A spate of early turnarounds will cloud the outlook for spot US sulphuric acid prices in the first half of 2017.
NorFalco will have planned turnarounds at all four of its supply sites in Canada in the first half of the year, cutting its production for 2017 by an estimated 100,000-150,000t. Kennecott also has a month-long planned maintenance at its Utah facility in May that will take an estimated 90,000t off the market.
Vale will take an extended outage at its Sudbury, Ontario, location, where it will move to a one furnace operation.
The transition at Sudbury will curtail acid production to an uncertain extent.
Buyers are still bearish despite the cuts because of the potential for weak demand in fertilizer and industrial markets.
Sulphuric acid prices have been weak throughout 2016, with the spot import vessel price at the $30-$45/t cfr range throughout the year. Prices were between $60-$80/t cfr for most of 2015 before falling to the $40s/t cfr in November. Quarterly contract price levels have also fallen, moving to $67-$100/t del across the lower Atlantic, US Gulf Coast and Midwest at the end of 2016 from $85-$127/t del at the end of 2015.
Total vessel imports through October 2016 have fallen by 33pc to 440,000t from the corresponding period in 2015. Vessel import volumes are expected to recover in 2017 even without increased demand, because of supply curtailed by the turnarounds and the new NorFalco terminal coming online in Savannah, Georgia.
The NorFalco terminal is expected to lead to some Canadian volumes being reallocated to vessel transportation as opposed to rail. Attractive vessel freight rates have led the producer to place more volumes by water and given it another negotiation tool against railroads.
International prices are falling going into the end of the year, with European producer netbacks falling $5/t to the $5-$10/t fob range for the first quarter 2017. Leading Moroccan buyer OCP is also expected to pressure annual contract prices next year, as sellers redirect acid previously bound for Cuba to Morocco because of Sherritt commissioning its own sulphuric acid plant on the island in 2016.
Sherritt brought in 219,000t of sulphuric acid from Germany and Spain in 2015, with Glencore among the suppliers from each of those countries. Glencore is NorFalco's parent company.
The sulphuric acid market should see more vessel imports in 2017 than it did this year, with both tightened domestic supply because of the turnarounds and length in the international market.
