Viewpoint: Weak global sulphur market weighs on US

Negotiations for the first quarter Tampa sulphur settlement will heat up amid a cooling international market, with prices on a downward trend around the globe at the end of 2018.

China, the leading global importer, has led prices down in the fourth quarter after a surge in the third. Buyers pulled back after flurry of purchases in September, causing the market to plateau and then drift down throughout October and November.

The fourth quarter Tampa settlement was assessed by Argus on 11 October at $140/long ton delivered, when Chinese prices peaked at $186/t cfr for granular product at the top end of the range. Prices then declined by $36/t to $150/t cfr China at the top end as of 7 December.

North American export assessments have also trended down, as sulphur export markets around the globe follow Chinese price direction. Prices in Canada have moved down by $34.50/t on a midpoint basis to $122-132/t fob Vancouver, while prices in the US Gulf have decreased by $38/t on a midpoint basis to $112-117/t fob.

Buyers are likely to push for a decrease in the first quarter Tampa settlement given that prices have decreased across the globe since the fourth quarter. Suppliers have had volumes available for export during the fourth quarter, with several in the market in early December, illustrating a lack of tightness domestically.

The sulphur market is in balance in most regions with little spot demand and healthy production going into the end of the year. The domestic market is unlikely to counter decreasing prices internationally, with buyers not currently looking for above-norm volumes in the US and production rates expected to be stable in 2019 from 2018.

Indeed, the market is expected to lose some demand in 2019 when Nutrien takes an extended turnaround in Redwater, Alberta, to convert its facility to ammonium sulfate from MAP. The turnaround is expected to be completed by the third quarter of the year and remove around 200,000t/yr of sulphur consumption at the plant.

Nutrien is anticipated to increase its production at phosphate plants in North Carolina and Florida, and its sulphur consumption will likely stay around 2mn t/yr going forward, though 2019's consumption will be impacted by the turnaround.

The sulphuric acid market should continue to drive sulphur demand in the near term from sulphur burning sulphuric acid producers, with prices for sulphuric acid at the highest level since Argus began assessing the market in 2012. Supply will be tightened by two maintenance projects early in 2019 at leading smelter acid producer Kennecott in Utah.

The strong sulphuric acid market is unlikely to outweigh the loss of demand at Nutrien and declining international prices in early 2019, and the outlook for sulphur in the US leans bearish as the calendar turns to 2019.