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The financial crisis plunged the world economy into a deep downturn. China has a high degree of economic dependence on external factors; in the international trade arena, it remains an export-oriented country with a strong reliance on exports. The global economic decline will inevitably affect China’s economic growth and market demand. In particular, the domestic fertilizer and pesticide industries have been affected by the international economic downturn, facing increasing export pressures that have severely impacted the development of the sulfuric acid industry. In January, the sulfate market was characterized by weak demand, a decline in transaction volumes, and a further drop in the operating rate of downstream industries. Although there are signs that sulfuric acid prices are bottoming out, market sentiment seems to be continuing to decline, with little possibility of improvement in the short term. In January, the average ex-plant price of 98% sulfuric acid in the domestic market was 300 yuan per ton, while the market price was 400 yuan per ton, representing a decrease of 74% compared to the same period last year. The extent of price drops in such a short period is rarely seen in history. Production status: In January, domestic sulfuric acid producers were generally operating at low capacity, with an average load factor of around 40%. Most small and medium-sized enterprises are either shut down or operating at reduced capacity, and even those with larger production scales have imposed strict limits on output. Difficulties in selling products, severe inventory buildup, and reduced liquidity have put sulfuric acid production in a difficult situation. In particular, due to unstable market demand and continuously falling raw material prices, sulfuric acid producers are even less willing to increase production. Normally, January marks the peak season for the production of fertilizers and pesticides in China, but this year, production of these products remains at a low level. This is undoubtedly a further blow to the sulfuric acid industry. Market demand: In China, 70% of sulfuric acid is used in the production of fertilizers. The first quarter is the peak season for the production of fertilizers and pesticides on a domestic scale. However, this year, as demand for fertilizers in the domestic market has slowed down, and particularly due to a significant decline in demand for fertilizers in international markets, exports of domestic fertilizers and pesticides, which are highly dependent on international markets, have dropped sharply, with a decline of over 30%, which has had a considerable impact on the sulfuric acid industry. The sluggish sulfuric acid market stands in sharp contrast to the booming market plagued by shortages last year. Under pressure from costs and market sales, small enterprises have stopped production one after another, while large and medium-sized enterprises have also significantly reduced their output; some of these enterprises no longer supply the market except for their own use. Price situation: In January, the market price of sulfuric acid had dropped to the level seen in the same period of 2005. The rapid changes in market demand are beyond the prediction of sulfuric acid manufacturers. Declining demand downstream has led to stalled sales, product backlogs, and operational losses, putting the company under immense pressure. In January, the average ex-plant price for domestic sulfuric acid producers was 300 yuan per ton. The selling price of some companies is even below 200 yuan per ton. Due to the slower start in fertilizer and pesticide production this year, pressure on the sulfuric acid market is increasing. Judging from the current demand for sulfuric acid, although prices have reached their lowest levels, they may continue to drop slightly further due to weak market demand. Raw material situation: In January, the average ex-plant price of sulfur, one of the main raw materials for sulfuric acid, was below 800 yuan per ton; compared with 4,000 yuan per ton in the same period last year, the price dropped by 80%. In January, international crude oil prices dropped below $40 per barrel, reaching a low of $36 per barrel – a decrease of about 20% compared to the previous month – and prices continued to fall. As a result, sulfur prices are likely to drop further, which in turn could lead to a decline in sulfuric acid prices. At the same time, the weak demand for sulfuric acid will drive down sulfur prices further, which in turn will lead to an additional decline in the price of sulfuric acid. February forecast for the sulfuric acid market: Affected by the decline in international economic growth, domestic economic growth is also set to continue slowing down. Although the price of sulfuric acid in the domestic market has currently dropped to relatively low levels, it does not seem to have reached rock bottom, and there is still a possibility of further decline. The situation in the production of fertilizers and pesticides is quite challenging. However, it is estimated that in February, production will increase to some extent in order to raise the levels of inventory for the off-season. As a result, demand for sulfuric acid will also rise slightly in February. Yet the overall situation of an oversupply in the sulfuric acid market will not change significantly; prices are likely to experience a slowdown in decline and may reach a temporary state of stability.