Sulfur Market in Brief
In this weeks' key CFR markets, nowhere in the world paid over USD100 CFR. Where in Brazil the price reached mid-USD90s per MT CFR following a purchase by consumer CMOC, China and India followed the trend and business concluded in South China by Indian importer CIL at prices below USD100 per MT CFR.
This global price slide was not a surprise to most of the market. The finished-fertilizer market trend is still towards bearish and demand across the global sulphur market looks weak for the rest of this quarter. End-users are either in the process of covering demand, or have already covered demand, for the rest of third quarter. Now all eyes now rest on the fourth quarter and beyond.
Active Forces in the Market
Market Outlook in Next Month
As the rest of 3Q progresses, trading activity in key markets is expected to slow, as forward buying covers many large consumers and attention from mid-September turns to fourth quarter contract negotiations. With liquidity set to become minimal, there are some expectations that a slowdown - if not total halt in price softening - will occur. But this will not be because a trading level will have been found, but rather because a total lack of business is keeping prices range-bound.
Asia
China
Granular spot prices have eased this week with reported business ranging mid-to-high-USD90s/MT CFR. A southern buyer has booked 35,000-45,000MT of Mideast granular from a Chinese trader at USD95/MT CFR, loading during the second-half of August and a Yangtze River buyer is linked to a purchase in the high-USD90s/MT CFR.
There are also reports of some river based traders bidding in the high-USD90s/MT CFR. Granular spot prices, which were last seen at this level in June 2017, have lost around half of their value since trading at the mid-USD180s/MT CFR in September-October last year. And the outlook remains soft, amid substantial port stocks. Most buyers expect further price erosion and this lack of confidence can be seen among certain domestic traders, who are requesting September delivery import lots to be priced in local terms ranging Yn780-790/MT, minimizing risk where possible.
Crushed lump sulphur trades are minimal with the only product heard available arriving from Turkmenistan and Iran. Prices are indicated to be at least USD10/MT lower than granular product. Molten sulphur was last priced at USD80/MT CFR, with no new business or price indications given this week. The China CFR price has been assessed at USD80-98/MT.
Domestic market
Sinopec has lowered prices at both Puguang sites by Yn50/MT this week. Wanzhou is now priced at Yn810/MT and Dazhou is now priced at Yn770/MT. Port prices have now fallen to their lowest levels since April 2017 with prices trading in the range of Yn770-790/MT, equivalent to low/mid-USD90s/MT CFR.
The ever-sliding port prices have been linked to traders being forced to liquidate tons to free up cash to, in some instances, pay port-storage costs which are high in some areas. Paper prices have fluctuated this week. September was trading at Yn791/MT on 30 July and October at Yn795/MT. By
press time September was trading at Yn796/MT and October at Yn797/MT.
Port stocks have edged higher again this week and are at 2.18mn MT, up by 60,000MT on the week. Stocks are moving ever closer to 2.2mn MT, a level not seen in China since 25 July 2013. Zhenjiang continues to hold over half of all Chinese inventories, at 1.19mn MT.
India
India's CFR price has followed that of China and is now below USD100/MT, assessed at USD96-99/MT CFR, a price level not seen since June 2017. Fertilizer producer CIL has filled its demand for 20,000t at just under USD100/MT CFR with product from trading house Swiss Singapore, and fertilizer producer PPL has received offers against its purchase tender in the mid-to-high-USD90s/MT CFR. At press time the company was understood to have made an award in the mid-USD90s/MT to a trader, with credit.
Fertilizer producer Fact has closed its purchase tender, which is yet to be awarded, but the company has received two offers from international traders in the high-USD90s/MT CFR. Tenders from trading house MMTC and fertilizer producer RCF total 18,000t of demand but do not close until 9 August and 8 August, respectively, with the latter having extended the closing date twice this week.
A freight check is in the market for 20,000t prompt loading Qatar for shipment to Haldia Port and is linked to the recent purchase made by IRC Agro from a trader. Fertilizer producer IFFCO is currently getting around 15,000t/month from domestic refiner and sulphur producer IOC. On the supply-side, some domestic producers are committed to the end of this quarter and are now focusing on 4Q supply.
For exports, the re-issued spot sales tender from refiner and sulphur producer MRPL closed on 31 July. An award was not discoverable at press time, but there were several reports of bids being rejected, and some speculation that the tender has been scrapped once again because price levels
were not attractive enough.
