Global Fertilizer Outlook - 4

Changing Trade Dynamics in Sulfur

Russ Quinn
By  Russ Quinn , DTN Staff Reporter
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Global sulfur demand is set to increase from 60.4 million metric tons (mmt) in 2015 to 61.8 mmt in 2016. This would be an increase of just over 2%. (Graphic courtesy of Meena Chauhan, Integer Research)

FORT LAUDERDALE, Fla. (DTN) -- The global sulfur market continues to evolve and change as the industry deals with an increasing supply and growing fertilizer demand.

Sulfur was once looked at as just a byproduct in the fertilizer market, but today it's being viewed as a more valuable product, even being called "yellow gold," explained Meena Chauhan, Integer Research head of sulfur and sulfuric acid. She presented the sulfuric outlook at the 2016 Fertilizer and Technology Conference held in Fort Lauderdale in mid-November.

CHANGING GLOBAL TRADE

The international sulfur trade is seeing some changing dynamics, according to Chauhan.

China is influencing the world sulfur picture with fluctuating imports over the last five years. In 2011, China imported 9.5 million metric tons (mmt) of sulfur; this jumped to 11.2 mmt in 2012, only to fall to 10.6 mmt in 2013 and then 10.2 mmt in 2014.

Now China appears to be trending higher in imports. In 2015, 11.9 mmt were imported with 8.8 mmt of that during the January-to-September period. In 2016, during the same January-to-September timeframe, it's higher by 6.4%: 9.4 mmt were imported.

Another change in the sulfur world trade is influenced by the evolving phosphorus market.

Morocco has pushed to produce more downstream phosphorus products, meaning less phosphate rock and more phosphoric acid. Sulfur is a key ingredient in the process of making phosphoric acid. Moroccan sulfur imports have grown throughout the year as new processed phosphate capacity has been brought online, she said.

The northern Africa country has increased imports, but only from certain sulfur suppliers. Morocco has increased imports from the United Arab Emirates (UAE) (up 48%), Poland (up 23%) and even from the U.S. (up 63%).

Other countries, however, have seen their sulfur exports to Morocco decrease during this time. This includes Russia (down 32%), Kuwait (down 27%) and Saudi Arabia (down 83%).

MORE S SUPPLY

On the supply side, Chauhan said the global sulfur supply in 2015 was 59.8 mmt. In 2016, the supply increased by 6.1%, to 63.4 mmt.

The main producers were the Middle East (15.8 mmt in 2016), North America (13.9 mmt), the former Soviet Union (FSU) (11.3 mmt) and East Asia (10.7 mmt). The Middle East invested in sulfur production in recent years, and increased production was finally seen in 2016 as the region's amount was only 13.4 mmt in 2015.

"This brought the Middle East to the top of the global rankings," Chauhan said.

Sulfur production is mainly produced by a gas-based or oil-based process. These two methods of manufacturing the product make up 94% of the global sulfur production by type, she said. Gas-based sulfur is expected to grow and is forecast to represent over 50% of the global output in the coming years.

The shifting economics of lower energy prices has an effect on the sulfur market.

Canada, for instance, has seen sulfur production fall as oilsands projects have become unfeasible in the low oil price environment. As Canadian gas production is expected to decrease, this will lead to net decline in sulfur output for North America.

Canadian sulfur production sat at 6.3 mmt in 2011; in 2015, production was only 5.4 mmt, Chauhan said.

"There are several factors at work here, including limited growth from the oilsands sector, depletion of wells and challenging economics, the impact of sulfur exports from Vancouver, (and) the utilization of long-term sulfur storage ...," she said.

MORE DEMAND AS WELL

World sulfur demand is set to grow by just over 2% in 2016. World demand in 2015 was 60.4 mmt and this will increase just slightly to 61.8 mmt in 2016.

Chauhan said Integer forecasts for around 4 mmt of sulfur demand to emerge over the next 10 years in non-fertilizer markets. East Asia, led by China, and the FSU, led by Kazakhstan, show the largest growth potential over the forecast period.

The global sulfur supply-and-demand situation is fairly well-balanced in two different scenarios Integer employs, she said. In a slow-growth scenario, there is a 1 mmt to 2 mmt oversupply, a fairly balanced situation.

In the second scenario, there is slightly more sulfur supply available, hovering around 3 mmt to 4 mmt through the medium-term forecast period, Chauhan said.

Russ Quinn can be reached at russ.quinn@dtn.com

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(ES/AG)

Russ Quinn