Bullishness Persists in the European and Middle Eastern Sulphur Market

Al Jubail: The Sulphur market in the Middle East and European nations continues to experience persistent bullishness, characterized by rising prices and strong market sentiment, reflecting a steady upward trajectory in trading activities across these key regions.

In the Middle Eastern region, the Saudi Arabian Sulphur market witnessed a price increase of 2.9%, reaching USD 141/MT (FOB-Al Jubail) during the week ending on 22nd November. This bullish trend was attributed to robust demand for Sulphur from both domestic and overseas downstream agrochemical sectors. Additionally, the market was further impacted by the scheduled maintenance at Saudi Aramco and Sinopec’s Yasref refinery in Yanbu, a 50:50 joint venture with a 400,000 b/d capacity. The maintenance, which began on 3rd November and is set to last 45 days, involves the shutdown of key units, including the sole crude distillation unit (CDU), an 84,000 b/d reformer, a 117,000 b/d delayed coker unit (DCU), two 88,500 b/d diesel hydrotreater units (DHT), and other secondary units. This has significantly constrained Sulphur supplies amidst rising demand, further intensifying the bullish momentum in the Saudi Arabian Sulphur market.

The German Sulphur market continues to exhibit stability at elevated price levels, reflecting persistent bullish market sentiment. The ongoing plantation season has bolstered Sulphur demand, which remains high due to insufficient inventory levels across the region. This shortness in Sulphur supply has sustained the market's bullish trend, as buyers and refineries negotiate terms for 2025 yearly contracts amid tightening market conditions. Further influencing the market, Shell has announced that crude oil processing at its Wesseling plant (80,000 t/yr) at the Rhineland refinery will cease in March 2025. This development coincides with the planned construction of a production plant for Group III base oils, highlighting a shift in operational priorities. Additionally, maintenance activities at Germany's Miro refining joint venture are affecting market dynamics. Specifically, work on a catalytic hydro desulphurisation unit at its Karlsruhe refinery (131,000 t/yr) is disrupting the production of middle distillates, as the unit is responsible for desulphurising gasoil. These combined factors, including constrained supplies, rising demand, and refinery operational changes, have disrupted the balance between supply and demand, driving continuous bullishness in the German Sulphur market.

According to ChemAnalyst, the recent rapid rise in Sulphur prices is expected to persist into December 2024, driven by robust open demand from certain buyers. This sustained bullish trend of Sulphur reflects the current market's tight supply-demand dynamics. However, with the sharp escalation in prices, the risk of a potential downturn looms large. Historically, such rapid price surges are often followed by equally swift corrections, and this pattern raises concerns about heightened downward volatility as January approaches. Market participants are closely monitoring the situation, balancing the immediate bullish sentiment with caution about the potential for significant price declines in the near term.