Sulfur Market in Brief
This week prices have taken another sudden fall in the East of Suez spot market. In the recent business granular sulfur has fallen to no higher than USD 120/MT CFR China, hitting its lowest level since September 2017, and bids are now below the mid-USD 110s/MT CFR. Domestic ex-port prices have also fallen below RMB 1,000/MT for the first time since August 2017. In the fob market, the award of the spot tender from Qatar's Muntajat, together with the softening in China, has aided in bringing the Middle East fob price back down to under USD 110/MT.
West of Suez, the market remains relatively muted, with contract negotiations the key focus of major buyers and suppliers alike at present. So far no settlements have been confirmed with buy and sell-side price ideas at a wide range.
Active Forces in the Market
Market Outlook in Next Month
Any future sulfur price increases will be dependent, as they currently are, on the improvements in finished fertilizer prices. Whilst the phosphates market is particularly bearish at the moment, there is some expectation for prices to see some improvements that could knock-on to sulfur prices during the second-half of this quarter.
Asia
China
A combination of factors have conspired to pull granular sulfur CFR prices down this week. Trades have been concluded at a maximum of USD 120/MT CFR – a notable step down on the flurry of business earlier in March ranging USD 125-128/MT CFR. Four recent trades have been confirmed ranging USD 117-120/MT CFR South/River. But, bids are now well below USD 120/MT CFR, and offer levels are also understood to be sliding sub-USD 120s/MT CFR for April loaders. The weak outlook for the domestic phosphates and NPK sectors, the bearish price indications from international second quarter price discussions (Mideast and North Africa) and the prospect of rising Chinese domestic supply have all contributed to this week’s declining values.
But perhaps the primary reason has been the development of the domestic market as both Yangtze River port and paper prices have slumped. Granular CFR levels have fallen sharply in response, bridging the price gap that had developed. The crushed lump market is still muted, with just one deal in the low-USD 110s/MT CFR concluded this week. But there are reports of a slight elevation in offers of Russian crushed lumps which has been attributed to the expected volume to come from Gazprom Export across the second and third quarters.
Domestic Market
Sentiment in the domestic market is overwhelmingly weak also and prices have steadily trended down. Sinopec has reduced Puguang prices for a second week running. In the domestic molten market, producers are understood to be holding prices steady. But several consumers on the East Coast of China are holding planned maintenance across April which should see stocks of product in tanks build amid thin demand.
India
Buying interest is said to be non-existent in the Indian market for imported cargoes with maintenance largely being pointed at along with the softening global sentiment encouraging buyers to wait further to benefit from the expected softening. Fertilizer producer CIL is not receiving its March molten sulfur delivery because of ongoing maintenance and will likely next receive a shipment in April or May.
Middle East
Middle East fob prices have been assessed at USD 100-108/MT fob on softening netbacks from falling prices in key CFR markets and the award of the most recent Muntajat tender.
Iran
Iranian New Year holidays - which start 21 March – are putting a pause on market activity and supplier IGCC only intends to return to the spot market with an export tender in April.
Fob Iran prices remain flat at USD 84-94/MT, the level of the last confirmed, concluded business.
Qatar
The monthly sales tender from Qatari state-owned marketer Muntajat is understood to have been awarded within the assessed Middle East fob range.
UAE
Second quarter contracts between state-owned UAE sulfur producer Adnoc and traders have been settled at USD 104/MT fob. The drop in contract prices was expected as Middle East fob spot prices have lost USD 19/MT since the start of this year.
Africa
Quarterly contract negotiations are still understood to be in the early stages and there are indications from market participants that buy-side price targets are at USD 100/MT CFR at a maximum. The spot market remains lacklustre for another week in north Africa as contract discussions are the focus of the region's key consumers.
Egypt
Sulfur consumer NCIC had been heard this week to be seeking product ahead of the start up of its new phosphoric acid plant. But an explosion has been reported as having happened today during the testing phase. Stock piling for the facility's start-up has seen an increase in the imports of sulfur to the Red Sea port of Adabiya.
South Africa
Sappi will remain out of the sulfur spot market for at least three months, following its purchase last week of 9,000 MT of ex-Saudi Arabian product from a trader at around USD 116/MT CFR Richards Bay. Overall port stocks are understood to still be healthy.
Freight Market Summary
Fertilizer freight rates for Supramax vessels climbed slowly higher this week as the recent surplus of tonnage was gradually absorbed. The pace of the rise jumped sharply in the latter half of the week as charterers started to run out of promptly available vessels and began to compete to secure ships ahead of the weekend.
The most notable driver was an increase in shipments from the east coast of South America with several more grain cargoes booked. But some owners were reportedly booking cargoes for forward loading dates at prompt levels, which often indicates that they expect the market to remain flat or even dip.
