Insights on the global sulphuric acid market - looking back at April 2017
Tightness persists across the Far East with another report of a short-lived stoppage at Saganoseki contributing to the lack of tonnage. Stocks in Japan are said to be low giving rise to the lack of spot tonnes and it will be a few weeks before the market is more balanced.
With Korea Zinc producing around 10% less y-o-y in 2017 combined with its own planned and unplanned stoppages, overall production by the zinc smelter is estimated to be down this year by up to 200,000 t sulphuric acid. Recent stoppages at LS Nikko and Japanese smelters have contributed to the reduced availability in the region.
At the same time requirements from the major consumer in the region, Taganito, is rising with an estimated increase of almost 200,000 t/y expected following its expansion at the nickel leaching facility.
The market is expected to remain tight therefore in the near term as stocks are replenished and Korea Zinc completes its planned maintenance period in May. However further curtailments are on the horizon for the 2-half with extensive turnarounds planned for Saganoseki, Niihama and Onahama all scheduled for September-December.
Further production issues in South America have added to the mix, curtailing availability for Chile where improved copper prices this year have led to some recovery in sulphuric acid demand. Spot prices here continue to firm up with some suggesting price levels have exceeded $80 cfr but without any real confirmation so far.
With the rise in delivered prices, the Chilean market has become the destination of choice for many suppliers, particularly in the Far East where the alternative Indian market is yet to catch up. Netbacks on Chilean business given an $80 cfr price tag for the Far East are currently in the region of the mid $30s fob depending on the freights.
The weak outlook for sulphur could put pressure on sulphuric acid demand going forward particularly for OCP who now has even more flexibility given the start-up of the latest 1.4 million t/y JPH-3 sulphur burner.
This monthly analysis is an extract from the World Fertilizer Review (May 2017), which is produced by highly experienced analysts who look at the market as a whole. The report is a monthly round-up of information on all the major commodities, including ammonia, sulphur, nitrates, potash, phosphate and more.