Market forecasts for some chemical products in February – Inorganic (sulfur, sulfuric acid)
Thread Content
Sulfur remains in a range-bound pattern. In late January, the sulfur market continued its upward trend from earlier in the period, with price increases of up to 500–700 yuan per ton in some areas. Sudden snow and wind weather hit the southern regions, causing multiple highways to be temporarily closed, which led to transportation difficulties for many companies and made it hard for them to ship goods. Similarly, this has also led to a shortage of products for other companies that have high local demand, resulting in tight supply in certain areas and higher prices for sulfur. There are also some manufacturers that, due to the approaching end of the year, suspend taking new orders and focus on completing existing orders and shipping goods to regular customers, which leads them to charge higher prices. In January, the price spread for sulfur shipments imported into China in the first quarter widened, with prices ranging from 220 to 520 USD/ton (CFR); a small number of individual transactions were at 550 to 580 USD/ton (CFR). The contract prices for sulfur from Canada and the Middle East remained stable at 480 to 515 USD/ton (CFR), as buyers maintained healthy inventory levels. This year, our country reduced its imports from the Black Sea by 450,000 to 500,000 tons. In addition, following the contract agreement between UAE’s Adnoc and Tunisia’s GCT, sulfur supply to China decreased by 150,000 tons. Most Russian suppliers (such as Via Solvadis and Fedcom) have also stopped supplying to China. Import supplies once declined, while domestic demand continued to rise. The current spot price in the Arabian Gulf is above $500 per ton (FOB), while most buyers in India have secured contract prices in the range of $550–$580 per ton (CFR); spot prices have also reached around $600 per ton (CFR). The current calm in the spot market is about to end, and prices are expected to reach new highs soon. Throughout 2007, the sulfur production of domestic refineries was around 1 million tons, remaining roughly on par with the production level in 2006. In the Northeast region, sulfur prices at various companies increased in late January; the price for solid sulfur was 3,900 yuan per ton, while the price for liquid sulfur was 3,600 yuan per ton. Among them, the price at Liaoyang Petrochemical increased by 400 yuan per ton, reaching the same level as the regional market price. The price of solid sulfur at Jinxi Petrochemical has risen to 3,900 yuan per ton, the highest level in the region. In North and Central China, sulfur prices at refineries continued to rise in late January, by 100–300 yuan per ton; the prevailing prices were 4,500–4,800 yuan per ton for solid sulfur and 4,200 yuan per ton for liquid sulfur. Among them, the price of solid sulfur at Cangzhou Refinery is 4,800 yuan per ton, the highest in the region. Sales at various factories are smooth, but supplies are tight. In late January, the situation in the East China region reversed from the previous upward trend, with sulfur prices remaining stable across factories in this region. The price of solid sulfur is 4,500 yuan per ton, while the price of liquid sulfur is 4,400 yuan per ton. Sales in the market are booming; demand exceeds supply, and shipments are delayed. In South China, Jiujiang Petrochemical’s price for solid sulfur in late January was 4,500 yuan per ton, and orders were no longer accepted. The price of solid sulfur at Maoming Petrochemical has risen to 4,840 yuan per ton; there is active demand from downstream buyers, and no inventory is available. In the northwestern and southwestern regions, prices saw a sharp increase in late January; Xianyang Aditive Factory raised its price by 700 yuan per ton, while solid sulfur was priced at 4300 yuan per ton, with good sales performance. In the southwestern region, Chongqing Natural Gas Plant and Dianjiang Desulfurization Plant will raise their prices but will stop accepting orders. Market analysis: With the start of the Spring Festival travel season, shipments from various factories have been strained, but this has not driven up sulfur prices. It is expected that there won’t be much upward pressure on sulfur prices before the festival. On one hand, there are transportation challenges, and on the other hand, many downstream factories shut down during the Spring Festival, resulting in reduced demand ahead of the festival. It is expected that domestic sulfur prices will remain high at the upper limit and rise from low levels in February, entering a period of consolidation. Sulfuric acid prices continue to rise. In January, domestic sulfuric acid producers were in good condition, with their production facilities operating at full capacity; product inventories were low, resulting in a tight supply situation in the market. The average ex-plant price of sulfuric acid in the main market was 1,250 yuan per ton, representing a 20% increase on a month-on-month basis and a 166% increase on a year-on-year basis. Average domestic ex-plant prices for sulfuric acid: 1400 yuan/t in the Northeast, 1450 yuan/t in North China, 1400 yuan/t in East China, 1100 yuan/t in Central China, 1100 yuan/t in South China, 1100 yuan/t in Southwest China, and 900 yuan/t in Northwest China. The highest price is offered by Tianjin Boda Chemical in North China, at 1,650 yuan per ton ； The lowest price is offered by Qishan Chemical in Shaanxi, Northwest China, at 880 yuan per ton. The downstream industries are growing rapidly. According to statistics, compared with the same period last year, the added value of the chemical industry increased by 31%, that of the fertilizer industry by 29%, and that of chemical pesticides by 30%. Growth in total export trade in November 2007: 26.9% for the chemical industry, 150.5% for fertilizers, and 17.3% for chemical pesticides. Rising prices of energy and raw materials: International crude oil prices rose to over $100 per barrel in January, driving up the costs of raw materials. Under the influence of unstable energy prices, domestic market prices for sulfur and sulfuric acid are set to rise further. The growth rate of imports declined. From January to November 2007, China’s total imports of sulfuric acid amounted to 1.809 million tons, representing a year-on-year decrease of -11.6%. The average unit price of import contracts in November was $45 per ton, up by $15 per ton compared to October, representing a year-on-year increase of 105.2%. Market analysis: The continuously rising international crude oil prices are the main factor driving up prices in the sulfuric acid market. Crude oil prices are expected to continue rising in February, which will affect the stability of the sulfuric acid market. Judging from the progress of import trade negotiations, domestic sulfur imports will continue to rise in February, driving up sulfate prices as well. February also falls during the peak period for domestic fertilizer production and winter stockpiling; as fertilizer production enters its peak season, the demand for sulfuric acid will increase further. Under the influence of various factors, domestic sulfuric acid prices are expected to continue rising in the coming period.
