Sulfur Market in Brief
Flat-to-soft is the theme again this week. On the soft side, the China CFR price has slipped to the high-USD110s/t CFR, Iran's FOB price has dropped to top-out in the mid-USD80s/MT FOB with the conclusion of a sales tender, and the US Gulf FOB price has fallen to span USD85-88/MT.
On the flat side, the Black Sea FOB price holds steady with a crushed lumps tender supporting the low end. Also, Brazilian and North African CFR prices remain at current levels because of a lack of liquidity in the regions.
A general sense of near-term bearishness is still dominating the sulphur market, which is keeping buyers on the sidelines and undermining the general confidence in the market.
The softness in the finished fertilizer market is of course still playing a large part in this but it is also being accompanied by global trade tensions.
Active Forces in the Market
- Maintenance at the Kashagan oilfield has finished 10 days ahead of schedule, which will slightly reduce the 50,000t expected to be removed from the market because of the scheduled maintenance works.
- Market participants expect Chinese port stocks to rise in the next month to in excess of 1.7mn t, which would see inventory levels hit highs not seen since August 2018, further quashing buying appetite in the country.
Market Outlook in Next Month
As time progresses, more optimism is appearing from some on the supply-side as end-user buying activity and stocks are monitored. The return of buyers in the African, Indian and Latin American markets in particular, is expected to provide some stimulation to the spot market in the early third quarter. But contract prices are still expected to settle down on second quarter levels, and this could put a ceiling on any spot price rises.
Asia
China
A general sense of bearishness still dominates the Chinese sulphur market, deterring trade and undermining confidence. Therefore few firm offers have been tabled.
Some sellers tentatively indicate around USD120/t CFR Yangtze river for Mideast tons, against bids which are nearer the mid-to-high-USD110s/t CFR. Some traders have also tabled bids for imports in local currency terms at Yn960-970/t, as a way to mitigate currency risk amid the trade tensions. In the south, granular activity is equally muted but a key buyer has secured a cargo at around USD116/t CFR. Turkmen crushed lumps are under discussion below USD110/t
CFR southern ports, with no conclusions confirmed. Suppliers report molten sulphur trades this week in a wide bracket. One supplier has concluded a June shipment of 3,000t in the mid-USD90s/t CFR and other reports concluding a price in the mid/high-USD100s/t CFR for shipment to Zhenjiang.
Some suppliers are still citing tightness because of supply side maintenance and good levels of demand. Whilst, other market participants report low demand remains, following the March explosion and inventories being high particularly at the ports of Weifang, Longkou and Liangyungang.
The China CFR price has been assessed at USD95-118/t. The MV Unison Spark arrived at Jingkou port on 19 May after loading at Mailiao, Taiwan. The vessel is carrying 16,500t of sulphur.
Domestic market
Sinopec has kept prices stable at Wanzhou at Yn990/t and Dazhou at Yn880/t. This is the fourth week in the row that Wanzhou tons have been priced at this level. Tons at port were being offered in the range of Yn980-
India
Indian sulphur producers are noting oversupply in the domestic market because of the level of new production that has come online of late and end-user shutdowns which are only now coming to an end, both of which are contributing to the general stagnation in the Indian market.
The New Mangalore refinery owned and operated by MRPL is still offline and a return to operations could be seen in the next 15-20 days if the water shortage situation improves. The refinery's shutdown period was expanded in mid-May. No export market activity is expected from the producer for
several months because of the shutdown and the impending monsoon season.
The MV Sulphur Guardian, a molten sulphur carrier with deadweight of 14,785t, was scheduled to arrive at Vizag on 23 May, to discharge its cargo for fertilizer producer CIL. The vessel departed Yokohama port, Japan 10 May.
CIL previously received 12,500t of Japan loaded molten sulphur on 23 April, aboard the same vessel. The company restarted normal operations at its Vizag
plant last week, following an extended maintenance.
