Sulphur feels weight of oversupply

By Alex Feytis
Published: Sunday, 26 July 2009

From the times of unprecedented sky high demand in 2008, sulphur production has once again plummeted into excess and oversupply. But for the by-product mineral from oil and gas refining, severe shortages could well be the long term norm by Alexandra Feytis, Assistant Editor

Sulphur’s swings are commonplace to those in the industry: excess, shortage, excess. For the last few years, the sulphur market has been acting as a yo-yo. With virtually all sulphur being a by-product from the petroleum and gas industry (about 99%), its supply/demand balance is highly volatile and unpredictable.

In 2007, sulphur was in excess with the end-markets of fertiliser, copper and nickel barely interested in the material (IM March ’07, p.64: Sulphur’s surplus scenario). But a year later, stocks dwindled, the world faced a shortage and the yo-yo mineral suddenly became an object of desire. Prices rocketed to $800/tonne in mid-2008.

Traders rubbed their hands in glee, sulphur had never been so popular. This did not last. The situation turned around once again at the end of 2008, sparked by the start of the global financial crisis.

Like in 2007, sulphur is in excess once again with prices as low as $45/tonne in March 2009. In some cases, refineries even had to pay to remove their sulphur, such as in the USA or Mexico with fertiliser producer Grupo Fertinal being paid to accept molten sulphur from US and Venezuelan refineries (IM April ’09, p.36: Fertiliser loses its mineral appetite).

 Mining sulphur from volcanic sources in East Java, Indonesia is a far cry from its primary source of oil and gas by-product. Courtesy Ulet Ifansasti

“Sulphur went quickly in opposite direction”

“Sulphur, like most commodities, has undergone a radical change in market conditions over the last year, impacted by the global economic crisis,” explained Donald Messick, director of market studies and agricultural programmes at The Sulphur Institute (TSI).

He added: “From tight market conditions and resulting high prices, it went rather quickly in the opposite direction, affected by similar conditions impacting phosphate fertilisers, its major end use.”

As a result, uncertainty about the extent of the global economic meltdown has dogged the sulphur market and had analysts working overtime.

“The current market is sluggish. The situation is vastly different than it was a year ago when prices were at or near record highs,” Joyce Ober, sulphur analyst for the US Geological Survey (USGS) told IM

The present macroeconomic conditions are obviously impacting both supply and demand of sulphur. On one hand, sulphur demand has been affected by the declining interest for fertilisers and industrial products. On the other hand, sulphur production is suffering from the sharp reduction in oil demand in the developed world, which directly affects sulphur production levels in the short-term. Therefore, new projects are delayed or even cancelled owing to this general economic uncertainty.

Like analysts, traders were taken aback by the rapid downturn in sulphur demand. US trader Transammonia AG explained to IM that the demand situation “remains depressed” at present after the collapse of the fertiliser market at the end of 2008.

According to Vildan Bekirov, production manager at Transammonia, “inelastic supply and increasing sea freights costs” are the main challenges of today’s market.

Solvadis Commodity Chemicals GmbH, German sulphur trader and producer, is of the same thought. “The global financial crisis has no doubt affected many companies, including ours. We have been challenged by the almost non-existent off take of raw materials for the fertiliser industry which has created logistical bottlenecks and, in turn, massive price reductions on the products. We managed to master this down time by way of streamlining our logistical and trading activities to meet the reduced demand/consumption,” Peter Kholer, chief marketing officer of sulphur/sulphuric acid division at Solvadis explained to IM.

Driven by fertilisers

World production of sulphur in all forms (elemental, pyrites, and sulphuric acid) accounts for 72m. tonnes., up from 68.4m. tonnes in 2007 – the biggest source, elemental sulphur (99%) is produced as a by-product of oil and gas refining (see Sulphur at a glance).

Sulphur as an element is not commonly used as a direct product. The vast majority is consumed to make sulphuric acid (H2SO4), one of the most widely used chemicals, required as a precursor for a host of industrial practices. World production of sulphuric acid is about 200m. tonnes.