The chemical product with the highest price increase in 2007 was sulfur. After 2008, the domestic sulfur market became extremely volatile again, with the level of price increases and the speed at which they occurred being **surprisingly high**. At present, in most areas of the country, the mainstream price has surpassed the 4,000-yuan mark, and it seems that prices are still on the rise. How much more upward momentum does sulfur still have? How to curb the skyrocketing price of sulfur? It has become a focus of attention in the industry. The author believes that policy factors will be a key factor in curbing the sharp rise in sulfur prices in the future, as there is already limited room for further increases in sulfur prices. At present, the main policy factors affecting the trend of the sulfur market are as follows: the first is tariff policy. There were mainly two tariff policies related to sulfur in 2008. First, export tariffs on phosphate fertilizers and sulfuric acid have been raised or introduced; a provisional export tariff of 20% will apply to ammonium phosphate in the first and fourth quarters, while a provisional export tariff of 30% will apply in the second and third quarters ； A provisional export tariff of 5% is imposed on sulfuric acid. Second, a provisional tariff is imposed on sulfur imports, with the tax rate adjusted to zero. Sulfur is primarily used in the production of sulfuric acid, and 3/4 of that sulfuric acid is used to manufacture phosphate fertilizers. Imposing a provisional export tariff on sulfuric acid helps to reduce the export of sulfuric acid within the country, increases the domestic supply of sulfuric acid, and thereby directly reduces the demand for sulfur. Raising export tariffs on ammonium phosphate and reducing its export volume can also indirectly reduce the demand for sulfur. A zero tariff on sulfur imports reduces the cost of importing sulfur, which will also help to lower sulfur prices. Therefore, adjustments to tariff policies will slow down the growth in sulfur demand. The second is emission reduction policies. China has limited resources of natural sulfur mines, but it possesses large amounts of high-sulfur natural gas, high-sulfur coal, and imported high-sulfur oil. Sulfur dioxide is one of the two key pollutants whose emissions are closely monitored in order to reduce them. As **controls on sulfur dioxide emissions and the sulfur content in petroleum products become increasingly strict, this will drive the natural gas, coal, and petroleum refining industries to install sulfur recovery units, resulting in an increase in sulfur recovery volumes** ； The current high price of sulfur also provides an economic incentive for companies to recover sulfur. Therefore, strengthening emission reduction policies helps to increase domestic sulfur resources. Third is the price policy. On January 9, the State Council held an executive meeting to discuss measures for maintaining price stability, calling for the stabilization of prices of chemical fertilizers such as urea and phosphate fertilizers ； It has been decided to conduct special inspections on the prices of agricultural inputs such as fertilizers in order to regulate price practices. The meeting also stated that if it is indeed necessary to adjust the prices of fertilizers and other products due to rising costs, such adjustments must be submitted to the **price regulatory authorities for approval in accordance with regulations. It is foreseeable that policies to strictly control fertilizer prices will prevent high sulfur prices from being passed on to downstream sectors, thereby curbing further increases in sulfur prices. Furthermore, the price of sulfur has currently risen to exorbitant levels; the international price has increased from over 70 dollars at the beginning of last year to over 600 dollars, an increase of eight or nine times ； The highest price for the domestic market has exceeded 5,000 yuan, and it has basically reached the limit that downstream users can bear. At present, China already has the highest sulfur prices in the world, and there is little room for further significant increases. However, due to the still-high prices in the international market, as well as the commissioning of several large-scale phosphate fertilizer plants in China, there is strong demand for sulfuric acid; thus, the situation of a shortage of sulfur is unlikely to change in the near future. Therefore, in the first half of this year, especially in the first quarter, sulfur prices will remain high ； After the middle of the year, various policy factors will exert an increasingly strong influence; the supply and demand for sulfur are expected to reach equilibrium, and the sharp rise in prices will ease.