NorthAm sulphur balance stable as melter impact grows
Houston, 27 February (Argus) — North American implied consumption of sulphur was flat year-over-year at 8.9mn t in 2017, with the Mosaic melter in Florida fueling more imports and exports.
Offshore imports increased despite overall lower demand from leading sulphur consumer Mosaic, with the market restructuring around its melter. Import volumes from countries outside of Canada to the US increased by 45pc year-over-year to 472,000t. Volumes from both Mexico and Venezuela fell but volumes from Russia, Kazakhstan and the UAE rose, driving the large increase, according to customs data.
Production in North America in 2017 was stable, with US supply flat at 9.1mn t and Canadian production static at 4.1mn t. US refinery production increased by 2pc to 8.4mn t, while sulphur from natural gas processing was down 15pc at 662,000t, according to the US Geological Survey. The increase was driven by high refinery operating rates, while the decrease in natural gas supply came from decreasing sulphur content in the gas stream.
Canadian oil sands sulphur production increased by 8pc to 2.2mn t, while natural gas processing production from the country declined by 8pc to 2mn t, according to government agencies. The oil sands increase was driven both by CNR's expanding production at the Horizon oil sands project and by the Alberta wild fires in 2016 causing temporary shutdowns in the region. The natural gas decline was largely because of inconsistent production at Spectra's Pine River plant in British Columbia, which had maintenance issues throughout much of 2017.
US sulphur production is expected to be stable in 2018, while Canadian production should see continued increases from the Alberta oil sands. CNR completed an additional expansion at its Horizon project in late-2017 and the Sturgeon refinery began producing late last year.
For the purposes of the implied consumption estimate, sulphur production in Canada from British Columbia by way of gas processing and from Alberta through oil sands upgrading were estimated using the average monthly production figures from facilities in each region from January-October 2017.
Export volumes were up by 2pc at 4.8mn out of US and Canada ports, with a steeper increase likely had Hurricane Harvey not impacted both production and export terminals in the US Gulf in September and October.
On the demand side, Mosaic began consistently utilizing the melter in the second half of 2016, giving it the ability to bring solid sulphur in by vessel and then melt it for consumption at the New Wales, Florida, facility. It has led to increased import volumes from suppliers across the Atlantic and less sulphur from Canadian producers because of freight advantages.
Mosaic is the leading sulphur consumer in North America, but its 2017 consumption dropped by 2pc to 4.1mn lt (4.2mn t). The late-year idling of its Plant City phosphate plant contributed to the decline.
Mosaic's shutdown of Plant City, which was consuming around 650,000-700,000 t/y of sulphur, puts to question whether it will continue to import at increased levels from offshore. Early indications in 2018 suggest it is still aggressively in the offshore market amid a tight US market.
The second largest consumer in the North American market is Nutrien, created by the merger of the second and third largest consumers of sulphur PotashCorp and Agrium. In 2017, PotashCorp's phosphate production increased by 2pc on the year to 1.5mn t. Agrium saw a 14pc decrease in phosphate sales to 551,000t, but no production volumes. Nutrien's sulphur consumption could drop in 2018 if it repurposes its phosphate plant at Redwater, Alberta, which consumes an estimated 400,000 t/yr of sulphur.