Middle East
The Middle East FOB price is held flat on the week at USD100-104/MT on no new confirmed business. Key suppliers indicate that they have no spot availability at present and this situation is likely to extend for the rest of the quarter, as contract supply volumes take priority.
Iran
FOB Iran prices have softened to USD75-85/t on the award of a sales tender from supplier IGCC for 50,000t of granular sulphur at USD85/t FOB.
IGCC's cargo will load from Assaluyeh port during the first half of June, and the company expects to issue another granular sulphur tender of the same volume shortly after. The company's previous sales tender was awarded in early May, at USD89/t FOB Assaluyeh.
In the freight market check for 33,000t loading BIK for shipment to China end-May to early-June loading.
1Q exports down 26pc
Iran’s exports of sulphur dropped to 227,000t during the first quarter of the year, 26pc lower than the first quarter of last year, as US sanctions on Iranian oil and banking sectors begin to take effect. Argus data shows at least 170,000t has been awarded through export tenders during the frst quarter. China is the only recipient of Iran’s bulk sulphur exports, according to GTT data, and its receipts are also up by 15pc. India and Indonesia received nothing, down from 77,000t and 35,000t, respectively, last year.
In March, Iran exported 90,000t, down by 66pc. Lower export volumes are also linked to lower end-user demand for spot sulphur, alongside weaker finished fertilizer pricing sentiment. China received 88,000t in March, down by 53pc. 1,000t went to Tanzania, up from zero, probably to cover mining sector demand in southern Africa's copper belt. Data collected by Argus shows a further 150,000t has been sold through export tenders since March.
Including the above-mentioned granular sulphur tender awarded by IGCC this week.
UAE
Operational constraints are still being felt at the port of Ruwais with one berth out of operation and poor weather conditions causing loading delays. Abu Dhabi Marine Operational & Services Company is in the freight market for 50,000t loading Ruwais for shipment to Jorf Lasfar port Morocco or Jorf Lasfar and Saf port Morocco loading 6-8 June. There is also a freight check for 40,000t loading Ruwais 22-28 May for shipment to Nantong/Zhenjiang range.
Africa
Once again prices were held steady in the North African market, with no business for large cargos of over 10k MT confirmed concluded.
Egypt
Buyers in Egypt are bidding in the USD80s/t CFR for crushed lump sulphur while granular tons are still clinging on to the USD90s/t CFR with firm bids heard in the range and some business for small lots reported in the range of USD92-93/t CFR. But buyers are citing healthy stock levels at present and see no need to rush to the market. No real buying interest is expected until July.
South Africa
Phosphate producer Foskor will be requiring a second half June loading cargo.
Freight Market Summary
Fertilizer freight rates ticked up this week as Supramax routes traded higher but momentum was limited and the market remains largely in the same range as it has for several months.
A public holiday in Singapore on Monday kept a range of charterers and owners off the market, which did slow booking activity across the Pacific and Atlantic basins but rates did still rise, particularly from the US Gulf with several more cargoes available.
Petroleum coke cargoes were under discussion at USD14,000/d from the US Gulf to Europe and at USD18,000/d from the US Gulf to India. Further south, the rate from east coast of South America to Asia-Pacifc ticked up to USD15,000/d with a ballast bonus of USD350,000 as grain cargo volumes continued to increase.
In the fertilizer market, BPC put the Ultramax Bao Run on subjects from Klaipeda, Lithuania to China, loading from 29-31 May at USD35.50/t. Caravel picked up the Panamax Ecostar GO at USD9,000/d for an immediate north Pacifc round voyage to China carrying either grain or fertilizers and may have also booked the Efrossini on the same terms — though the Efrossini booing may have failed.
Shipowners expect that the safrinha harvest (the second harvest of the year) will create additional grain volumes in June and July and push rates up, though the extent of this increase is uncertain. The market does appear poised to rise but momentum is limited and rates could appear range-bound through into the summer.
Report By: Parya AhmadPour
