SAVANNAH, Ga. (DTN) -- Much like other fertilizer outlooks, the global sulfur (S) market appears to be balanced heading into 2020; however, there are some issues the market will need to work through for this to come to fruition.
Fiona Boyd, director of Houston-based Acuity Commodities, covered the sulfur outlook at the 2019 Fertilizer Outlook and Technology Conference in Savannah, Georgia, in mid-November. The outlook looked fairly positive, but there were some major issues facing the industry.
GLOBAL S SUPPLY/DEMAND
The global supply and demand of S appears well balanced with both sides of the market steadily increasing.
Sulfur supply in 2013 was at 55 million metric tons (mmt) and this number pushed to 60 mmt in 2017. The S supply forecast for 2023 is closer to 69 mmt.
Boyd said there are some large changes occurring in sulfur's global supply.
There is some development of refinery and natural gas processing capacity, particularly throughout Asia. Sulfur production in East Asia, South Asia and West Asia has seen large increases since 2013, she said.
There is also declining natural gas production, notable in North America and Europe.
Boyd explained supply will also be affected by International Maritime Organization (IMO) regulations limiting sulfur content in pollution emissions.
On Jan. 1 2020, marine sector emissions in international waters will be slashed. The sector has to reduce sulfur emission by more than 80% by switching to lower sulfur fuels. The current maximum fuel oil sulfur limit of 3.5 weight percent (wt%) will fall to 0.5 wt%.
"This is the most impactful sudden global change for ship owners and refiners ever," Boyd stressed.
Global S demand has also increased in recent years. In 2013, demand was pegged at 56 mmt and by 2017 it was 62 mmt. The forecast for 2023 is at 66 mmt, she said.
There's some shifting on where S is being consumed, Boyd said. Increasing amounts are being used in East Asia, South Asia, West Asia, Latin America and Africa, while less demand is seen in North America and Europe.
Boyd said important bullish demand drivers to watch for in the end of 2019 and into 2020 would be increased fertilizer applications in both the fall of 2019 and spring of 2020. Demand restraints for this same time frame would be new S production coming online in different regions across the globe, she said.
NORTH AMERICA PRODUCTION SITUATION
Boyd said the sulfur supply and demand situation in North America has remained fairly flat in recent years.
Annual S production in the U.S. increased steadily from 2011 to 2014, but in the last four years production has been decreasing slightly. In 2016, production was at 9.098 mmt, 2017 at 9.072 mmt and 2018 at 9.007 mmt.
Demand also fell slightly during this time. In 2016, S demand was 9.200 mmt, by 2017 it was 9.100 mmt and by 2018 9.000 mmt.
Boyd said there are some refinery operation issues still lingering in the U.S. that affected production -- particularly the effects of Hurricane Harvey. The good news is domestic demand continues to be fairly firm, she said.
U.S. sulfur exports by country have shifted during the last five years, Boyd said. Export shipments to Brazil are down from 900,000 mt in 2014 to under 700,000 mt in 2018.
While exports to Brazil have been dropping, exports to Mexico rose during this same period, Boyd said. In 2014 only about 100,000 mt of S was shipped to Mexico and by 2018 this number was nearly 700,000 mt.
"Molten sulfur supply from Mexico has declined from 2012 to 2018, so much so Mexico had almost no exports by 2018," she said.
Boyd said annual S production for Canada has remained fairly steady from 2016 to 2018. Production in Canada in 2016 was 4.712 mmt, in 2017 at 4.752 mmt and in 2018 at 4.707 mmt.
Production from natural gas processing in Canada has decreased during the last four years. In 2015, production was at 2.5 mmt and by 2018 production fell to under 2 mmt, she said.
Canadian S exports saw a large decrease in 2018, falling to 2.42 mmt from 2.755 mmt in 2017, Boyd said.
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