the outlook for sulphur and sulphuric acid...the outlook for sulphur and sulphuric acid preppy ,...
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The Outlook for Sulphur and Sulphuric AcidSulphuric AcidPrepared by Joanne Peacock, British Sulphur p y , pConsultants, for Creon
LONDON | RALEIGH | WASHINGTON | MINNEAPOLIS| BEIJING
31 Mount Pleasant, London WC1X 0AD UK Tel +44 20 7903 2132 Fax +44 20 7833 4973
www.crugroup.com
This presentation will review :
PART 1 - SULPHUR
• Recent Developments
• Supply OutlookSupply Outlook
• Conclusions
PART 2 – SULPHURIC ACID
• Recent Developmentsp
• Supply Outlook
K C l i• Key Conclusions
Part 1: SULPHUR Part 1: SULPHUR
Recent DevelopmentsRecent Developments
Late 2006 to mid-2008.
Supply problems out of Vancouver and Russia disrupted Q1 2007 exports …disrupted Q1 2007 exports …
(thousand tonnes)Canada Russia
3000
3500 0.9 million tonnes below the average of the other quarters
2000
2500
1500
2000
500
1000
02006 I II III IV 2007 I II III IV 2008 I II
… as phosphate fertilizer prices soared.
US $ per tonne Phosacid fob N Africa DAP fob Tampa
18002000US $ per tonne Phosacid fob N. Africa DAP fob Tampa
120014001600
High grain prices, biofuels boost demand
600800
10001200
200400600
01992 1997 2002 2007
Chinese demand continued to grow …
2007 imports 9.65 Mt vs 8.81 Mt in 2006
(thousand tonnes)North America Far East Middle East/FSU/Other
2500
3000North America Far East Middle East/FSU/Other
Q3 2007 2.64 million tonnes
2000
2500
1500
500
1000
02006 I II III IV 2007 I II III IV 2008 I II
… and sulphur prices rose - quite slowly at firstbut then with increasing speed.g p
800850900($/tonne fob Ruwais)
600650700750800
Adnoc monthly contract price rises by $768/t in 20 months
400450500550600
200250300350400
050
100150200
0
2005
Jan Mar
May Ju
l
Sep
Nov
2006
Jan Mar
May Ju
l
Sep
Nov
2007
Jan Mar
May Ju
l
Sep
Nov
2008
Jan Mar
May Ju
l
Market fundamentals supported price increases.4 Global supply surplus 3.4 Mt.
P i t d l
2
3Prices at record lows.
1
2
n to
nnes
)
-1
0
(mill
ion
Global supply deficit 1 2 Mt
3
-2
Global supply deficit 1.2 Mt.
Prices soaring.
-3
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Recent DevelopmentsRecent Developments
Mid-2008 to the present.
What went wrong?
China
• Fertilizer special export tax introduced Apr Sep 2008 later extended to• Fertilizer special export tax introduced Apr-Sep 2008, later extended to Dec 2008.
• Olympics depress sulphur demand furtherOlympics depress sulphur demand further.
• China is awash with sulphur, sulphuric acid and finished phosphate fertilizers.fertilizers.
The credit crunch
• Commodity prices came under huge pressure as the credit• Commodity prices came under huge pressure as the credit crunch became a global financial crisis.
• The price of crude oil metals grains etc all fell sharply OceanThe price of crude oil, metals, grains etc all fell sharply. Ocean freights dropped massively as world trade slowed.
• Sulphur could not escape the storm.Sulphur could not escape the storm.
Phosphates
• Demand destruction now in full force• Demand destruction now in full force.
• Production cutbacks have been announced by numerous fertilizer producersfertilizer producers
• Sulphur prices have collapsed. Disposal is now the focus.
Adnoc Monthly Contract Price
800850900($/tonne fob Ruwais)
600650700750800
$
400450500550600 Price falls $620/t
in 3 months
200250300350400
050
100150200
0
2006
Sep Nov
2007
Jan Mar
May Ju
l
Sep
Nov
2008
Jan Mar
May Ju
l
Sep
Market OutlookMarket Outlook
Supply
Brimstone production grows by 35.6 Mt.
North America Middle EastFSU East AsiaRoW
70
80
90RoW
50
60
70
tonn
es)• Strongest growth is in Middle
East, N America, E Asia and FSU.
All th i f i l t
30
40
50
(milli
on• All growth is from involuntary production.
0
10
20
0
2007
2009
2011
2013
2015
2017
Middle East: + 14.3 million tonnes
UAE Saudi ArabiaQatar IranKuwait Others
20
25Kuwait Others
15
20
tonn
es)• Potential is very high: Shah gas-
1 bscfd gas @ 33% H2S = 4 Mt/y S.
B t t ti l f j t d l i10(m
illion• But potential for project delays is
also high.
0
5
0
2007
2009
2011
2013
2015
2017
North America: +8.1 million tonnes
Canada USA
20
25
• Canadian production from gas declines All growth from oil
15
20
n to
nnes
declines. All growth from oil sands.
• Sulphur recovery capacity at
10mill
io
Su p u eco e y capac ty atUS oil refineries increases by ~ 2.5 Mt/y by 2013.
0
5
0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
East Asia: +6.1 million tonnes
8
Oil etc Gas
China produces >7 Mt/y
6
7
es
• Almost all regional growth from China
China produces >7 Mt/y
4
5
llion
tonn
from China.
