Sulfur Market in Brief
Global prices have been on the decline for 10 months. On a midpoint basis CFR prices have dropped by 47-52% since late-October and there are no real market expectations of a reverse in price direction any time soon.
When the price floor will arrive, and in which region, remains up for debate. Some market participants expect CFR China prices for granular sulfur to hit the mid-USD70s/MT before the end of the third quarter.
Weak sentiment had a notable impact on tender participation this week, with offerings from Qatar, Greece and Libya understood to have attracted low levels of interest.
Active Forces in the Market
Market Outlook in Next Month
October could bring a floor to the market as buyers are expected to step in with a bit more gusto. Chinese end-users will begin securing product in preparation for the spring application season and consumers in other markets are expected to start looking for spot cargoes to cover the rest of the year. The impending closure of Russia's Volga Don river system could also provide some support.
Asia
China
The market drifted this week amid limited trading, with the declining price trend still evident.
Mideast granular was offered in the low-USD90s/MT CFR Yangtze river and USD85-88/MT CFR south. Business was concluded in the mid-USD80s/MT CFR south by a trader for a September Mideast loader and there was unconfirmed business at around USD90/MT CFR reported for an end-August loader sale to a domestic trader.
Highest firm bids were around USD85/MT CFR Yangtze river ports with a small lot of Vietnamese granular trading around this level for September delivery. The outlook for sulfur prices remains weak. Downstream phosphate sellers continue to face sliding prices and now say the 40pc DAP production cut will likely be continued through the remainder of the year. This, alongside sulfur
port stocks in excess of 2mnt and rising domestic sulfuric acid production, suggest continued pressure on prices in the short term. Mideast crushed lumps were under discussion this week at USD75/MT CFR, but demand for this product in bulk remains weak.
Domestic market
Puguang prices have been reduced at both sites by Sinopec. Wanzhou has been reduced by Yn20/MT to Yn770/MT and Dazhou prices are down Yn10/MT to Yn740/MT. Puguang inventories were placed in the range of 100,000-120,000t.
Refinery ex-works prices in some parts of China were reduced by Yn20-60/MT this week. Port prices were trending at Yn740-750/MT at the start of the week but slipped to Yn740-745/MT by press time. This reflects USD87/MT CFR equivalent at the low end.
Paper prices fell sharply from late last week with September trading around Yn741/MT and October Yn748/MT at press time. Port stocks were down slightly on the week at 2.16 mn t, the first drop since early August.
India
After receiving three technical offers against its spot purchase tender, fertilizer producer RCF has opened the pricing round and three offers were received:
USD110/MT CFR from an international trader
Rs 6,291 ex-works from a domestic trader
Rs 6,850 ex-works from a domestic producer.
The two ex-works offers are not inclusive of additional GST and RCF transportation costs. No award had been made by press time. Because of the extended closing deadline, the purchase tender from trader MMTC remains unawarded.
The 35,000t two port discharge cargo reported last week will make deliveries at Hazira and Jaigarh port. The India CFR price was held flat at USD90-95/MT on no new business.
Middle East
The Middle East fob price was assessed at USD68-70/MT on highest firm bids and reported concluded business to South Africa. Middle East fob prices have not dipped below USD70/MT fob since August 2016.
Iran
Sulfur supplier IGCC has offered a new spot cargo to the market after previously deciding to sit and wait after Iranian fob prices fell to USD50-60/MT. The tender comes after requests for product from customers after the company scrapped its previous three tenders because of unattractive bids been sold to South Africa in the mid/high-USD80s/MT CFR, with an fob also near USD70/MT fob attached to the sale.
Jordan
Fertilizer producer JPMC is yet to award its term contract tender, with the end of the validity period drawing near.
Qatar
The spot sales tender from state-owned marketer Muntajat is understood to have not been awarded once again. This is the third consecutive tender to have been scrapped. Bids against the tender are understood to be at around USD70/MT fob on the high end. It was heard across the market that a Qatar cargo had
Africa
The north Africa CFR price was assessed lower at USD76-85/MT as offers to smaller consuming markets slipped again this week, and firm bids also continued to be reduced by those with buying interest.
Egypt
A cargo of 8,000MT of Kazakh origin sulfur has been bought by Abu Zaabal/Polyserve and sold by Greenfield at USD73/MT CFR Abu Qir. Now, buyers in Egypt are understood to be bidding exclusively under USD70/MT CFR.
South Africa
Fertilizer major Foskor will not return to the sulfur spot market until mid-September. The company last entered the spot market in July, when it secured 40,000MT of Middle East loading material in the high- USD80s/MT CFR Richards Bay.
Freight Market Overview
Fertilizer freight rates for Supramax vessels jumped higher this week on the back of a rush of cargoes from both the US and north Europe. Supramax trading from the US Gulf has been buoyed
by several new coal and petroleum coke cargoes, which has pushed the transatlantic rate from the US Gulf into the USD20,000-22,000/d level.
But the cost of freight between the east coast of South America and the east Mediterranean was traded at USD16,750/d for a standard Supramax ship. Fronthaul cargoes from the US Gulf were under discussion at USD30,000/d or higher and poised for further increases.
Most shipowners aim to arrive back into the Atlantic during September, and this has left a shortage of available ships for prompt loading. And some charterers have indicated that owners are unwilling to commit to loadings later in the third and fourth quarters as many will be either getting their fuel tanks cleaned or having scrubbers installed and there is too much uncertainty
currently around the supply/demand dynamic.
Fertilizer fixtures during the week were relatively limited but RCH picked up an unnamed Handymax vessel from Oman to Mundra at USD14.95/MT for prompt loading.
Along with the rise in rates, there has been a sharp drop in the price of bunker fuels, which has reduced owners’ costs and provided a slight damper to the increase in USD/MT rates. The price of 380cst grade 3.5pc sulfur bunker fuel in Rotterdam has dropped to USD285.75/MT by 21 August from USD380.50/MT on 31 July with other grades showing similar declines.
Report By: Shahriyar Yusefi
