Since the beginning of this year, the domestic sulfuric acid (mainly refers to 98% sulfuric acid) market has gone through a round of deep declines. In the first quarter, the sulfuric acid market continued its downward trend at the end of 2023, and only saw the only rebound in the first half of the year during the spring plowing period in March. In the second quarter, with the end of spring plowing, the capacity utilization rate of the downstream phosphate and compound fertilizer industry continued to decline, the chemical industry also operated in a downturn, and the overall demand was insufficient, causing the price of sulfuric acid to fall to 120~200 yuan (ton price, the same below) at the end of June. And set a new low for the year. So far, the overall price of sulfuric acid in the first half of the year has fallen by more than 40%.
Senior market commentator Yan Shaoqi: The price fell and the company lost money
From the perspective of raw materials, the price of sulfur continued to decline from January to February, from 1380 yuan at the beginning of the year to about 800 yuan in the middle of the year, and the low-end price even fell to 510 yuan. In the first half of the year, the overall price of sulfur fell by more than 42%, and the support of sulfuric acid raw materials weakened.
In order to reduce the risk of inventory, acid companies basically adopt the strategy of fast-input and fast-out products for raw materials, and the social circulation of sulfuric acid is accelerated. The domestic demand for sulfuric acid has shrunk significantly, coupled with the decline in exports, resulting in a continued decline in the sulfuric acid market. In March, due to the large amount of fertilizer used for spring plowing and the periodic increase in demand from downstream enterprises, the sulfuric acid market rebounded. However, after April, under the background of sufficient market supply and weakening demand, the price fell again, reaching a record high at the end of June. A new low for the year.
In the first half of the year, the price of sulfuric acid hit a new low, which led to the loss of domestic acid companies. Among them, the lowest value of profit appeared in May, and the gross profit was around -50%. In June, the profit was gradually restored due to the falling cost, but as of the end of June, the gross profit rate of acid companies was still -19%.
Cui Huajie, head of operation of Henan Ruiyuan New Energy Chemical Technology Co., Ltd.: the launch of production capacity hits the market
In the first half of the year, the average price of domestic sulfuric acid was around 168 yuan, the price hit a new low in the past three years. Among them, the highest point was 218 yuan in March, and the lowest point was 107 yuan in June. One of the biggest features of the sulfuric acid market in the first half of the year is the enhanced linkage between upstream and downstream. The continuous downward trend of sulfur combined with the decline in demand for downstream chemicals and fertilizers has led to continuous record lows in the price of sulfuric acid. From the 42% drop in sulfur and the 40% drop in sulfuric acid, it can be seen that the linkage of the industrial chain has begun to increase.
In addition, the launch of new sulfuric acid production capacity and the release of emerging downstream production capacity were less than expected, which also accelerated the decline in the sulfuric acid market. On June 12, Jiangxi Copper Guoxing (Yantai) Copper Industry Co., Ltd. relocated and built a new 180,000 tons/year cathode copper energy saving and emission reduction project, which was successfully put into trial production. The company's original sulfuric acid production capacity was 400,000 tons/year, and the total sulfuric acid production capacity reached 930,000 tons/year after commissioning, an increase of 132.5%. Affected by this, the price of Shandong smelting acid fell by up to 80 yuan, which was more than 30% lower than the price before the start of construction. On the downstream side, the new production capacity of 2 million tons of iron phosphate in 2023 was originally expected to be released in the first half or the middle of the year, but as of the end of June, the new production capacity was less than 500,000 tons, and the production progress has slowed down significantly.
The rapid launch of new sulfuric acid production capacity and the delay in the production of new downstream production capacity are also one of the main factors impacting the domestic sulfuric acid market.
Li Peixin, Purchasing Director of Jiangsu Dipu Technology Co., Ltd.: The market is expected to recover steadily
Data show that from January to May this year, the apparent domestic consumption of sulfuric acid totaled 39.024 million tons, a year-on-year increase of 4.96%. Under the background of relatively shrinking downstream demand in the first half of the year, the growth momentum can still be maintained, indicating that there is still room for growth in the subsequent demand for sulfuric acid.
From the analysis of supply and demand trends, it is expected that the sulfuric acid market is expected to recover steadily in the second half of the year. From the perspective of the supply side, there are still maintenance plans for some large sulfuric acid plants in the second half of the year, and the shortage of supply may bring benefits. In addition, the raw material sulfur market has begun to stabilize and recover, and prices in some areas have rebounded. Against the background of rising costs, it is unlikely that the operating rate of sulfuric acid plants will increase significantly. From the perspective of demand, the domestic autumn fertilizer market will start in the later period, and the fertilizer export policy will be gradually implemented. It is expected that the operating rate of the fertilizer industry will increase. In addition, the demand for sulfuric acid in some foreign regions will increase in the second half of the year, and the export of sulfuric acid may also increase further.
On the whole, the demand of downstream chemical companies and fertilizer companies will be an important factor in determining the trend of the sulfuric acid market in the future, especially the general losses of domestic fertilizer companies this year have provided a great boost to the decline in the sulfuric acid market. It is expected that the recovery of the traditional chemical market in the second half of the year and the growth in demand for fertilizers will drive the sulfuric acid market to stop falling and stabilize. Based on the current status of supply and demand transactions, the third quarter may become an important finishing cycle, and the possibility of sharp fluctuations in short-term sulfuric acid prices is unlikely. (Liu Yongming)
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