Surge in the Global Sulphuric Acid Market Amid the Increased Demand due to the Plantation Season

Hamburg, Germany: The global Sulphuric Acid market is witnessing a bullish trend due to the ongoing Plantation seasons resulting in a surge in the demand from the downstream Agrochemical enterprises. Therefore, to cope with the rising demand for Sulphuric Acid, the production rate, as well as the trading activities, are increasing to provide a sufficient amount of inventory levels for the smooth running of the supply chain.

Chinese producers are facing increasing pressure due to a decline in phosphate markets and reductions in downstream production, coinciding with the completion of some smelter maintenance activities. China is the major exporter of Sulphuric Acid, however, due to the 5 days Labor Day holidays, the market was closed. Pressure is building on China producers as phosphate markets are weakening and downstream production is being cut, while some smelter maintenance is coming to an end. Therefore, the Sulphuric Acid market in China recorded a downward trend this week. Additionally, the upstream Sulphur market is also experiencing a downward price trend resulting in the lower production cost of Sulphuric Acid and providing support to a bearish trend of the commodity.

In the European market, the Sulphuric Acid market is witnessing an upward trend which increased by 12.72% settling at USD 62/MT (FOB-Hamburg) during the week ending on 3rd May 2024. The limited availability of Sulphuric Acid in the spot market is causing prices to rise. Many major European producers are standing firm on pricing for new business, as they are relatively well-committed. A heavy schedule of maintenance in Europe, especially in Q2, is further restricting availability. For instance, Aurubis has scheduled a two-month maintenance period for its Hamburg smelter from May to June, which has a Sulphuric Acid capacity of approximately 1.3 million tons per year. Similarly, Boliden is planning the majority of its maintenance for Q2. Additionally, the tightening availability of the upstream molten Sulphur in Europe is leading to increased demand for Sulphuric Acid from European buyers and limiting acid production from Sulphur burners. Meanwhile, demand for Sulphuric Acid from Morocco has been absorbing most of the available spot export volumes, resulting in a stronger market than anticipated.

The Japanese Sulphuric Acid market is experiencing an upward trend due to the ongoing Plantation season leading to increased demand from the downstream Agrochemical enterprises. The ongoing Plantation season in Japan has increased the demand for Sulphuric Acid, however, due to the Spring Festival from 29th April to 5th May 2024, has disrupted the supply and demand equilibrium due to the disturbance experienced in the supply chain of the commodity. Therefore, it has increased the prices of Sulphuric Acid in the market during this week. Central banks seek to prevent excessive depreciation or rapid declines in their currencies by intervening through the sale of dollar-denominated assets from their international reserves. They then use the proceeds to buy back their currency, thereby stabilizing its value relative to the dollar.

However, the US market is showcasing the stable prices for Sulphuric Acid along with the stability in the production cost of the commodity due to the steady prices of the upstream Sulphur market. The demand from the domestic as well as the overseas downstream Agrochemical markets is increasing and the existing inventory levels are sufficient to meet the rising demand for Sulphuric Acid.  The production rate of Sulphuric Acid is running at a smooth rate. The spread between Sulphur and Sulphuric Acid prices remained consistent compared to last week, suggesting stability in the commodity trend during this week.

As per ChemAnalyst, the Sulphuric Acid demand from the downstream Agrochemical enterprises is anticipated to incline in the upcoming weeks due to the ongoing Plantation season in most of the region. This might increase the consumption rate of the existing inventory levels of Sulphuric Acid resulting in a supply deficiency which might raise the prices of the commodity.