Petroleum refining and metal ore leaching are one of the leading uses for sulphur, which with its derivatives, is also used for a large range of other applications such as pigments, pulp and paper chemicals, batteries, detergents, rubber vulcanisation and plasticisers.

Sulphuric acid is also used to process titanium dioxide (TiO2) in the sulphate route method. But producers are expected to shift from sulphate to the more modern and efficient chloride production in the medium term (IM June ’09, p.28: TiO2’s time to transform).

Agriculture is the top end use for sulphur, mainly in the form of sulphuric acid. Its largest single use is the manufacture of phosphoric acid, an essential intermediate in many processes in the chemical and manufacturing industries. In addition, sulphuric acid is used by the fertiliser industry to process the key nutrients phosphates (P), nitrogen (N), potassium (K), as well as in pesticides and in other agricultural chemicals.

Over 50% of world sulphur consumption is used for fertilisers, reaching an average of 60% in the USA and 70% in China (see China’s potential section).

For fertiliser minerals, for the most part, 2008 was a good year – industrial minerals such as phosphate rock, potash and sulphur all experienced a pricing boom, with many producers reporting record profits. Towards the end of 2008, however, the economic downturn hit farmers, causing a chain reaction that ultimately slashed fertiliser mineral prices.

Therefore, fertiliser producers such as Tiger-Sul Products Co., the largest maker of bentonite-sulphur fertilisers, are seeing the effects of this downturn.

Jeff Ivan, marketing and business development manager for the Canadian company, told IM: “Phosphate fertilisers represent the largest consumer of sulphur through the production of sulphuric acid. With the fall in phosphate demand, sulphur followed as well.”

Consumption patterns vary with the cycles within various end-use areas. For instance, although the fertiliser industry ebbs and flows with the fortunes of agriculture, this sector remains the main consumer of sulphur. In short, actual consumption will ultimately rest with the fortunes of the farmers. And even though a lot of work as been done to increase the use of sulphur as a plant nutrient, farmers may use their limited fertiliser funds for more central plant nutrients of nitrogen, phosphorous, and potassium.

World sulphur production

*Preliminary         **Forecast

Sulphur’s use in fertilisers

Source: Suphur Outlook, TSI 2008

Green shoots?

Signs of sulphur recovery have timidly started to show up and producers are claiming it is a good time for purchasing.

“We are seeing increased demand for sulphur fertilisers in all global markets due to the reduction of atmospheric sulphur emissions and the trend to high analysis fertilisers with little or no sulphur,” confirmed Ivan of Tiger-Sul.

He explained to IM: “Many customers realise sulphur has bottomed out and that this represents a good time for purchasing sulphur fertilisers. We work closely with our customers and we communicate with them our thoughts on the global sulphur market. We foresee that fertiliser demand in general moving into this fall and into 2010 represents strong demand due to the earlier cutbacks we have seen from this spring.”

Despite the obvious necessity for food, global crop production is expected to fall which will put pressure on commodity prices. Ivan said that if the world sees stronger prices heading into the latter stages of 2009, continued demand into the first quarter of 2010 is expected.

Demand for fertiliser is being predicted to strengthen before the end of 2009, with the possibility of benefits arising from the price crash for companies such as Tiger-Sul who still require significant tonnages of sulphur.

USA now 100% by-product

US production of sulphur is totally sourced as a by-product from hydrocarbon processing, when since the last pyrite mine closed in 2008.

Sulphur now comes from petroleum refining (85%, including a negligible amount from metallurgical coke operations) and natural gas processing (15%).

According to the US Geological Survey (USGS), the USA produced 8.54m. tonnes of elemental sulphur in 2008 at 114 operations in 24 states, this is down from 9.38m. tonnes in 2005.

