March 2022

Argus White Paper:

Historically high sulphur prices:
Discover the key reasons why prices
continue to accelerate in 2022 and
what this could mean for 2Q contract
negotiations

Sulphur prices rose exponentially during 2021 to reach levels not seen since 2008. The first quarter of
2022 has seen an even more accelerated trend following the Ukraine conflict that started in the second
half of February. The disruption of sulphur supply as a result of the conflict and the resulting sanctions
saw buyers look to other sources for raw materials for the second quarter, leading to a further jump in
already historically high prices.

Uneven pandemic recovery led to rapid firming over 2021 as a result of the first Covid-19 lockdown that was followed by
The Covid-19 pandemic has led to an upward spiral in the price strict measures in other countries later in the year. By 2021,
of many commodities, and has increased the cost of logis- the fertilizer sector, industry and the metals markets began to
tics. During 2021, this was further exacerbated by increased pull on sulphur availability, with the firming pricing for these
demand from the fertilizer sector as countries sought to secure commodities enabling raw material price increases. Partial
their food supply chains. The booming metals sector added on lockdown measures and travel restrictions continued to curb
further pressure with additional demand. Meanwhile, supply the production of sulphur, with refineries running at lower
recovery failed to keep up with returning demand. production rates as a result of subdued demand for refined
fuels. This had the unintended knock-on impact of reduced
Qatar and UAE monthly sulphur prices sulphur output. Additionally, the new capacity expansions
$/t from the Middle East that were expected to be easing the sup-
300 ply situation were delayed as a result of market conditions.
fob Qatar QSP fob UAE OSP
Uneven recovery and pandemic outbreaks also had the effect
250 of disrupting supply chains, leading to a disruption in usual
trading patterns and vessel shipping routes.
200

„„Supply limitations from Russia

150

100 Russian sulphur exports dropped substantially in 2021, lead-

ing to increased demand from the major usual recipients of
50 Russian sulphur, with particularly Morocco and Brazil depend-
ing more on other supply sources.
0
Jan 17 Jan 18 Jan 19 Jan 20 Jan 21
Tonnes railed and barged on Russian rail and river barges to
export hubs reveal the drop in exports from Gazprom supply,
Key factors supporting price increases over 2021 while Kazakh product exports that also moved on the Russian
„„Covid-19 leading to uneven recovery, with demand rail system to export markets remained relatively stable year
recovering ahead of supply on year at 3.63mn t, actually rising slightly from 3.46mn t in
2020.
In 2020, activity was subdued for supply and consumption,
with the Chinese fertilizer industry notably down in early 2020

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Argus White Paper: Historically high sulphur prices: Discover the key reasons why prices continue to accelerate in 2022 and what
this could mean for 2Q contract negotiations

Russian sulphur exports „„Phosphate fertilizer price increases with food security at
3,500 the centre of the agenda

3,000 Phosphate fertilizer prices rose following the introduction of

US import tariffs on Moroccan and Russian fertilizers. This
2,500
disrupted usual US import flows and gave prices a boost.
2,000
DAP and sulphur price correlation fob and cfr China
1,500 $/t $/t
1,000 500
1,000
900 DAP bulk fob China (LH scale) 450

500 Sulphur cfr China (RH scale) 400

800
350
0 700 300
2019 2020 2021
600 250

500 200
The barging season along the Volga-Don river system to Black
150
Sea ports saw the movement of 356,000t of Russian sulphur 400
100
between April and November 2021 — down by 1.14mn t, or 300 50
76pc, on the year.
200 0
2021 2022
This drop in Russian state-controlled Gazprom sulphur moving
to Black Sea ports was supplemented by railed quantities to In the fourth quarter, there was a further boost to fertilizer
the Baltic for exports at 473,000t in 2021, also down from prices as a result of the Chinese fertilizer export ban, which
930,000t in 2020, but overall exports have dropped from last prompted buyers in the market to look for alternative supply
year as a result of increased allocations for the domestic mar- sources. Sulphur suppliers took the opportunity to increase
ket and lower sulphur production as a result of maintenance margins.
activity.
New demand emerging from the buoyant metals industry,
Overall Russian exports dropped from 3.29mn t in 2020 to notably from Indonesian nickel and central African copper
only 1.55mn t in 2021, according to customs data. projects, has also added to supply tightness. We will con-
tinue monitoring these developments in the Argus Sulphur
„„4Q boost to prices from Middle East supply reductions price reporting service, as well as our Argus Monthly Sulphur
Outlook and Argus Sulphur Analytics service.
From the fourth quarter, the market saw another price spike
on news that Middle East supply would be curbed by main- „„Sulphuric acid pricing has been firm through 2021
tenance from November, which prompted some traders and
end-users to enter the spot market to cover commitments. Sulphuric acid from metals smelting and sulphur burners has
also been firm through 2021, coming off toward the end of the

Middle East sulphur fob prices Sulphur and sulphuric acid prices cfr India

$/t $/t Sulphur dry bulk cfr India Sulphuric acid cfr India
fob Middle East spot fob Qatar QSP 400
450
fob Kuwait KSP fob UAE OSP
350
400

