Sulphur shortage, outages underpin EU sulacid market
The European sulphuric acid market is currently facing a pickup in demand from sulphur burners, owing to a shortage of molten sulphur on the continent, tilting the market dynamics from oversupply to a more balanced market.
Upcoming maintenances at key smelters will also help balance a readily available domestic market.
These factors come at a key time when contract negotiations for European sulphuric acid are set to start in the second half of March.
Sulphur shortage
The acid market is facing an increase in domestic spot demand as a shortage in molten sulphur in Europe is affecting sulphur-burner operations, which represent about 43pc of total capacity in northwest Europe.
Some sulphur burners have struggled to secure all its sulphur requirement this quarter and have had to operate at reduced capacity, which in turn has resulted in an increase in demand for sulphuric acid for those consumers that can switch between smelter and sulphur-burnt acid.
The molten sulphur shortage is owing mainly to production being constrained by refinery maintenance outages, sweeter crude feedstocks and a shortfall of sour feedstocks as a result of Red Sea delays and the Russian crude import ban.
These challenges are likely to persist into the next few months unless there are some fundamental changes in the market that can alleviate the shortage.
The changes in market dynamics come at a time when players will start to discuss the next quarterly contract for sulphur-burnt and smelter-based acid later this month.
The quarterly sulphur-burnt acid contract settled at €128-180/t cfr for the first quarter, a €5/t decline on the previous quarter. Meanwhile, the smelter-based acid contract settled at €96-110/t cfr for the first quarter, a €10-15/t decrease on the previous quarter.
Smelter outages
Spot availability from smelter-based producers will be tighter in the second quarter as heavy maintenance is planned at key smelters in Europe.
Aurubis' Hamburg smelter will start a 60-day-long maintenance in May, expecting to remove about 200,000t of acid as a result of the outage. Spring maintenance at some of Boliden's plants is also expected to tighten some spot availability from northwest Europe in the second quarter.
This is in addition to the temporary supply loss of Nyrstar's Budel smelter as the plant remains under care and maintenance.
Budel, with a nameplate capacity of 324,000 t/yr of sulphuric acid, has been off line since mid-January owing to high energy costs and deteriorating market conditions.
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