Sulfur Market in week ending to January 31st 2019
According to Kuwaiti sulphur producer KPC and Qatari marketer Muntajat, they have lifting prices for February and both are down by $18-19/t on the January prices. The decreases were expected as CFR prices in China, the Middle East's biggest export market, have fallen by $25/t since the start of the year.
The market still awaits the Official Selling Price from Abu Dhabi producer Adnoc and the status of Aramco Trading's monthly price announcements remains unclear. The company has not announced a monthly price since November.
Major market drivers may be categorized in three following:
1- The sanctions recently imposed in Venezuela by the US which are hindering heavy crude supply to refiners, potentially limiting some sulphur recovery and production operations in the near term.
2- The Turkey e-tender which guides mediterranean prices. The latest ex-works e-tender from Turkish refiner Tupras has produced sharply lower prices in comparison to the previous month, and is likely to lower buyer price expectations for Mediterranean fob and CFR prices.
3- China New Year shifts pricing focus. In other words, China’s lunar New Year holiday will halt all sulphur trade into that market, creating opportunities for consumers in other regions to seek for lower prices.
China
Lunar New Year holiday mode has arrived for a lot of the Chinese market, but this has not stopped a small amount of granular CFR trades from being completed with the mid-$120s/t now the trading level in the river.
For February sales, some ex-Turkmen product is under discussion with prices heard at around $120/t CFR. Bids are still sitting at a maximum of $120/t CFR for key buyers in the south, but the volume of overall bids is minimal, with end-users now out of the market until after the holiday season at least. China's CFR price has been assessed at $110-125/t.
China's 2018 sulphur imports hit lowest since 2014 China's sulphur imports totalled 10.78mn t last year, a drop of 4pc from 2017 levels, and the lowest level since 2014. The MV Navios Hope is scheduled to arrive at Zhanjiang port on 7 February.
Port inventories ticked up by just 10,000t on the week, to total 1.31mn t. Fangcheng is the dominant Chinese port at present holding 590,000t. Yangtze river port prices have held steady at Yn1,080-1,090/t across the week - equivalent to low-$130s/t CFR -with the market already in holiday mode.
Zhenjiang, which is pegged to take over as the dominant river port from Nantong, is currently holding just 390,000t, but river end-users have been relying on hand-to mouth ex-port sales for some time, so CFR based deliveries have been minimal.
The Fangcheng line up has been significant across the latter part of January with contract cargoes for delivery to key Chinese end-users in the south likely the reason behind this increase. Prices for Puguang produced product is now lower than port inventory prices. The paper market for February is now trading at Yn1,100/t whilst the March market is trading at Yn1,075/t.
India
New phosphoric acid price a relief to Indian importers Moroccan phosphoric acid supplier OCP has secured first quarter contracts with its Indian partners at $750/t P2O5 cfr, a drop of $18/t P2O5 on the previous quarter, bringing relief to Indian importers and producers of DAP.
In the spot market, sulphur buyer CIL has secured a cargo of around 30,000t from a trader in the mid-$120s/t CFR. This deal brings the India spot price down to $126-130/t CFR. Trading firm MMTC has issued a tender to buy 8,000t of sulphur for delivery to Vizag port.
Japan
Japan exported 1.18mn t last year, down by 8pc on 2017 levels and is the first time exports have fallen below 1.2mn t since 2015. Japan is largely an exporter of molten sulphur and molten sulphur consumption in the Chinese market was restricted across parts of 2018 because of environmental legislation.
In December, Japan exported 87,000t of sulphur, down by 18pc on the year. Korea and Vietnam completed the top five export destinations for Japanese sulphur discharging 27,000t and 16,000t, respectively.
Indonesia maintained its position as the second biggest importer of Japanese sulphur and took receipt of just under 81,000t, up by 1pc on the year. This limited not only the use of molten sulphur by end-users in Shandong, but also the discharge.
China took receipt of 946,000t in 2018, down by 10pc on the year and is the first time the number has fallen below 1mn t since 2015. Custom's data indicates that India imported 76,000t in 2018 from Japan, at an increase of 8pc.
Middle East
Despite there being no new confirmed spot business in the Middle East this week, cfr prices in key export markets China and India have both softened on concluded business and the monthly lifting prices announced so far are in the mid/high-$100s/t fob. Therefore, prices in excess of $110/t fob are not seen as achievable in the region and the Middle East fob price has been assessed at $106-110/t.
Sulphur supplier IGCC closed a tender on 28 January for 30,000t of prilled sulphur for loading 1-10 February. In Saudi Arabia, There are two freight market inquiries for cargoes loading in the Saudi Red Sea: 10,000t loading Yanbu or Rabigh 24-28 January for shipment to Adibya, Egypt 31,500-35,000t loading Yanbu 14-17 February for shipment to Adibya, Egypt.
IGCC will only supply granular and crushed lump tonnes following this tender. Iranian granular sulphur often achieves a $3/t premium to prilled product so indications on fresh granular and crushed lump sales can be taken from this award and the Iran fob price has been assessed at $88-98/t.
Qatari state-owned marketer Muntajat has set the Qatar Sulphur Price (QSP) for February at $107/t fob Ras Laffan/Mesaieed. Kuwait's state-owned KPC has announced its February Kuwait Sulphur Price (KSP) at $106/t fob Kuwait.
Africa
The north Africa first quarter contract price has been assessed at $103-134/t cfr. Cape Town refinery to start maintenance mid-February Astron Energy will shut its 110,000 b/d Cape Town refinery in South Africa on 15 February for two to three weeks for annual maintenance work. On the granular side, a cargo of around 10,000t has been sold in to the country near $130/t cfr, but bid levels are now firmly in the 120s/t cfr.
The top end is supported by Middle East product for shipment to Tunisia whilst the bottom end is supported by smaller sized cargoes as well as crushed lump product from the Mediterranean/Europe. Product of Kazakh origin has been confirmed in the $120s/t cfr, but nothing from Russia will be shipped to the region because of winter logistical limitations.
US Gulf origin sulphur is also to be shipped this quarter and is priced in the $120s/t cfr.
Tunisia: In the freight market there is an inquiry for 4,000t loading Tarragona, Spain, 8-10 February for shipment to Sfax or Gabes. In the spot market, prices are indicated to have softened with the highest price in the market around $130/t cfr for smaller buyers in the region. The spot price has been assessed down to $120-130/t cfr. This is the lowest midpoint price - $118.5/t - achieved by North African buyers for a quarterly contract price since the fourth quarter of 2017 when the midpoint sat at $111.5/t.
Report By: Mohammadreza Barakchian