Sulphur Market
Fob 1Q contracts settle lower
First-quarter Middle East and FSU fob contracts have settled below the previous quarter's levels, reflecting spot markets. The lower contract settlements come after fob Middle East spot prices fell by $46/t between the start of the fourth quarter and the start of the first quarter, and Black Sea fob prices fell by $25/t over the same period. The Middle East fob 1Q range is down by $41/t on fourth quarter prices on a midpoint basis, with the FSU fob 1Q range down by $43/t. Contract settlements for North Africa, US Gulf, and Brazil are still pending, with North American suppliers still yet to confirm the completion of their discussions. Spot market activity declined this week as the Chinese holiday looms and contract deliveries cover demand in other markets.
Market Drivers
Indian consumers schedule maintenance
Indian sulphur consumers have scheduled maintenance in March-April, removing key buyers from the market for longer than expected and weighing on prices.
Baltic ice restrictions to start soon
Baltic Sea ice restrictions will start at Russia's Ust Luga port on 31 January, increasing freight rates.
Iran sales tender scrapped
Sulphur producer KHIPC has scrapped its latest sales tender with no clear indication as to a re-issue.
30-60 day Outlook
mixed expectations
Expectations for the next 30-60 days are mixed. Suppliers are confident that prices will start rising, but the extent of any recovery is open to question. Spot buying has been absent for some time but the increased use of direct producer-end-user contracts is ensuring end-users have more consistent supply. This signals a fundamental shift in buying strategies which the market will have to start adapting toarket Drivers
China
The China cfr price has been assessed at $110-128/t. Firm granular offers are in the high-$120s/t cfr in the River and bids from end-users are also at a similar level. Buying interest is waning even further as the Lunar new year holidays approach. Sellers are reporting prices in the region of $110-115/t cfr as realistic molten spot prices this week. But there is one deal heard in the market this week, with a Chinese trader said to have secured a 35,000t granular cargo of Middle East origin in the high-$120s/t cfr. End-users there are bidding as low as mid-$110s/t cfr, citing comfortable stocks and scheduled contract arrivals.
Domestic Market
Announced/fixed prices across the wider Chinese market were also reduced this week:
Prices at each resource point in Shandong were lowered by Yn40/t Prices in Huazhong were lowered depending on resource point by Yn50-100/t In East China, prices at each resource point were lowered by Yn100/t In South China, prices depending on resource point were held flat or reduced by up to Yn100/t.
Port prices stood at around Yn1,100-1,110/t at the time. In North China, prices depending on resource point were lowered by Yn10-30/t. This is the first week since end-November that port stocks have increased. Prices at Sinopec's Puguang facilities have fallen for a second consecutive week. The reduction in sulphur prices in East China have been linked to molten sulphur producing refiners having high stock levels but low buying interest from regional consumers. Port stocks are at 1.3mn t this week, up by around 30,000t on the week.
India
Fact awards tender to buy sulphur Fertilizer producer Fact has awarded its tender to buy sulphur in the low/mid-$130s/t cfr. India approves Numaligarh refinery expansion India's BJP government has approved the expansion of statecontrolled Bharat Petroleum's (BPCL) Numaligarh refinery in Assam.
In the domestic market, demand is consistent with producers not too concerned with the softening prices in the export market at present. A small 10,000t cargo for Haldia is also heard to have been sold recently in the mid-$130s/t cfr. The India cfr price has been assessed at $130-135/t cfr on confirmed concluded business.
IOC’s Panipat shutdown draws near State-run refiner IOC, the country's biggest crude refiner by capacity, will shut down an atmospheric and vacuum distillation unit (AVU) at its biggest refinery in north India from mid-February for regular maintenance, a company official said.
Nayara plans petrochemical expansion Refiner Nayara Energy is planning to expand into petrochemicals with an initial $850mn investment in Gujarat state on the country's west coast.
South Korea 2018 sulphur exports up 4pc South Korea's sulphur exports are up by 4pc on 2017 volumes, to total 1.25mn t. Sulphur exports are predominantly molten in form and China is the country's biggest market.
