Sulfur: Continued to decline by 42%

In the first half of this year, the sulfur market was bleak, and the price was at a low level in nearly three years. As of June 30, sulfur prices fell by more than 42% compared with the beginning of the year. People in the industry believe that the sulfur market in the second half of this year is still not optimistic, but downstream demand will improve in certain periods of time. However, the contradiction between supply and demand cannot be underestimated, and the probability of a fundamental improvement in the market is not high.

Lv Xiaoqian, analyst of Longzhong Information: The output has increased significantly

In the first quarter of this year, the sulfur market experienced three stages of rapid decline, slow rebound, and decline. The overall market continued to decline. The high point was 1420 yuan at the beginning of the year (ton price, the same below), and the low point was at the end of the quarter. 1040 yuan.

At the beginning of the new year, the sulfur market fell sharply. The average price of solid sulfur was 1,130 yuan, and the average price of liquid sulfur was 1,070 yuan. In February, the price of sulfur in the markets along the Yangtze River and in the south increased significantly, and the price of sulfur in some areas in central China rose. In March, the domestic sulfur market went up and down, and the north and south markets operated differently, but the overall price remained above 1,000 yuan.

Entering the second quarter, the sulfur market got off to a bad start. In April, the price of domestic sulfur fell as a whole, and the market atmosphere was relatively sluggish. Solid sulfur fell by 21.80% month-on-month, and liquid sulfur fell by 18.16% month-on-month. In May, the sulfur market in some areas showed an increase in price, but after falling below the 900 yuan mark in early June, it fell again at the 800 yuan mark in only 7 working days.

In stark contrast to this year, the price of sulfur reached the 4,000 yuan mark last year, but this year the price has dropped by as much as 80%, which is the product with the largest decline in the chemical fertilizer industry chain. The fundamental reason is that the production of sulfur has further increased under the release of new production capacity represented by Shenghong Refining and Chemical at the end of last year and Guangdong Refining and Chemical at the beginning of this year. At the end of May, the natural gas with high hydrogen sulfide content in the Tieshanpo Gas Field of PetroChina Southwest Oil and Gas Field was successfully connected to the gas transmission network and purification system of the Puguang Gas Field of Sinopec and put into production. The supply of domestic sulfur has grown steadily.

In addition, while the new production capacity was released, the maintenance of sulfur plants in the first half of the year also decreased to a certain extent compared with last year, resulting in higher sulfur production this year than the same period in 2023. In the first half of the year, the domestic sulfur output was about 5.275 million tons, an increase of 15.8% over the same period last year, and the increase in the amount of imported sulfur was superimposed. On the whole, these factors brought pressure on the operation of the sulfur market in the first half of the year.

Jin Lianchuang analyst Li Yubo: Demand continues to be sluggish

The downstream sulfuric acid market also encountered Waterloo in the first half of this year. Taking 98% sulfuric acid as an example, excluding the disturbance caused by the epidemic in the first half of 2020, the market price of sulfur hit the lowest value in the past ten years, almost cut in half from the previous month, and fell by nearly 80% year-on-year. At the end of June, the price approached the 100 yuan mark.

On the whole, weak downstream demand directly drags down the price of sulfur.

The downstream phosphate fertilizer market is affected by the poor performance of the global fertilizer market, the industry's capacity utilization rate hovers at a low level, and the continued weak demand suppresses the trading atmosphere in the upstream market. The relatively tightened export policy also restrains the industry from improving, and the situation of oversupply continues, and the market can only continue to adjust downwards. It is difficult to improve the demand side, which aggravates the pessimistic negative sentiment in the market. Specifically, taking monoammonium phosphate as an example, the average capacity utilization rate in the first half of the year was 50.88%, a year-on-year decrease of 8.8%; the capacity utilization rate of diammonium phosphate was 60.86%, a decrease of 4.59% from the same period last year. Dealers purchase on demand, and the inventory in the mainstream consumer market has decreased compared with the same period; in addition, the restricted supply competition in the international market has intensified, the purchasing power of some major demand countries has weakened, the international demand has declined, and the export volume has shrunk.

Wang Chunming, general manager of Shandong Ruiyang Chemical Co., Ltd.: the market outlook is not optimistic

In the second half of the year, domestic sulfur supply is still expected to increase. With the release of sulfur production capacity in 2023 and the commissioning of new and expanded projects in 2023, the output in the first half of the year will reach more than 5 million tons, and it is expected to exceed 10 million tons in the whole year.

While the output of sulfur is increasing, the high inventory in the port is difficult to digest in a short time. In the first half of the year, the average domestic sulfur port inventory was 1.630 million tons, an increase of 6.1% month-on-month and a year-on-year increase of 20.6%. Both showed a growth trend, and the year-on-year increase was more obvious. In the recent period of time, the port inventory could not get rid of the high pressure situation, which also cast a shadow over the trend of the sulfur market in the second half of the year.

From a downstream perspective, the main positive factor in the market is that the newly added capacity of sulfuric acid was not fully put into production in the first half of the year. The effect may not be as expected. However, there are other benefits in the second half of the year. The fertilizer autumn market and winter storage will be launched one after another. The export policy will also be gradually implemented. The operating rate of the fertilizer industry is expected to increase, which will have a stimulating effect on the upstream sulfur market.

The negative factors in the second half of the year should not be underestimated. The export volume and price of sulfuric acid have dropped significantly compared with previous years, with a year-on-year decrease of 55.7% compared with the first half of 2023. There is no sign of improvement in the international market, and the industry is not optimistic about the export of sulfuric acid in the second half of the year. Not only that, the lithium battery industry, which is emerging downstream of sulfuric acid, has cooled down in an all-round way this year after two years of vigorous development. As of the end of 2023, the production capacity of iron phosphate and lithium iron phosphate, which are raw materials for lithium batteries, has exceeded 12 million tons per year. Although a new production capacity of 2 million tons per year is planned to be put into operation this year, the new production capacity that has actually been put into production so far has exceeded 12 million tons per year. The production capacity is only 500,000 tons per year, the production progress has slowed down significantly, and the market competition has become increasingly fierce. The possibility of some planned projects withdrawing from the market or changing plans cannot be ruled out, which will directly reduce the demand for sulfuric acid and further affect the sulfur market.

It can be seen that the sulfur market may benefit from the improvement of downstream demand in stages, but the room for improvement remains to be discussed, and the overall trend in the second half of the year is still not optimistic. (Zhao Shuling)