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Exports reach a record 880,000 tons – does this sector have great potential? Author/Source: China Fertilizer Network Date: 2020-10-09 Clicks: 23 According to Chinese customs data, China exported 880,100 tons of sulfuric acid in August, the highest volume for any single month on record (the previous highest figure was 715,000 tons in November 2018). From January to August, China’s total exports of sulfuric acid amounted to 5,123,000 tons, a 12.8% increase compared to 4,542,500 tons in the same period last year; this figure is also higher than the 5,023,000 tons exported throughout 2016. Sulfuric acid is thus the fertilizer type with the highest cumulative export volume. Given such astonishing figures, it is not hard to understand why the price of sulfuric acid AN remains high. On the one hand, the export prices of anhydrous sulfuric acid have been favorable since the beginning of 2020. At the start of the year, the price was as low as 85–88 dollars per ton (FOB), but by mid-March, the FOB price for anhydrous sulfuric acid of the caprolactam grade exported from China had risen to around 100 dollars per ton. By the end of September, this price had reached 105–110 dollars per ton (FOB). Converting this using an exchange rate of 6.8, the price at ports such as Yantai is approximately 678 yuan per ton. After deducting the corresponding shipping costs, this represents the factory price for anhydrous sulfuric acid of the caprolactam grade in China. Given that distributors often transport anhydrous sulfuric acid using round-trip shipments, they are able to obtain it at a higher price, suggesting great potential for exports. On the other hand, export volumes are on the rise. In addition to the record-breaking exports of sulfuric acid an in August as mentioned above, export volumes of over 500,000 tons, or even over 700,000 tons, were recorded in several months prior as well. Once again, exports account for more than 60% of China’s total demand for sulfuric acid an, and this figure can even reach 70%. The monthly export volumes in January-February and May-June were below 600,000 tons. These periods also coincided with times when the price of sulfuric acid AN in China was relatively low (given factors such as shipping schedules and the time it takes for distributors to transport the product to ports, it is normal for price changes to occur around periods of sharp increases or decreases in export volumes). For example, at the beginning of June, the ex-factory price of sulfuric acid AN of a caprolactam-grade manufacturer in Shanxi dropped to 405 yuan per ton (by road transport), while in late July, the ex-factory price of sulfuric acid AN of a coking-grade manufacturer in Hebei fell to 430 yuan per ton (by truck). During other times, the prices of sulfuric acid at various factories in China remain high, especially during the peak periods of agricultural demand in spring and summer; for example, the ex-factory price at most manufacturers in Shanxi reached as high as 550 yuan per ton, while that at most coking manufacturers in Hebei was 500 yuan per ton or more. In addition, the cost-effectiveness of using sulfuric acid AN is very high; there will be no shortage of customers willing to continue purchasing it during the winter of 2020/spring of 2021. The price of one ton of AN sulfuric acid at the factory is 400–500 yuan per ton; it contains 20.5% nitrogen, and it also provides the sulfur element needed by soil. The price of one ton of urea at the factory is 1600–1700 yuan per ton, with a nitrogen content of 46%. AN sulfuric acid is used in the production of blended fertilizers and compound fertilizers, for export purposes, in the synthesis of lysine, and in the production of potassium sulfate. In any case, the cost-effectiveness of using AN sulfuric acid for our distributors is quite high. In short, the market for sulfuric acid an does hold great potential, but industry experts have noticed that the price fluctuations over the past two months have been too small, making it difficult to operate in this market. In particular, new caprolactam production facilities are already in operation or will soon be launched in regions such as Shandong, Inner Mongolia, and Henan; during periods of low demand, this can put some pressure on the supply side, so it is not recommended to stock up in large quantities for a long time. (Che Yanhong)