracts cannot be assessed as not all Middle East producers have confirmed conclusions. It is worth noting that Kuwait's KPC will only supply cargoes on a fixed contract price to North African consumers, other cargoes will be sold on the monthly Kuwait Sulfur Price (KSP) and the company will deliver nothing under contract to Brazil. In the spot market, the price has been assessed at USD93- 97/MT fob following reductions in prices in key CFR markets and increased freight rates of late. There are two reports of cargoes having been concluded below USD90/MT fob, but they
are unconfirmed.
Iran
Iranian sulfur supplier IGCC has scrapped its tender to sell 40,000t of mixed flaked and granular sulfur on a fob basis, as well as its tender to sell two 30,000t cargoes of crushed lump sulfur on an ex-works basis.
Fob Iran prices have been revised down to USD68-75/MT. The reduction reflects lower CFR prices in key end-user markets and the top end is supported by the recent sale of Turkmenistan origin sulfur at USD10/MT ex-works Galkynysh, with transport costs from Turkmenistan to Bandar Abbas port indicated in the mid-USD60s/MT..
Kuwait
Kuwait's state-owned refiner KNPC has postponed a planned turnaround at its 265,000 b/d Mina Abdullah refinery from August until October, potentially providing some relief to a tightening middle-distillates supply picture in the Mideast Gulf.
When the maintenance was to take place in August the company did expect to have reduced availability and delayed laycans across the third quarter, this will now likely be shifted to the fourth.
Qatar
Qatari state-owned Muntajat will close its sales tender for 35,000t of sulphur on 23 July. The tender, if awarded, should provide the next clear test of fob Middle East prices.
Africa
Contract prices are so far indicated to range USD80-101/MT CFR North Africa for the third quarter. The top end is supported by Middle East sulphur for shipment to Tunisia's GCT and the bottom end is supported by product of European/Mediterranean origin to Morocco's OCP. Sulfur from the FSU falls in the range of mid/high-USD80s/MT CFR to mid/high-USD90s/MT CFR on a crushed lump-granular price spread. OCP's contract top-end is in the high-USD90s/MT CFR and is linked to Middle East origin product. Contracts have softened by USD2/MT on the top end for Middle East supply.
The 3Q North Africa CFR price, despite indications of USD80-101/MT CFR cannot be assessed as confirmation of prices for UAE origin product has not yet been obtained from the sell-side. In the spot market, no business has been confirmed keeping prices steady and largely in line with contract prices indicated so far.
Morocco
Following the conclusion of third quarter contracts, fertilizer producer OCP is now comfortable and is not expected to enter the spot market until the start of the fourth quarter, at the earliest. Around 545,000t is currently scheduled for discharge at Jorf Lasfar port. This is the highest volume of sulphur that has been scheduled for discharge at Jorf Lasfar since 21 February. The boost reflects the agreements between Morocco's OCP and suppliers in the Arab Gulf and FSU for the third quarter.
South Africa
The MV Ermione arrived at Richards Bay on 10 July. The vessel has a deadweight of 56,557t and loaded at Mesaieed, Qatar. A planned new refinery in South Africa — backed by Saudia Arabia's state-owned Saudi Aramco — is likely to be located at Richards Bay, in Kwa-Zulu Natal, energy and mining minister Gwede Mantashe said last week.
Tunisia
The purchase tender from fertilizer producer Tifert has been awarded in the low-USD100s/MT CFR Tunisia to a trader. As the tender is for sulfur to cover the entire quarter, the award price is thought to not be representative of spot pricing by market participants..
Freight Market Overview
Fertilizer freight rates continued to rally this week making rapid gains each day. Some routes in the Atlantic rose by as much as USD2,000/d compared to last week, one participant suggested, which could be 10-20pc depending on the TC rate on the route.
The transatlantic route was up to USD19,000/d with some variance depending if the booking was to the Mediterranean or the north of Europe. Some discussions reportedly took place at USD20,000/d and slightly higher. At least one scrap cargo was booked from Liverpool, Britain to the east Mediterranean at USD12,500/d by EMR.
A substantial shortage of available tonnage in the north of Europe developed and charterers struggled to secure any vessels for July loading dates, which helped drive the market higher. Front haul cargoes from the US Gulf to East Asia were discussed as high as USD31,000/d though no fixtures have been concluded at this level yet. There is still tonnage available for prompt loading dates but it is growing sparser and charterers were bidding higher and higher to attract owners.
Rates in the Pacific basin also ticked up, which could help to keep the market balanced rather than pulling owners from the Pacific into the Atlantic. This could sustain the current rally in rates in the short-term. Fertilizer fixtures were limited this week, possibly as a result of the rapidly escalating rates, and there were few bookings since the fixing of the Ever Grace by BPC on Thursday last week at USD41/MT between Klaipeda and China.
Report By: Parya AhmadPour
