Feature
market outlook
Sulfuric acid prices riding high into 4Q21
Fiona Boyd, Acuity Commodities
Freda Gordon, Acuity Commodities
By: Fiona Boyd and Freda Gordon, Directors of Acuity Commodities
In the Spring/Summer 2021 issue of Sulfuric Acid
Today, we discussed the recovery of the sulfuric acid market from the Covid-19 pandemic. Now several
months later, key impacts remain the permanent loss of sulfur production because of the pandemic and a sustained rally in commodity prices.
In terms of the loss of sulfur production, it contin-
ues to constrain availability of the raw material for sulfuric acid producers. We previously noted around 2.4m t of lost production between Europe and the United States alone just last year compared with 2019.
While on a longer-term basis we still expect overall
in the accompanying graph.
have adjusted operational rates due to acid pricing and/
and firm demand for fertilizer production was apparent
In the sulfur market, the impact of lower production
when the Tampa molten sulfur quarterly contract price
was agreed at an increase of $96/lt, resulting in the raw
material benchmark price doubling to $192/lt DEL, the highest level in almost 10 years (4Q11).
In the spot sulfur market and resulting quarterly
settlements, prices have remained firm due to the snug
availability. This is despite a lack of notable import buying liquidity in the key import market of China since 2Q.
Despite reduced sulfur supply, there is a notable
growth in sulfur production as new refining and natural
amount of sulfur-based acid moving to meet demand in
impact on trade flows. This is because new sources of
tion. In some cases, it is from atypical sources because
helping offset the overall decline in the west of Suez.
term shift towards lower carbon emissions and electric
challenging sulfur sourcing post Covid-19 a contribut-
ing sector, which has historically represented around
yr is adding to reduced smelter acid spot exports from
the EV trend continues to bode well for sulfur and
markets.
of raw materials such as copper and lithium for key
even labor disputes reducing sulfuric acid production,
Shifting back to the present, many commodity
lent in North America (for example) where a smelter in
article we discussed how copper pricing hit a 10-year
strike action. A restart of the acid plant was expected
metal has firmed even further. We have also continued
unplanned operational issues have been seen in part due
supporting consumption for both sulfur and sulfuric
The firm demand as well as tight supply availabil-
supply available out of its traditional supply source of
in pricing accordingly. But with pricing for most down-
deliveries to the domestic market that saw a shortage
tion of higher raw material costs.
prioritizing product to contractual buyer in Morocco–
gas processing capacity comes online, we anticipate an
the merchant market rather than for captive consump-
production will be mainly concentrated east of Suez,
of the favorable economics.
There is also increasing interest in how the long-
supply in the UK with a closure at Runcorn with more
vehicles (EVs) will effect sulfur produced by the refin-
ing factor. The loss of this supply of around 200,000 t/
50% of elemental sulfur output globally. Meanwhile,
Europe as buyers seek alternative supply from nearby
sulfuric acid demand, including to support production
components.
squeezing an already tight market. This has been preva-
prices have remained firm in recent months. In our last
Canada (Vale – Sudbury) was idled back in June due to
high in February 2021. Since then, pricing for the red
around mid-September. In the United States, notable
to see firm phosphate fertilizer pricing. This is in turn
to weather events.
acid at peak levels.
disruptions has been limited with essentially no spot
ity for both products has of course resulted in a tick up
Europe. European smelters have been focusing on acid
stream products firm, it has allowed for easier absorp-
of molten sulfur in 1H21. Smelters here have also been
In the acid market for example, we have seen the
average Chilean spot sulfuric acid price climb in tan-
dem with copper pricing in recent months as reflected
Meanwhile, we have seen a loss of sulfur-based
We have also seen several operational issues and
In the meantime, supply options to cover these
fertilizer producer OCP.
In the world’s largest acid import market of Chile,
we saw strike action averted in June that would have
had a notable impact on consumption. Since then, acid prices have risen steadily with a notable amount of spot demand to cover in 2H.
Globally some buyers have tried to show resistance
to the price growth. For example, we have seen a few buyers scrap purchase tenders citing high price offers.
In the end, however, business is usually concluded due
to lack of other options, and we have seen re-tenders attracting even higher price offers. And while some PAGE 10
or its availability, this has been relatively limited.
Also of note is the amount of forward buying to
cover consumption requirements amid a tight market. Rather than looking for cargoes for prompt shipment, buyers were in the market as early as July to secure cargoes for November arrival. We also saw sales from
the Far East back in May being made as far forward as for 4Q shipment with demand firm in the west of Suez while nearby markets such as India were not paying up. Over the past few months, the growth rate in CFR val-
ues in India and southeast Asia have been much slower than most other markets.
In addition to low prompt availability contributing
to higher prices, market participants have been dealing with higher freight rates. As an example, freight from
Japan/South Korea to Chile was within the range of $57-68/t CFR in 1Q21 before climbing to the $80s/t in
May where it remained as of late 3Q. Drivers for higher
freight rates include constrained cargo availability and Covid-19 impacts.
As we look to 2022 and market participants deter-
mine their strategies in a bullish market, freight will be a key component of the thought process.
We also note the ongoing gap in sulfuric acid pric-
ing in the east of Suez versus the west of Suez with the
former lagging behind in terms of pricing. This makes
preparing for longer-term price discussions rather difficult for both the buy and sell sides. The gap between
prices in the east and the west will likely have to close, or at least narrow, before formal price discussions can
progress meaningfully. This begs the question: Will CFR prices in the east rise further, or will CFR prices in the west soften?
Looking to next year, we also continue to focus on
the unpredictability of the Chinese market. This year
there has been a notable amount of sulfur-based sulfuric acid moved offshore due to favorable economics. But at
the same time, exports of smelter acid have been limited in part because domestic acid prices in China remain
firm. For 2022, key factors will be the health of the domestic market as well as copper market fundamentals that will influence smelter performance accordingly.
Acuity Commodities provides insight into the sulfur and
sulfuric acid markets through price assessments, data, and
supporting analysis. Offerings include weekly reports on
the global sulfur and sulfuric acid markets and a bi-weekly report focusing on North America as well as bespoke con-
sulting work. Please visit www.acuitycommodities.com for detailed information. q
Sulfuric Acid Today • Fall/Winter 2021