The leading producers of by-product sulphur in the USA in 2007, all with a sulphur production over 500,000 tpa, were Valero Energy Corp., Exxon Mobil Corp., ConocoPhillips Co., Chevron Corp., and Shell Oil Co. (including its joint ventures with Petróleos Mexicanos, and Saudi Refining, Inc. and subsidiary operations) in descending order of production. Unsurprisingly, the core businesses of all is oil refining.

About 85% to 90% of sulphur consumed in the USA is converted to sulphuric acid and used in various industrial applications. Sulphuric acid is the most widely used mineral acid and the most produced and consumed inorganic chemical, by volume, in the USA.

In 2008, US sulphur consumption was 10.6m. tonnes, down from 12.4m. tonnes in 2005.

Since the beginning of the financial crisis, demand for sulphur in fertiliser and other end uses has been falling owing to curtailments at phosphate fertiliser capacity in the USA.

According to the USGS, the decline in consumption was reflected in reduction of elemental sulphur imports which fell sharply in Q4 2008 and declined further through March 2009.

In the USA, agricultural uses are the dominant consuming sector, using an average of 60% market share, followed by petroleum refining (25%), sulphur also being used in hydrocarbon processing. The remaining demand is for the processing of metals such as copper and nickel (3%).

Other uses, accounting for 12% of demand, were widespread because a multitude of industrial products required sulphur in one form or another during some stage of their manufacture.

China’s potential

China is the world’s largest sulphur importer and it produces much of its own product, but, contrary to the USA, it is the only country for which pyrites as its dominant source (see Pyrite production to decline).

According to the TSI, Chinese sulphur production increased to 11.4m. tonnes in 2007, including 5.7m. tonnes from pyrites; 4.5m. tonnes from smelter-acid; and 1.2m. tonnes recovered elemental sulphur. Chinese sulphur imports increased to 9.7m. tonnes to meet the increasing demand the same year.

According to Beijing Orient Agribusiness Consultant Co. Ltd (BAOBC), China imported 1.233m. tonnes of sulphur in May this year and 5.832m. tonnes between January and May 2009. This is an increase of 63.9% and 41.7%, respectively, on the same period in 2008.

The Chinese sulphur market saw a volatile fluctuation during 2008 and 2009, with extreme price rises and falls impacting the industry.

Fertiliser analyst at BOABC Xu Hongzhi, explained to IM: “Both the Chinese sulphur market and international market are confronting the same depressed and weak situation. The softening price and slowdown of demand growth now fully embody this complexion”.

“Oversupply can be regarded as the most important factor affecting the market,” he added.

However, China is by far seen as the market with the most important consumption potential together with India. Tiger-Sul’s Jeff Ivan told IM: “We are seeing new uses for sulphur opening up in India and China through the cooperative research and work that TSI has done in these regions. India and China represent over 53% of the global sulphur deficit.”

This opinion is shared by Kholer from Solvadis who estimates that “China and India are the major consuming area with further growth potential.”

BOABC analysed that, when sulphur’s import price was below $60/tonne, “it put pressure on the domestic sulphuric acid and phosphorus price.”

The country’s main sulphur imports in May 2009 were from Canada (17.52%), Saudi Arabia (15.89%), the USA (14.92%), Japan (10.18%), Iran and Kazakhstan.

Total Chinese sulphuric acid production also reached record highs in 2007 at 57m. tonnes. Total sulphur consumption reached 20.5m. tonnes, 70% used in fertilisers. China consumes all its sulphur but exports sulphuric acid mainly to Hong Kong.

“Driven by environmental protection policy and large scale infrastructure improvements, China’s sulphur market has a huge development potential,” explained Xu Hongzhi.

According to BOABC, the main sulphur producers are oil refining companies China Petrochemical Corp. (SINOPEC Group) and China National Petroleum Corp. (SNPC Group).

The main sulphuric acid producers are Yuntianhua Group, WengFu Group, Guizhou Kailin(Group) Co. Ltd, Tongling Chemical Industry Group Co. Ltd., and Hubei Yangfeng Group.