And, despite molten sulphur discharge and usage in the Chinese market suffering under environmental legislation, deliveries to Chinese markets have increased by 5pc, to total 1.1mn t. Deliveries for 2018 also increased to Indonesia by 10pc to total 34,000t.
In December, South Korea's sulphur exports totalled 115,000t, at an increase of 17pc on December 2017 and 105,000t was shipped to China, at an increase of 22pc on the year.
Looking forward, the start of this year has seen China's buying activity wane further and problems surrounding the discharge of molten sulphur in north/river ports are likely to inhibit export figures to an extent.
Taiwan: The vessel loaded 17,600 MT of sulphur is scheduled to arrive at the port on 22 January and depart on 25. Taiwan. The MV Merit is expected to load 17,600t of sulphur at Mailiao port.
Middle East
First quarter contracts assessed Middle East first quarter contract prices have been assessed at $105-124/t fob.
Adnoc to shutter its 85,000 b/d Umm al-Nar refinery Abu Dhabi state-owned Adnoc will permanently shut its ageing 85,000 b/d Umm al-Nar refinery in the city of Abu Dhabi, but it has not yet confirmed a timeline for the refinery's decommissioning. The top end of the price represents contracts settled between Middle East producers and traders, and as is tradition, these were the first contracts to settle for the quarter.
Implications to the sulphur market will be minimal as the facility produces an estimated 13,000t/yr. In the spot market reports are mixed. MV IVS Naruo will load 60,000t for shipment to Madagascar.
The drop in contract prices were expected as spot prices softened on a Middle East fob topend basis by $46/t between the start of 4Q and the start of 1Q. The company has already committed its 2019 supply under term tender. As no concluded business has been able to be confirmed with transacting parties this week prices are held flat.
Contracts for sulphur to ship to north African fertilizer producers netback to range $105-113/t fob, and cargoes for shipment to buyers in Brazil netback to range $111-113/t fob. Contract prices have dropped by $41/t on the midpoint quarter-on-quarter and is the lowest midpoint price since the fourth quarter of 2017. MV Stove Caledonia will load 55,000t for shipment to Indian fertilizer producer IFFO under term contract.
Africa
Final supplier confirmation required for 1Q: The north Africa cfr prices for the first quarter continue to be indicated at $103-134/t cfr, but final North American supplier price confirmation is required before an assessment can be made. Mediterranean: Concluded fob business has lowered the Mediterranean price to the range of $104-111/t and cfr prices have been reduced inline on a notional basis to $128-132/t.
The top end represents sulphur for delivery from the Middle East to Tunisia and the bottom end is supported by smaller cargoes as well as crushed lump product from European/Mediterranean suppliers.
Freight between the Middle East to Richards Bay is indicated at around $15/t Saudi-backed South Africa refinery plans advance South Africa and Saudi Arabia today reached a framework agreement for the planned investment in a new refinery.
There are market reports that an additional, full size cargo has been sold to another South African end-user in the low-to-mid-$120s/t cfr Richards Bay. Russia is not supplying any sulphur to the North African market this quarter with all FSU supply being of Kazakh origin. The MV Uni K arrived at Abu Qir port on 23 January and is discharging around 8,000t of sulphur loaded at Constantza, Romania.
South Africa: Pulp and Paper producer Sappi Southern Africa is understood to have purchased a small 5,000t bulk cargo from a trader at mid/high-$120s/t cfr Richards Bay, and is currently in the market for an additional 8,000t for arrival in April-May. Namibia: There are market reports of a spot demand tender for Namibia, but details were not available at press time.
In the spot market, no new business has been confirmed for cargoes over 10,000t in size with buyers of larger cargoes relying on contract supply for the moment. Buyers are expected to be bidding in the $120s/t cfr exclusively in the next round of business.
Europe
Italy exported 156,000t in the year to October, roughly the same as the year before.
