The global sulphur market is experiencing a significant upward trend, driven by robust demand from the agrochemical sector and critically low inventory levels in China and the United States. This bullish sentiment is expected to persist in the coming weeks, although a potential slight correction is anticipated as China's domestic plantation season concludes.

Key Takeaways:

• Global sulphur market is experiencing an upward trend driven by robust demand.
• China's sulphur market has seen a dramatic price increase in February due to seasonal demand.
• US sulphur market remains stable at elevated price levels, mirroring global trends due to suppliers prioritizing exports over inventory.
• Inventory reduction is a major driver in price increase, both within the chinese market at port locations, and within available domestic supplies within the US market.

In China, the sulphur market has witnessed a remarkable surge, demonstrating a strong bullish trend. For the week ending February 28, sulphur prices skyrocketed by 13.95%, a significant increase even amidst a 3.06% decline in its feedstock crude oil prices. This upward trajectory has been further fueled by China’s largest sulphur producer Sinopec’s Puguang, which has implemented price hikes at its port locations and the Dazhou factory. Current daily production stands at approximately 5,500 tons.

There is a substantial seasonal increase in demand from the agrochemical sector for monoammonium phosphate (MAP) production. As the spring application period approaches, MAP producers have increased their operating rates from 50% to around 57% to meet the growing demand. This heightened activity has led phosphate producers to aggressively seek additional sulphur supplies, further tightening the market.

Adding to the upward pressure is the dwindling sulphur inventory at Chinese ports, which has fallen below two million tons (mt). Notably, a significant portion of the remaining stock is held by traders, who have limited sales to capitalize on rising prices. As of February 20, total port inventories in China dropped by 145,000 tons, reaching 1.987 million tons. Key ports like those along the Yangtze River and Dafeng port have experienced significant stock declines, further exacerbating the supply tightness.

In the United States, the sulphur market remains stable at elevated price levels, reflecting persistent bullish sentiment. Suppliers in the Gulf Coast have resisted bids below the assessed price range, as they seek to align regional prices with the sharp increases seen globally. The US market is increasingly influenced by global price movements, with suppliers prioritizing exports over domestic sales. This shift has led to reduced domestic availability, particularly in the Gulf Coast, where supply constraints have intensified following the closure of LyondellBasell’s 265,000 t/yr refinery in Houston, Texas.

The growing reliance on export demand may force domestic buyers to offer premiums over export prices to secure onshore volumes and maintain a stable supply. The potential imposition of tariffs on US imports from Canada and Mexico from March 4 poses an additional threat to supply and could drive up sulphur costs in the US. Our analysts predict an upward trajectory of sulphur in the US.

In china, the sulphur market is expected to remain well-supported in March, with prices maintaining an upward trend in the coming weeks. However, a slight decline is anticipated as the Chinese domestic plantation season nears its end.