In its China Fertilizer report on 25 June 2009, BOABC reported new fertiliser operations in the country. Xiangyun Chemical Co. Ltd., located in Hubei, plans to upgrade its capacity of sulphuric acid by 900,000 tpa in addition to mono-ammonium phosphate (MAP, 400,000 tpa), di-ammonium phosphate (DAP, 200,000 tpa), NPK (200,000 tpa), synthetic ammonium (300,000 tpa ) and ammonium phosphate (120,000 tpa) by May 2010.

China’s sulphur import 2006-2009

China’s sulphur capacity and production 2009-2015

Source: BOABC

South Korea emerges; Middle East to watch

Asia remains an important player for the sulphur market with new operations emerging in the region.

SK Inchon Oil Refinery Co. Ltd, South Korea’s largest sulphur producer, recently commissioned a second hydrocracker unit at its Ulsan oil refinery. The expansion is so significant it will boost the country’s production to 1.2m. expanding South Korea’s total annual sulphur production capacity by 20%.

South Korea is the third largest producer of sulphur in all forms in east Asia, after Japan (1.9m. tpa), China (1.5m. tonnes in 2008), and Taiwan (900,000 tpa). Owing to a depressed fertiliser (DAP) industry, the demand is relatively weak. Jae-Kyoung Kim, head of sulphur marketing at SK Energy Co. Ltd, a parent company of SK Inchon Oil Refinery, explained to IM: “Fluctuation in the fertiliser market is highly related to the sulphur market. In the short term, Chinese import quantity is the most important factor in the sulphur market.”

SK has two main refineries: Inchon refinery (20,000 tpa of sulphur) and Ulsan refinery (300,000 tpa sulphur, all of which are liquid), which is the second largest refinery in the world. Ulsan’s second unit started production in May 2008 and has a sulphur capacity of 150,000 to 200,000 tpa.

SK’s total production is expected to be over 500,000 tpa in 2009. The group sells 50% of its sulphur to the domestic market and with China taking the other 50%.

Even though the DAP fertiliser industry remains weak, Kim describes the demand for other markets, such as the caprolactum – the base chemical for nylon fibres and resins – as stable.

The Middle East is another important sulphur player in west Asia. “It is clearly the area with the most growth on the horizon when it comes to sulphur production, owing to further exploitation of the gas fields leading to further by-production of sulphur,” commented Peter Kholer, Solvadis’ sulphur chief marketing officer (see Trading Faces at the back of the issue).

According to TSI’s Messick, the countries to watch in this region are Qatar, United Arab Emirates (UAE), Saudi Arabia, Kuwait and Iran with the first three having announced major gas-recovery projects which could yield serious sulphur tonnages.

Most of the world’s incremental output over the next 5 to 10 years may well be in this region with some reports indicating that west Asia, as a region, may represent on the order of 20% of world sulphur production.

Messick said: “There is a large phosphate project under development in Saudi Arabia that will consume some of the additional production, but there will be additional sulphur available for export from this region,” he added (IM 10 July ’07: Saudi phosphate project progresses; IM June ’09, p.29: Seeking Saudi mineral potential).

Traditionally, the Middle East’s sulphur is sold to the phosphate fertiliser producing regions in Africa such as Morocco, one of the world leading producers, as well as to India and China. In recent years, Jordan and Brazil have also been recipients of the region’s sulphur.

The major gas projects in the Middle East need to be monitored by anyone with an interest in sulphur or related markets, explained Messick. He said that the “timing and volume of production” will have a significant bearing on the future of the market.

The majority of sulphur is used a fertiliser. Here sulphur is shown
in its solid phase, however it is sulphur’s use as an acid in phosphate
fertiliser production that drives the market. Courtesy TSI

Sulphur fertilisers in South America

Sulphur production has been growing and is expected to increase significantly within the next few years in South America as the region is the second largest sulphur fertiliser market after Asia. According to the TSI, sulphur fertiliser requirements increased to 2.6m. tpa sulphur and consumption to 1.8m. tpa.