Spain: Cepsa prepares for 45-day Algeciras refinery turnaround Spanish integrated oil company Cepsa's 240,000 b/d Algeciras refinery is preparing to stop a 110,000 b/d crude unit and over half the refinery's cracking capacity for maintenance and upgrades.
In October, Italy exported 8,000t, down by 58pc. Morocco received over 73pc of this, at 41,000t, up from just 14,000t. Israeli demand comes largely from fertilizer producer ICL.
France and Tunisia received 7,000t respectively, each up from negligible volumes. Tunisia secured around 15,000t, up from just 5,000t, and Senegal received 10,000t, up from zero. Israel and Turkey were the main export markets, securing 68,000t and 22,000t, respectively.
Italy: In the freight market there is an inquiry for 6,000t loading Augusta 22 January - 1 February for shipment to Abu Qir, Egypt. Jan-nov exports up 5pc Spain increased its sulphur exports by around 5pc in the January-November period, to 426,000t.
The drop is linked to lower demand from Morocco and Egypt, which slumped to zero from 8,000t and 6,000t, respectively. But, French supply dropped by 68pc, to 3,000t, and German supply dropped by 42pc, also to 3,000t and the lower deliveries are likely because of limited West European supply for a large part of 2018.
Turkey: Refiner and sulphur producer Tupras will hold its monthly e-tender on 29 January.
Global refinery capacity to grow 2.6m b/d in 2019: IEA Global refinery capacity growth is set to rise by 2.6m b/d in 2019, representing the largest increase since the 1970s, the IEA said today in its latest Oil Market Report (OMR).
No Russian sulphur is being shipped to north African buyers. Planned maintenance is also anticipated to hinder supply from the company across the first half of this year. The product is for shipment in February and the company is offering 9,000t in big bags, 8,000t bulk ex-Izmit and 6,000t bulk ex-Izmir. The first quarter cfr Brazil contract assessment awaits price confirmation from North American sell-side parties.
Details of the last tender here.It has also been heard that the company will not offer big bags under e-tender for April loading onwards. This is on netbacks on product supplied from Kazakhstan and Russia to buyers in Brazil on a cfr basis and Kazakhstan to north African buyers on a cfr basis.
Black Sea fob prices have dropped $25/t over the fourth quarter, whilst Baltic Sea fob prices have dropped by $28/t since first assessment on 4 October and the start of this year from topend prices.
Confirmed Brazil spot market activity is lacking this week, holding prices flat. The tender on the 29 January and the February e-tender will be the last ones offering big bags. Adisseo's sulphur supply is mostly secured under term contracts and the company does not expect to require any spot supply until the second half of this year, at the earliest.
This is the lowest midpoint settled since the second quarter of 2018, and is a drop of $43/t on the fourth quarter midpoint. The smaller second train is running and the previously mothballed first train may be brought back online.
IMF again cuts global economic growth forecast The IMF is again scaling back projections for global economic growth in the near term - a forecast with implications on demand for oil and other commodities.
Repsol meets 2018 production target after 4Q growth Spanish integrated Repsol production increased last year, when solid growth in oil and gas output in the fourth quarter offset weakness in the third.
Latin america: Brazil: Final sell-side 1Q contract confirmation awaited.
The MV Iver Ability, a molten sulphur carrier with a deadweight of 12,497t is was scheduled to arrive at Le Harve port on 24 January.
Also on the Turkish supply-side, sulphur production from the Socar Star refinery is still expected to commence in mid February.
The first quarter contract price for ex-FSU supply, for shipment between January and March, has been assessed at $90-109/t fob.
West Europe
France: Sulphur buyer and animal feed producer Adisseo has scheduled a five week turnaround at its facilities in Les Roches, starting in March.
sweden: A molten sulphur carrier with a deadweight of 4,252t was scheduled to arrive at Helsingborg on 23 January, after departing Brake, Germany, 21 January.
canada: Prices have been held steady, with no business reported.
PetroChina sees profits more than doubling in 2018 China’s biggest upstream producer state-controlled PetroChina expects its profit to have risen significantly in 2018, despite lower crude prices in the fourth quarter.
