March sulphur port stocks breach 3mn t in China

Sulphur port stocks in China climbed to 3.01mn t on 12 March following the lunar new year holiday. This is expected to moderate import buying in the short term.

Sulphur port stocks in China climbed to 3.01mn t last week, a level last breached in August 2020, when a peak of 3.1mn t was recorded on 20 August. This gives consumers some flexibility on moderating import buying and replenishing plant stocks from port stockpiles.

In 2020 the peak inventory build-up was followed by a rapid drawdown of stocks, as traders holding stock at river port warehouses released tonnes to the market, and consumers along the Yangtzhe river were able to secure supply in domestic currency from stocks in favour of booking cfr-based full shipments in the import market. By 23 December inventories had fallen to a more moderate 2.3mn t.

This week port stocks did begin to drop slightly, as tonnes have begun again to be barged down the river from port to consumer plants and import vessel arrivals have been moderated by subdued import buying. On Monday 18 March inventory levels slipped to 2.88mn t, down from 2.94mn t on Friday. Stocks dropped further on Thursday to 2.86mn t.

This is still a high level, but the holiday season logistics stoppage that meant product stayed at ports rather than moved to consumers, coupled with reduced import buying limiting new arrivals have led to the drawdown of stocks this week. Port inventory rose again to 2.93mn t on Friday 22 March following the latest vessel arrival and discharge at Dafeng port.

Stocks are now expected to slowly reduce over the coming weeks, as post-holiday logistics again allow for product to move from port to plants, import buying has been moderate and fertilizer producers are likely to need raw material for targeting the export market for DAP and MAP. March-loading Middle East sulphur has been mainly sold to Indonesia in favour of the Chinese market, leading to a lower number of import vessels expected to arrive during April at Chinese ports.

Domestic prices have been lifting as the fertilizer export season is expected to support consumption and traders holding port inventory have been reluctant to release product to consumers at below cost levels. As a result of the lift to prices, this week trading became more active in the local market on small parcels.

By Maria Mosquera