Here are six things you need to know about the sulphur market in 2017.
1. The YUC-Kailin-Wengfu sulphur-buying consortium has been established in China, representing three of the “Big 4” phosphates producers. This has already pulled down cfr sulphur prices in China in late Q1 2017. The consortium will be called Tianji Resources, with ownership: YUC (45%), Kailin (40%), Wengfu (15%).
2. Chuandongbei Phase II (a CNPC-Chevron joint venture) is to come on-stream in China in Q3 2017. This major project will increase Chinese sulphur production as demand remains weak, squeezing prices further.
3. Jorf Lasfar JPH Units 3 & 4 (phosphate projects) are due on stream in Morocco in H2 2017 / Q1 2018 – this will provide major new selling opportunities, a rare bright spot for sulphur producers.
4. Meanwhile, there’ll be some reprieve for sellers in the form of short term upward price pressures in Q1 2017: export curtailments in Russia due to increased domestic demand and technical challenges at Astrakhan; stockpiling in Turkmenistan due to low export prices; and delayed commissioning at Barzan in the Middle East.
5. The December 2016 OPEC oil curtailments deal is expected to supress sulphur production minimally – it cuts oil production in regions where sulphur output is gas-based. Little price impact is expected. As a downside risk, the deal could indirectly lift sulphur production, by incentivising increase Middle East and CIS gas production.
6. New projects in CIS (e.g. Syzran expansion) and Middle East (e.g. Barzan start-up) will lift sulphur supply significantly over 2016-17; demand growth will be weak by comparison. This will keep prices weak and advantage sulphur buyers.