• Sour gas in Sichuan yields 4.5 Mt/y S by 2017. Output from oil
2
3
milt/y S by 0 Output o o
refineries more than doubles.
0
1
0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
FSU: +2.9 million tonnes
Russia Kazakhstan Others
10
12• Tengiz expansion complete Sep 2008.
8
n to
nnes
)
p
• Kashagan on stream Q4 2012.Sulphur capped at 3,800 t/d.
4
6
(milli
onStorage of 4 Mt sulphur in covered block approved.
0
2• Minor growth in Russia (Orenburg). New sour gas plants in Turkmenistan and U b ki t 0
2007
2009
2011
2013
2015
2017
Uzbekistan.
Conclusions
• The outlook for sulphur balance remains difficult to predict;
•The global economic crisis will affect both consumption and production;The global economic crisis will affect both consumption and production;
• Nevertheless, it would still appear that we are heading for a long period of chronically weak market conditions and large supply surpluses.of chronically weak market conditions and large supply surpluses.
Part 2: SULPHURIC ACID Part 2: SULPHURIC ACID
Recent DevelopmentsRecent Developments
Late 2006 to mid-2008.
Global demand for fertilisers grew significantly from late 2007 in response to growth in China and p g
India, fuelling rapid price rises US $ per tonne Phosacid fob N. Africa DAP fob Tampa
18002000
p
Tonnes H2SO4 per tonne:Ph id 3 0
120014001600 Phosacid = 3.0
DAP = 1.5 Q1-3 average 2008
600800
1000
200400600
01992 1997 2002 2007
To meet growing demand within the emerging economies, the copper price soared
¢/lb000t Cu
, pp p
LME cash price and supply/demand balance quarterly 2002-2008LME cash price and supply/demand balance, quarterly, 2002 2008 (Q3)
Acid Imports – Chile, 2002-2008
(thousand tonnes) Asia Americas Europe
1500
1750
( ) Asia Americas Europe
Chile imports 1.61 million t of acid in Jan-Aug 2008
1250
1500
750
1000
250
500
0
250
2002 2003 2004 2005 2006 2007 2008
Sulphuric Acid Trade 2008
1.3
0 3
0.5
0.3
2008 TRADE FLOWS
0.2 2.00.2 0.4
2008 TRADE FLOWS
Total Trade to Sept <11 million tonnes;
Extra-regional Trade 1.7 0.4
ImportsB D t IFA BSC GTIS
Extra regional Trade to Sept > 3.5 million
tonnesExports
Base Data: IFA, BSC, GTIS
Recent DevelopmentsRecent Developments
Mid-2008 to the present.
What went wrong?
Demand Destruction: Fertilizer price increases have Demand Destruction: Fertilizer price increases have pushed farmer costs past break-even
*at current prices/application rates/yields
*does not include capital recovery (approx $0 50)Source: USDA, British Sulphur
does not include capital recovery (approx. $0.50)
Copper prices succumb to financial meltdown…LME cash price and supply/demand balance, quarterly, 2002-2010
Forecast
¢/lb000t Cu
Brimstone Imports – China, 2005-August 2008
20082007(thousand tonnes)
200
400
1000
12002008 VS 2007
( )
0
200
800
1000
-400
-200
400
600
-800
-600
0
200
8000Jan Feb Mar Apr May Jun Jul Aug
Market OutlookMarket Outlook
Supply
Changes to voluntary sulphuric acid production it / t d t t k l icapacity are/were expected to take place in:
• US:– Freeport McMoran (Safford) – 420ktpa – 2009/2010 - NOW UNDER REVIEW
– Martin Midstream (Beaumont) - 150ktpa – 2009/2010
S th St t Ch i l (Wil i t ) 150kt 2009/2010– Southern States Chemicals (Wilmington) – 150ktpa – 2009/2010
– Ongoing debottlecking and capacity additions within fertiliser sector
• Europe:• Europe:– Prayon (350ktpa) – 2009
• Cuba:• Cuba:– Moa Bay Nickel (400ktpa) – 2010 - NOW UNDER REVIEW
• Namibia:Namibia:– Rossing Uranium –to be confirmed – 250ktpa – 2011 - NOW UNDER REVIEW
• Chile - UNDER REVIEW
Changes to involuntary sulphuric acid production capacity are expected to take place in:capacity are expected to take place in:
• Central America:– Mexico – GM currently running at 50% capacity
• South America:– Chile – Altonorte smelter +400ktpa – 2009/2010
– Peru - all smelters +1million tpa by 2012
• Europe:– Possible expansions in Germany/Bulgaria by 2011/2012
• Asia (excluding China):– India - + 300-500ktpa by 2010-2012d a 300 500 tpa by 0 0 0
Conclusions:
• Demand has collapsed around the world;
• Producers are cutting back production in order to manage stocks;
• Prices have collapsed and distress sales are being made;
• Outlook remains difficult to assess – impact on both supply and demand side;
• However, there will continue to be growing availability from Europe and Asia (involuntary production).
Chi i h i fl f t l b l b l• China remains a huge influence on future global balance.
• Therefore further market rationalisation may take place.
Sulphur/Sulphuric AcidTen Year Forecast & Market Analysis Service
Joanne Peacock+ 44 20 7903 2121 / +44 7884 [email protected]
LONDON | RALEIGH | WASHINGTON | MINNEAPOLIS| BEIJING
31 Mount Pleasant, London WC1X 0AD UK Tel +44 20 7903 2132 Fax +44 20 7833 4973
www.crugroup.com