Tight Supply Situation Drives Sulphur Prices Up in the United States and Europe

On August 1st, the settlement of upstream Crude Oil futures displayed mixed outcomes, with distillate futures leading the way within the complex. This was attributed to a persistently tight supply situation observed in the United States and Europe. Consequently, crack spreads significantly increased, rising by 4 tons per day before settling slightly higher than their opening price.

In the German market, trade data revealed a surge in Sulphur prices, reaching USD 98/ton FOB Hamburg during July. This price elevation can be attributed to numerous factors, such as increased consumption from the downstream fertilizer market and limited supply. Despite these influences, the fluctuations in the stock of feed Sulphur had minimal impact on the levels of Sulphuric Acid. In order to address certain concerns related to maritime-related services and transportation of Russian crude oil and petroleum products by sea, a grace period of ninety days has been implemented for adjusting the ceiling price level. This provision offers a reprieve in ensuring compliance with the revised regulations.

A substantial upswing in the market value of Sulphur was driven by augmented demand from the downstream fertilizer sector. Consequently, industry statistics revealed a noticeable reduction in stockpiles of Sulphur. However, traders and merchants faced challenges in sourcing the necessary inputs of crude oil and natural gas for Sulphur production from regional markets. While the German market experienced an increase in Sulphur prices, the fluctuations in the stock of feed Crude had negligible influence on Sulphur levels. Despite this, the stable supply chain situation in the region enabled inventories of Sulphur to meet the demand of traders and merchants. PMI was observed at 38.8 as per trade data, indicating challenging conditions within the industry. Similarly, the Consumer Price Index (CPI) was validated at 6.2%, reflecting the prevailing market conditions.

According to recent trade data, the supply chain conditions for the German market appear to have been adequately maintained, with inventory levels reportedly remaining high among local traders and merchants operating within the regional market.

Meanwhile, in Europe, the prices of Sulphur continued to rise due to a combination of factors. Heavy maintenance work conducted in Norway and concerns about potential labor disputes disrupting supplies in Australia contributed to the upward trajectory of natural gas prices. Furthermore, the increase in volumes of European Sulphur exports projected for 2023 has had an upward effect on oil prices across Europe and Asia. This export surge has become a crucial supply source, particularly as global producers curtail production levels and international sanctions hamper the flow of Russian crude.