350 300

300 250

250 200

200 150

150 100

100 50

50 0

0 -50
Jul 21 Aug 21 Sep 21 Oct 21 Nov 21 Dec 21 Jan 22 Feb 22 Mar 22 Mar 17 Mar 18 Mar 19 Mar 20 Mar 21

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Argus White Paper: Historically high sulphur prices: Discover the key reasons why prices continue to accelerate in 2022 and what
this could mean for 2Q contract negotiations

year as a result of abundant Chinese smelter acid and a lack Global fob prices
of local demand bringing prices down. Covid-19 measures
disrupted liquid product logistics, with a lack of tank space $/t
450
and vessel delays subduing pricing.
fob US Gulf fob Vancouver fob Middle East
400
„„Freight increases 350

300
Freight costs also increased for sulphur shipments in 2021,
250
remaining high for much of the year. This also had a knock-on
impact on delivered pricing in a market where supply was tight 200

and demand strong. 150

100
Bulk sulphur freight costs from the Middle East
50
$/t 0
70 Sep 21 Oct 21 Nov 21 Dec 21 Jan 22 Feb 22

60

The potential loss of 1.5mn t of Russian sulphur exports with

50
further potential losses to Kazakh exports as a result of Rus-
40 sian transport networks used to move the product. In 2021,
Kazakh exports totalled 3.9mn t. Additional concerns centred
30 Middle East - S China 30-35kt
on bottlenecks limiting the smaller quantities moving in the
Middle East - Brazil 30-35kt
20 Black Sea region, Turkmenistan, Uzbekistan and other origins.

10
All these factors amounted to substantial further upward
0 movement anticipated for much of the second quarter.
Feb 21 Apr 21 Jun 21 Aug 21 Oct 21 Dec 21
Some downside is visible toward the latter half of the quarter,
Price rises have only accelerated in 1Q 2022 with limitations to ammonia supply limiting fertilizer produc-
Prices over the first three months of 2022 have continued to tion, reducing the demand for sulphur. The impact from this is
rise, with the spot price briefly stabilising in the weeks prior to expected to be limited however.
the Ukraine conflict. Spot sulphur prices again rapidly firmed
in the weeks following the crisis against a backdrop of some Additional demand from the booming metals sector will also
immediate logistical issues of lifting already committed sul- provide an element of support. Overall, demand is still set
phur cargoes from the Black Sea region. This was followed by to be sufficient to maintain pricing at historically elevated
sanctions leading to a lack of vessels and higher freight costs, levels and prevent any sharp downturns during the quarter. A
difficulties in financing trading activities, steep insurance pre- two-tier pricing system is expected to evolve, with sanctioned
miums, and a reluctance from buyers to accept cargoes from product attracting higher logistics costs and risks at the lower
Russian ports. The Middle East, Vancouver and the US Gulf end of the spectrum, while mainstream tonnes are able to
coast were some of the alternative supply sources for immedi- command premiums in comparison.
ate relief, lifting prices at these locations.
By Maria Mosquera
2Q contract negotiations
Contract negotiations for sulphur supply during the second Editor, Sulphur — Argus Media
quarter of 2022 saw the impact of supply concerns lifting price
expectations, with the market anticipating a substantial loss
to both sulphur and fertilizer availability.

Would you like to know more?

Our team would be happy to discuss the sulphur market with you, and hear what data/analysis would help support
you and your organisation. We are confident our analysis and data will provide great value to you.
See the next page for more details, or simply contact us: fertilizer-m@argusmedia.com | www.argusmedia.com

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Argus White Paper: Historically high sulphur prices: Discover the key reasons why prices continue to accelerate in 2022 and what
this could mean for 2Q contract negotiations

Argus sulphur market services Daily sulphur price assessments from Argus:
„„China cfr granular $/t
Argus Sulphur
Access accurate and reliable sulphur weekly „„China domestic (ex-works) Yn/t
and daily price assessments, real-time mar-
ket news, market commentary and insight, How Argus’ daily sulphur prices will help
trade trends, as well as key current and support you:
historical data. Argus launched daily sulphur price assessments in early
2021 — it was a groundbreaking step for the industry,
Argus Monthly Sulphur Outlook with Argus further enhancing the accuracy and frequency
Insightful short-term sulphur market intelli- of its price reporting.

gence and outlook on prices, supply, demand

Our daily prices offer unique benefits:
and trade for the major sulphur exporting
and consuming regions. Includes the underly-
ing data in Excel.. Greater certainty
Increased price frequency gives you
immediate clarity for volatile markets
Argus Sulphur Analytics
Essential medium to long-term outlook
Lower risk
and analysis for the global sulphur market, Additional data points ensure your
connecting you with quarterly analyses business calculations are more robust
alongside an annual report, an innovative
and interactive data visualisation tool and Smarter outcomes
Daily data powers the most sophisticated
the underlying data in Excel.
data analysis and algorithmic trading tools

Interested in the sulphuric acid or phosphates Confident approach

markets? We give you the largest editorial team
„„Argus sulphuric acid services with the greatest geographical reach and
view more information here most rigorous methodological adherence

„„Argus processed phosphates and phosphate rock services

view more information here

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