The institute reports a total production of sulphur in South America of over 5m. tonnes in 2008 and forecasts that it could reach about 8m. tonnes in 2016.

Brazil, the largest regional sulphur fertiliser market, is a large producer and consumer of single superphosphate, the second after China, and ammonium sulphate. Its fertiliser market has grown by over 50% in the last ten years resulting in a huge fertiliser production base and demand for feedstock minerals production.

Tests on soybeans, corn and sugarcane in Brazil indicated widespread sulphur deficiencies. The country uses 1.2-1.3m. tpa of sulphur for fertiliser application and has a sulphur deficit of 150,000 tpa.

Argentina also has a large sulphur fertiliser market – tests also showed similar sulphur deficiencies in its major crops, like Brazil.

TSI reported that sulphur in Argentina is in the top three nutrients in domestic demand, beating potassium (potash). Argentina, which has a sulphur deficit of 250,000 tpa, uses 350,000 tpa of sulphur for fertilisers.

According to TSI, in both countries, more sulphate and elemental sulphur fertilisers are expected to come to the market.

In Chile, which is a tectonically active country, the potential to mine sulphur from volcanic sources is ever present. These sources are located along the Andes mountain belt which covers much of the country and have reserves into the hundreds of millions of tonnes for an ore containing between 30-50% sulphur.

Shell’s 70,000 bpd Bukom oil refinery in Singapore has a project
specification for sulphur recovery and is one of the group’s largest
sulphur producers. Courtesy Shell

Pyrite production to decline

Although some pyrites mining continues in several countries, China is the only country that uses pyrites as its dominant source of sulphur, contrary to the USA which closed its last mine in 2008 (see Reduced demand in USA).

In the mid-to-late 19th century, the pyrite group (i.e. sulphide minerals such as iron sulphide) , mined for its sulphur content, was the world’s second major source of the mineral. Pyrite as a main source of sulphur dramatically declined with the dawn of the oil and gas age.

“The sulphur industry has evolved from a predominantly mining industry until about 60 years ago, to one where most production is as a by-product of the oil and gas industry. Changes in the last few years have been minimal,” Messick from TSI commented to IM.

Exploiting pyrites has always been a problem as they do not form in large, commercially viable deposits. In addition, the extraction process is difficult, usually with a lot of unwanted product. That is why elemental sulphur has replaced pyrites burning for sulphuric acid production in most parts of the world.

“Pyrites burning for sulphuric acid production presents environmental challenges that sulphur burners do not. Elemental sulphur has gained market share over pyrites in China, where about 85% of all pyrites are produced. I expect pyrites to become less important with time,” Ober of the USGS explained to IM.

Emerging markets and sources

With fertiliser driving global sulphur consumption, the next major markets are nickel and copper for use in leaching of the metals.

There are various projects which have highlighted emerging uses for sulphur, most of which revolve around the construction industry.

Construction materials which use sulphur include: sulphur extended asphalt (an initiative headed by Shell), sulphur concrete, sulphur foam, and sulphur polymer cement to name a few.

There could also be an emergence of new sulphur sources, particularly from coal gasification/liquefaction.

Production from marine fuel desulphurisation regulations toward the end of the next decade is also a possibility.

Recovery by 2010?

Oversupply, weak demand and low prices were products of the worldwide financial crisis.

However, the market seems to foresee some hope in the near future as the growing opinion in the world of sulphur is that demand and consumption will increase for both sulphur and sulphuric acid in 2010.

One of the major factors impacting the evolution of sulphur is the recovery of the fertiliser market. Demand for fertilisers is expected to increase again when the global economy starts to recover.

In its June 2009 report, IFA’s Agriculture Committee projected a slow and gradual recovery. Global fertiliser demand in 2008 is estimated at 160m. tonnes nutrients, a steep reduction of 4.1% compared with 2007.

In the medium term, the demand prospects look rather positive, with global consumption expanding at an annual rate of 2.2% between 2006/08 and 2013 to reach 185.3m. tonnes in 2013. The IFA explained that “the current downturn has eliminated two years of growth”.

