Baltic Sea sulphur exports rise and diversify

Exports of sulphur from the Baltic Sea port of Ust Luga totalled at least 2mn t in the first half of this year, according to data collected by Argus. This is an increase of 5pc on the first half of 2019 and 11pc on the first half of 2018.

The product was loaded aboard 39 vessels.

Russian rail data show that 458,000t of sulphur from Russian producer Gazprom was railed to the Baltic Sea port of Ust Luga in the first six months of this year. This is a drop of 36pc on the year, but the decline can be accounted for by the overall reduction in deliveries of Russian produced sulphur on the network. Russian sulphur is also delivered by barge along the Volga Don river system to the Black Sea port of Kavkaz for export to consuming markets in north Africa. There has been a greater availability of barges in the second quarter of this year, following the opening of the river system for the transportation season, as grain exports were reduced. This has resulted in 749,000t of sulphur being transported on the river in April-June, up on the 665,000t transported in the same period last year.

But even as Russian deliveries by rail to Ust Luga have fallen, Kazakh deliveries to Ust Luga port increased by 23pc to 1.23mn t. This is despite cuts in sulphur production across Kazakhstan related to the Opec+ oil production cuts in the latter part of the second quarter.

Sulphur loaded at Ust Luga port is delivered to key consumers in Morocco and Tunisia as well as Brazil on a spot and contract basis. But the US and Mediterranean have become more important export destinations this year, with deliveries to the US increasing from just one vessel in the first half of 2019 to four so far this year. GTT trade data show the US took receipt of 180,000t of Russian sulphur in January-May, which would have loaded at Ust Luga port. This is an increase of 85pc on the year and accounted for 29pc of total US imports for the timeframe.

But exports from Ust Luga port have diversified further with deliveries to the Mediterranean region increasing from three in January-June 2019 to four this year. Europe has also entered the supply chain this year, with two deliveries having been made to France and Sweden.

The diversification in Baltic sea exports can be linked in part to the increasing availability of both Russian and Kazakh sulphur. Argus is expecting Russian sulphur production capacity to increase by an estimated 283,000t between 2017 and the end of this year, while Kazakh sulphur production capacity is likely to increase by 1.12mn t in the time frame.

The increasing diversification in export markets for Ust Luga loading cargoes, and a particular increase in deliveries to the US since 2017, means this trade route is becoming more integral. Argus is today launching a Baltic Sea-US Gulf weekly freight rate for cargoes of 35,000-40,000t in size.

Looking forward, the US is likely to continue to rely on the import market while the Covid-19 pandemic escalates as refinery based-sulphur production has been and continues to be curbed because of the severely reduced demand for refined oil products. But it is also worth highlighting that there could be some reduction in sulphur availability from Ust Luga port as the third quarter progresses because of the extended Opec+ production cuts in Kazakhstan.

By Claira Lloyd