Where did all the crushed lump sulphur go?

Spot trades for crushed-lump sulphur have stalled considerably since 2019.

China is buying less because of softer prices for granulated sulphur, as well as stricter environmental regulations on crushed-lump imports. Major sellers in Iran and Turkmenistan are struggling to export their crushed-lump cargoes because of lower pricing alongside trade sanctions on vessels loading from Iran.
 
Crushed lump trades will probably continue to dwindle from the global sulphur spot market if these obstacles remain. 

Pre-2019 crushed lump sulphur trade

Until 2019, Iran and Turkmenistan dominated the crushed lump spot supply market, with both countries exporting at least 77-89pc of all spot crushed lump cargoes in 2017-18, Argus data show
 
Total crushed lump spot sales tracked by Argus totalled 540,000t in 2017 and 535,000t in 2018. 
 
Of the two counties, Iran was the largest supplier, shipping 480,000t in 2017 and 211,000t in 2018.
 
China remained the number one buyer. Argus data show China secured at least 60pc of all crushed lumps sold in 2018, at 321,000t. 
 
The second largest buying market for crushed-lumps was north Africa, supported by demand from Moroccan fertilizer producer OCP, as well as from smaller buyers in Tunisia and Egypt.
 
But unlike China, OCP prefers to secure its crushed lump cargoes on a quarterly contract basis, rather than a spot basis, and predominantly secures them from suppliers in Saudi Arabia and Russia. 

Post 2019 crushed lump sulphur slumps 

China’s environment ministry banned several ports from discharging crushed lumps in mid-2018 and placed restrictions on buyers processing it on an industrial scale. This was done to limit pollution from dust, caused by storing or processing sulphur in crushed lump form in large quantities.
 
These new environmental restrictions significantly weakened China’s crushed lump demand, forcing suppliers to lower their offer prices to attract a dwindling customer base. 
 
Alongside this, the US re-imposed trade sanctions on Iran in November 2018, which caused — among other things — freight rates to increase for Iranian sulphur exports, as wary vessel owners applied premiums for chartering from Iran. 
 
Global sulphur prices also softened throughout 2019, driven by falling end-product DAP prices and sentiment, alongside improving domestic sulphur production rates within key import markets such as China and India. 
 
As better quality granular sulphur became readily available at lower prices during 2019, crushed lump demand was further dampened. Cfr China granular prices dropped by around $88/t in January-December, reaching record lows in November at around $61/t cfr. 
 
The lower prices also added more pressure on Turkmenistan-origin crushed lump suppliers trying to sell their product overseas. Rail costs to Iran’s Bandar Abbas port remained broadly flat at $55-65/t in 2019, while fob Iran crushed lump prices dropped by $87/t in January-December, averaging just $23/t throughout the fourth quarter of 2019. 
 
Argus data show that just 130,000t of Turkmen-origin spot crushed lumps was sold in 2019, down by 36pc on 2018 sales. No spot crushed lumps were sold in 2019 in Iran, with Iranian supplier IGCC cancelling numerous sales tenders that year because of persistent low prices. 
 
No spot sales of Iranian or Turkish loading crushed-lump sulphur have been confirmed so far in 2020.

2020 crushed lump sulphur trade and beyond

Global spot sales of crushed lump sulphur are expected to continue this downward trajectory. 
Chinese domestic crushed-lump demand is still being stalled by the environmental ban, as well as lower granular sulphur prices, high sulphur inventory levels and modest DAP production rates from major buyers.

And  Covid-19 is putting more pressure on freight rates  from Iran, as the pandemic further discourages vessel owners from chartering vessels loading from the country. 
 
Some support for crushed lump trade will remain through Morocco’s OCP, but the company’s demand is largely being met by existing contract arrangements with Saudi Arabian and Russian crushed lump suppliers. And overall demand is falling steadily from the expansion of OCP’s Jorf phosphates hub, which only processes granulated sulphur. 
 
This means Iran or Turkmen-origin spot cargoes are unlikely to re-enter the global market in significant quantities, particularly given pressures from prices, sanctions, and now the Covid-19 pandemic.