Requirements for sulphur as a nutrient have become increasingly important as sulphur deficiencies become more critical for optimum crop production – education of farmers in the need for balanced fertilisation is a key factor in this.

In the past, NPK fertilisers were the most popular, but today has seen a turn around in mentalities and sulphur became an incontrovertible component in the fertiliser equation.

However, less conventional uses for sulphur could also grow.

Ivan of Tiger-Sul said: “We are at the start of a sulphur revolution as we see the interest in sulphur demand beginning to take off in many new markets.”

Surplus v. deficit

Increased production of oil and gas to feed rising oil demand from the developing world, such as China and India, will result in adequate availability of sulphur. This, however, could also be the problem as a surplus is likely to occur.

Messick of the TSI explained: “The sulphur surplus is likely to increase with all of the announced energy projects worldwide. West Asia and North America provide the bulk of supply exceeding likely demand on the basis of their large-scale production of recovered sulphur, whereas Africa is the major deficit region, due to its sizeable phosphate industry.”

According to the IFA, slow demand recovery and delays in commissioning of anticipated oil and gas related projects may result in annual potential surpluses through 2013, ranging between 3m.-4m. tpa and equating to 5%-8% of total sulphur supply.

The organisation forecasted that, between 2008 and 2013, world production of elemental sulphur is projected to grow at an average annual rate of 6.6%, from about 48m. today to 63.7m. tonnes in 2013.

Global consumption of elemental sulphur is projected to grow at an annual rate of 6.7% between 2008 and 2013, reaching 60.7m. tonnes in 2013.

The second scenario considered by the IFA, if future sulphur production grows at lower rates than anticipated due to delays in large projects, indicates that the global sulphur market could be relatively balanced in 2009-2010 and could shift to a potential deficit in 2011/2012.

Long-term management

Sulphur supply today is controlled by the world appetite for fossil fuels. This might raise new issues in the future.

On one hand, a mid-term scenario seeing increased development of fossil fuels would result in a spike in production of sulphur, likely leading to a surplus of the mineral.

On the other hand, long-term estimates suggest the significant decline of oil and gas fuels, and with the mining of rock sulphur from pyrites disappearing quickly, sulphur could become a rare material in a few decades.

With this in mind, Alberta Sulphur Research Ltd (ASRL) in Canada, is leading the research into sulphur storage methods.

At present, the most common way to store surplus sulphur inventory is to keep it in blocks which have been stored in Canada so far for up to 30 years. However, longer storage needs would become problematic as sulphur is affected by various factors such as water runoff, oil interaction, and exposure to the elements.

Paul Davis, general manager of the ASRL, explained to IM. “In long-term storage, the physical properties of sulphur combined with continuous exposure to elements create a porous structure susceptible to physical breakdown.”

The new target for the ASRL and for many producers – where immediate storage options are difficult to come by – are now try to find long-term opportunities to store the material for over 200 years without affecting either the mineral or the environment.

For that to happen, ASRL has been working in collaboration with large sulphur producers such as Shell and Total on various issues such as above ground block storage, acid-gas injection, acid-gas combustion in addition to investigating new uses for sulphur. But there is still a lot of work ahead.

Owing to sulphur’s involuntary production as a byproduct from oil
and gas refining, surplus stocks are common place in the industry. 
Courtesy TSI

Sulphur revolution?

Although the sulphur market has been extremely volatile during the last few years, with alternating periods of shortage and surplus, things are expected to noticeably change.

Despite sulphur the situation at present, the shadow of shortage looms over the long-term market as the world attempts to wean itself off oil and gas based energy.

The sulphur fertiliser market is expected to dramatically increase within the next year or two, particularly in developing countries such as China and India.

Today sulphur may be in a surplus, but as 2008 showed the world, this can change very quickly. Although an ultimate shortage of sulphur in the long term is inevitable with the downturn in oil and gas production, keeping it a future problem is a risky game to play. Besides, development of storage methods could be the answer to sulphur producers’ significant storage headaches.

