Contract negotiations for sulphuric acid supply to Chile during 2025 got under way at a major industry conference this week, with more than 2mn t to be priced.
The spot price for fourth-quarter deliveries to Chile — usually a guide in talks — has averaged $163/t cfr on a midpoint basis during the third quarter, well above the $127.50/t cfr average for the current annual contract.
Tight availability from most key suppliers — especially South Korea, Japan and northwest Europe — has kept spot delivered prices above the annual benchmark for several months.
Suppliers will probably argue that Asian import parity will be the key factor for 2025 prices, with fewer northwest European cargoes arriving in Chile this year as a result of maintenance and Morocco's OCP absorbing spot volumes.
Argus forecasts that OCP will import about 2mn t of acid in 2024, reflecting firm demand for finished phosphate products while a new sulphur burner capacity comes on line. OCP will continue importing acid as the burner ramps up.
Buyers, on the other hand, will probably argue that availability will rise in Asia, and that this will lead to a shift in market dynamics in 2025.
Chinese capacity is expected to increase as smelters come on stream, but tight global supply of copper concentrates could lead to an increase in idled capacity and limit acid availability for exports.
Another key factor is Indonesia, where large smelters and sulphur burners associated with the electric vehicle industry are ramping up, removing some demand next year.
Indonesia's sulphuric acid imports dropped by 14pc in January-July to 642,000t, after several buyers launched burners and switched to buying sulphur instead. Sulphur imports surged by 41pc in the first seven months of the year to 1.91mn t, following the expansion of burning operations at Obi Island and Sulawesi.
These factors will probably foster buyer caution. But with smelting utilisation rates in Chile estimated at 65pc in 2023, below the global average of 78.2pc, according to Chilean copper commission Cochilco, the country will continue to rely on imports.
