US amsul stripping margins rebound in March
The stripping margin for US ammonium sulfate production in March reached the widest spread since June on higher selling prices and steady variable costs.
The stripping margin — the selling price minus variable costs — for March rose to $246/metric tonne (t), a roughly $47/t or 23pc increase from February and a 38pc surge from March last year.
Amsul production issues at AdvanSix and BASF tightened the market, which lifted prices as buyers looked elsewhere for supply. Nutrien also had some production issues at its Redwater facility and was limiting supply to some customers, market participants said. The company did not immediately respond to request for a comment.
Resulting tightness in the market has been exacerbated by the spring season arriving early, causing buyers to enter ahead of normal before sulfur production ramps back up after spring refinery turnarounds.
The supply squeeze was clearest at New Orleans, where an amsul barge traded on 18 March at $385/st fob for March delivery. Prices were assessed between $325-335/st fob for week ending 14 March. Prices rose to $370-385/st fob for week ending 21 March, and market participants expected prices would reach $400/st fob in the upcoming weeks.
The total variable cost for amsul was flat for the month compared to February at $132.50/st. But variable cost in March 2023 was at $185/st, about 28pc higher than currently. The March 2023 stripping margin was also $7/st more than the total variable cost.
Declines of 25pc and 47pc in the cost of feedstocks ammonia and sulfur year over year, respectively, caused the shift in stripping margins.
The ammonia Tampa contract rolled over from February at $445/t cfr on higher demand. A series of plant disruptions in the US have tightened supply in the Corn Belt. Global ammonia is balanced but may soften as US domestic demand declines.
The Tampa sulfur contract settled $12/long ton (lt) higher for the second quarter at $81/lt on 18 March, up from $69/lt in February. Prices could fall toward the end of the second quarter as sulfur output rebounds following refinery turnarounds.
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