Sulphur at a glance

World production: 72m. tpa

Sources: Oil and gas by-product (99%), pyrite minerals (1%, iron sulphide FeS2)

Main producers: USA, Canada, Former Soviet Union, West Asia

Main exporters (>1m. tpa): Canada, Russia, Saudi Arabia, United Arab Emirates, Kazakhstan, Iran, USA, and Japan   

Main importers: China, Morocco, USA, Brazil, India, Tunisia (which are also the main fertiliser producers) 

* Pigments paper, paints, construction products, soaps, detergents, water treatment chemicals

Sulphuric acid

World production: 200m. tpa

Largest producers: East Asia (led by China), North America, Africa, South America

Largest traders: Western Europe, East Asia, North America

Major changes in China

IM interviewed The Sulphur Institute’s director of market studies, Donald Messick, on China’s role in the sulphur market

IM: What is the situation in China?

With the rapid development of the Chinese phosphate fertiliser industry and other chemical sectors, Chinese sulphur and sulphuric acid industries have experienced major changes in the last five years, becoming the largest sulphur consumer (sulphur all forms), producer and importer.

IM: What about the fertiliser sector?

In 2008, China’s phosphate fertiliser industry experienced an unprecedented and difficult situation, affected by sky-rocketing raw material costs, severe natural disasters and government policy on fertiliser export and domestic market pricing. Sulphur consumption in the phosphate industry dramatically decreased, which significantly impacted Chinese sulphur imports.

IM: What is your forecast?

It is expected that China’s phosphate production could recover by 2010, and sulphur demand will continue to grow from today’s baseline. However, recovered elemental sulphur production from within China itself will increase significantly from 1.5m. tonnes this year, which will stands to meet new sulphur demand and impact sulphur imports. However, China will remain a very important sulphur producer, consumer and importer within the world.

Plummeting prices

“The situation is vastly different than it was a year ago when prices were at or near record highs, although I cannot explain logically why prices were so high in 2008. High demand certainly was a factor, but a tenfold increase?” Joyce Ober, suphur analyst at the United States Geological Survey (USGS), is as intrigued as the other market analysts.

Sulphur prices have proven in the past to be extremely erratic, with alternating phases where supply exceeded demand resulting high peaks and low troughs for pricing. 

At present, sulphur’s price of $20-65/tonne is a far cry from the highs of 2008 which saw astonishing price rises in the region of $800/tonne. Considering the present economy, traders such as Peter Kholer from Germany’s Sovadis, estimates that sulphur’s market price is at “realistic levels now, although demand could be better.”

Vildan Bekirov, production manager at Transammonia, reported to IM that “benchmark price is about $35/tonne in the main exporting hubs of Canada and UAE.” But prices vary greatly by location and type.

For example, reported contract price for molten sulphur in Tampa, USA, is $5/tonne (FOB), spot tonnage of dry bulk sulphur out of Vancouver, Canada, is estimated $25-30/tonne (FOB) according to Fertilizer Week, up to $37-40 according to other analysts. Contract prices for Q2 2009 in China are reported at $60-63/tonne (CFR).

The situation is the same for sulphuric acid prices. After reaching historic highs in mid-2008, they have retreated since the beginning of the year due to the slowing demand worldwide in the key markets of fertiliser and metals.

Most of the drop in demand for sulphuric acid has been from pulp and paper, and the chemicals sector. The fertiliser industry, traditionally a market for sport sales of acid, has also been operating at a very low level.

In the USA, the drop is more pronounced. “Prices can not get much lower than the levels seen this year at least in the USA,” explained Ober, “...domestic US production has been increasing since about December 2008 compared to corresponding months from the year before. Reasons for increased production were higher sulphur content of petroleum processed at refineries and fewer unexpected outages at refineries.”

Sulphur spot price comparison

Source: FMB