Bullish Outlook for Sulphur Market as Demand Revival Spurs Price Rally

Abu Dhabi, UAE: During this week, Sulphur prices experienced a bullish market sentiment as the supply and demand balance was disrupted. Existing inventories among the storage units were inadequate to fulfill the demand from downstream sectors such as Agrochemical and Rubber Vulcanization industries. The price surge was notable in major export countries in the Middle East Asian region.

In the United Arab Emirates, Sulphur prices rose by 5.47% to reach USD 77/MT (FOB-Abu Dhabi) on March 15, 2024. This increase in Sulphur prices was driven by disruptions in supply and demand dynamics, alongside heightened demand from downstream Agrochemical and Rubber Vulcanization industries. Trading activities among major manufacturing units intensified, and production rates were raised to meet the growing demand from these sectors, as existing inventories proved insufficient. Supply chain disruptions resulted in storage units facing shortages. However, Crude Oil prices remained stable throughout the week, thereby maintaining production costs at a steady level.

Moreover, trade activities from the UAE and Qatar markets to the international markets were increasing as a consequence of the global upturn in the Agrochemical market. Additionally, the Yemen-based Houthi attack on the Red Sea has compelled traders to redirect their ships away from the Red Sea towards the Cape of Good Hope, aiming to mitigate potential losses of goods. This shift in shipping routes could lead to increased insurance fees due to the disruption of goods. Therefore, rising freight charges added up to the overall prices of Sulphur. Consequently, market players raised their ex-quotations to increase their profit margins.

Similarly, in Singapore, the Sulphur market followed an upward trend as the prices of the product in Singapore mirrored the trend of the Qatar market, being the exporter of the commodity. Furthermore, the demand from the downstream Agrochemical and Rubber Vulcanization enterprises increased after maintaining stability in the price trend of Sulphur for a few weeks. The bullish market situation represents that the consumption rate of the existing inventory levels has increased, therefore, the supplies became insufficient to meet the rising demand for Sulphur. Regarding the upstream Crude Oil market, the prices remained stable which kept the production cost of Sulphur constant.

In the US market, trading activities were increased from the Canadian market to the US market to attain the equilibrium between supply and demand by providing ample amounts of inventories. However, due to the increased rate of consumption of the inventory levels because of the surge in the demand from the downstream Agrochemical and Rubber Vulcanization enterprises, the trades increased. Despite the stable prices of the upstream Crude Oil market which kept the production cost stable. Regarding the spread, the difference between Crude Oil and Sulphur widened representing the bullish market situation of the commodity.

According to ChemAnalyst, Sulphur prices are expected to face a decline in light of the overall persistently weak Agrochemical sector. Therefore, it is anticipated that as per the weak demand from the downstream Agrochemical and Rubber Vulcanisation enterprises, ample amount of inventory levels might lower the prices of Sulphur in the upcoming weeks.