Global sulphur market transition to continue in 2017Posted On: 01-03-2017 By: Grahame Turnbull
By Meena Chauhan – Sulphur and Sulphuric Acid Research Manager
In 2016, the global sulphur market entered a major transition as the Middle East became the leading regional producer of sulphur, representing a quarter of total global output. This led to North America taking second place. The upward momentum in Middle East sulphur production has gradually led to significant shifts in trade patterns, with increased focus on sulphur pricing in this region.
See below for details about our recently delivered sulphur outlook webinar, we have also listed further below some of the developments we will be watching over 2017. These developments are likely to strongly influence market dynamics, with further shifts expected to alter the course of the industry as new supply comes online:
|SULPHUR MARKET OUTLOOK PRESENTATION|
Watch our global sulphur market outlook presentation – Our Sulphur and Sulphuric Acid Research Manager recently delivered a webinar presentation, to watch the recording click the link below.
- Oil price developments: the sustained low oil price environment in recent years has led to a downward revision of growth prospects for sulphur in some regions where projects have been cancelled or delayed. This, in turn, has led to a more balanced outlook for the sulphur market in the long term. Through the months ahead, oil pricing will be key to understanding the longer term forecasts for sulphur production. High priced producers in particular such as oilsands in Western Canada have faced project cancellations and investment freezes. With projections for global refinery based sulphur or oilsands derived sulphur growth prospects seeing a negative impact from low oil prices, focus is turning to gas based projects. However, increasingly challenging economics for energy companies remain a major factor for the coming year and potential developments for new projects that will add significant volumes of sulphur.
- Geo-political factors: The election of President Trump in the US in November 2016 led to a revival of expectations for the Keystone XL pipeline in North America. In January, the US President signed an executive order to support the pipeline. The pipeline proposal would see over 800,000 bbl/day of Canadian oil transported to refineries on the Gulf coast. Further changes to US energy policy are likely to be made by the new administration, further impacting sulphur production from the refining sector in the country.
- China sulphur production and imports: Monthly sulphur trade in the early parts of 2016 were at significant increases on a year earlier but Q4 2016 saw a marked decline despite the erosion of stocks at major ports. At the end of 2016, China imports were flat on 2015 levels, at 11.9 million tonnes. Meanwhile, China continues to increase domestic production of sulphur from both oil and gas projects, any upward shift in supply may erode requirements for sulphur from the import market. How Chinese production progresses over the short and medium term will be a major factor for the market, as China imports more than a third of sulphur that is traded globally. Supply is sourced from across the Middle East, North America and the FSU regions and any major changes in trade to China would have significant implications.
- The Kashagan project: Following years of delays, the project is set to add around 1 million tonnes of new sulphur to the global export market this year, with initial availability expected from Q2 2017. This will lead to a reversal of the dip seen in exports from Kazakhstan following the depletion of producer stocks from the sulphur blocks previously held by TCO. Target markets for product from Kashagan are expected to be wide ranging, including North Africa, Latin America and Asia, adding further competition to the export market.
- Fresh export availability from the Middle East: The Barzan project in Qatar is pegged for start up in 2017 following numerous delays owing to technical issues. An attempted start up in October 2016 revealed a gas pipeline leak. However, another start up is planned for H1 2017, with the two phases of the project expected to come online in quick succession of each other. In total, the project is set to add around 800,000 tonnes per year of sulphur capacity to the export market. Prospects for supply from the Middle East and FSU in H2 2017 point to a weaker market, based on the significant rise of sulphur production capacity should both Barzan and Kashagan come online.
- Changes in the West European market: Two announcements have come in February, set to impact the sulphur industry in West Europe. The first was from Sojitz, with an announcement that the company has signed agreements to acquire 100% shares in solvadis holding. Secondly, Chemtrade entered into an agreement on the sale of Aglobis, its European sulphur and sulphuric acid business, to Mitsui & Co. Ltd. Expectations are for the transaction to close in Q2 2017.
Related research from Integer
- Track future supply developments and key projects and trends, forecast for the next ten years
- Reveal the 10-year forecast for future demand developments
- Gain insight into the dynamics of sulphur market pricing
- Learn what producers will have additional export availability
- Discover future market prices based around different scenarios
- Quarterly high level analysis
- Forecasts and intelligence on the Sulphur market
- Supply / Demand / Trade / Pricing / Projects
- Purchase a single quarter or subscribe for a year
- Discover what the production costs are for each producer, what prices and margins they achieve and how these are likely to change in the future
- Identify the junior miners’ likely positions on the cost curve
- Uncover how much new capacity (greenfield and brownfield) – is likely to be added in the medium term
- Learn how phosphate demand, supply and pricing will evolve in the next 10 years
- Incorporate the comprehensive datasets into your planning and use them to inform and support your decision making