Middle East
The Middle East fob price is assessed at USD75-79/MT. The bottom end is supported by the August Qatar Sulphur Price and the top end is supported by netbacks, despite prices having now exclusively fallen below USD100/MT CFR. The Middle East fob price has not slipped below USD80/MT fob since May 2017 with continuing tightness in the region providing support to prices for the prolonged period.
Iran
Iranian supplier KHIPC has returned to the spot market this week with a tender to sell 30,000MT of granular sulphur. This is the company's first sulphur sales tender since mid-June. Supplier IGCC has also returned to the spot market, issuing a tender to sell 50,000t of granular sulphur. The company scrapped two tenders to sell 40,000MT of flaked sulphur and 60,000MT of crushed lump sulphur last week, on limited demand. Both of the newly issued sales tenders close on 7 August, and will provide the next clear test of the Iran fob price.
Jordan
The MV Shanghai Bulker with a deadweight of 56,719MT departed Ruwais port, UAE on 25 July. The vessel is scheduled to arrive at Aqaba on 5 August. A trader is now in the freight market with a check for 45,000MT loading Jubail, Saudi Arabia 4-5 August for shipment to Aqaba. No news of the award of fertilizer producer JPMC's term purchase tender is expected until the second half of August when validity of offers expires.
Qatar
Qatari state-owned marketer Muntajat has set its August Qatar Sulphur Price (QSP) at USD75/MTMT fob Ras Laffan. This is a drop of USD25/MT on the July QSP.
UAE
Market participants report that loading problems at the port of Ruwais are to persist for the rest of the year. The port has had just one berth operational since May this year, and has been unable to load cargoes in excess of 50,000t. A return to normal operations was initially anticipated in early-August. It has been estimated that this operational restriction is removing 150,000t/month from the market. There is a freight check in the market from sulphur producer Adnoc for 50,000t loading Ruwais 7-9 August for shipment to Jorf Lasfar or Jorf Lasfar and Safi, Morocco. This is linked to term-contract supply.
Africa
Once again, no spot business has been confirmed in the North African market for cargoes over 10,000MT in size, with contract volumes comfortably covering many buyers.
Egypt
Discussions for bulk flaked sulphur cargoes are heard to be underway between suppliers in Iraq and Egyptian buyers. Granular prices are still placed in the high-USD80s/MT CFR to low- USD90s/MT CFR, with demand still weak as the Eid Al Adha holiday approaches. Also, it has been reported that buyers are lifting stocks currently held by NCIC which were originally secured ahead of the startup of its Ain Sokhna phosphate fertilizer facility. The start-up has been delayed because of an on-site explosion in March.
South Africa
Fertilizer major Foskor is heard to have secured a 40,000MT cargo for mid-September delivery, with a price in the high-USD80s/MT attached. But this price could not be verified with a sell-side party. Stocks at the port of Richards Bay are described as healthy, with market participants estimating at least 80,000MT available and building. The MV Texas arrived at Richards Bay on 27 July. The vessel with a deadweight of 57,970MT was loaded in Qatar departing Ras Laffan on 5 July and Mesaieed on 7 July.
There is also a freight check in the market for 43,000-63,000MT, loading Middle East 8-10 August. For delivery to Beira, Mozambique/Richards Bay range. With fob Middle East prices currently assessed at USD75-79/MT fob, and freight between South Africa and the Middle East at USD18-20/MT, a CFR Richards Bay price of USD93-99/MT is implied.
Freight Market Overview
Fertilizer freight rates came under pressure this week in part because of increased resistance from charters and in part because of a sharp slide in the Cape size freight market, which exerted pressure on all the smaller sizes. The lack of new cargoes combined with a reduction in owners offers for those shipments still available put pressure in particular on the US Gulf and east coast of South America to Asia markets. The rate from South America to Asia was stable around USD15,500/d with a USD550,000 ballast bonus on a standard ship but the rate from the US Gulf reportedly came under pressure.
The transatlantic market was relatively active but the fall in sentiment on the more influential fronthaul routes meant that rates were under pressure. A shipment from the US Gulf fell at USD14,000-15,000/d while a petroleum coke cargo was booked to Italy from the US Gulf at USD16,000/d including a slight premium because of the particularities of petroleum coke. Fertilizer fixtures were limited during the week but Seacoast did book the Handy size Rabea at USD13,250/d between the Mideast Gulf and India.
Report By: MoahammadReza Barakchian
