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Global sulphuric acid market – back and to the future
Since the 1990s, global production of sulphuric acid
has increased significantly. Along with greater availability,
the boom in many commodity prices in 2007-08 saw new
market players emerge. Despite a year of survival in 2009
following the global economic recession, many of the
newer companies remained involved in the traded sulphuric acid market. The emerging trend now, however, is one
of consolidation in the industry despite the forecast for
even greater production.
Europe because of their origin within base metal majors.
All three traders were active in selling to the US and Brazil,
then the dominating import regions.
This article will take a historic look at the global sulphuric acid market as well as a look forward to what can be
expected with the “king of chemicals”.
To meet the demand of these US consumers, companies
invested in tank capacity. Interacid through its own Sulphuric
Acid Trading Company (SATCO), which at that time was a
venture with Freeport McMoRan Copper & Gold, added tank
capacity at Tampa in the late 1980s with BCT following suit.
In the early-1990s, imports into Tampa reached as high as
1mn t/yr before slipping to around 650,000 t/yr by the mid1990s. This was a sign of things to come. By 2013, sulphuric
acid imports into Florida were close to just 70,000t.
1990s – low prices in sulphuric acid related markets
In the mid-1990s, world sulphuric acid trade volumes were
around 6.5mn t/yr accounting for mostly short-haul trade
within Europe, within Asia and from Canada to the US.
These regions were key suppliers because of their base
metal smelters, the primary source for traded sulphuric
acid. That regional dominance remains today
At that time, prices in the global sulphuric acid market and
related markets were low compared with today’s levels.
The US Gulf/ Tampa import price for sulphuric acid was the
benchmark price and it was around $30/t cfr. Meanwhile,
the molten sulphur benchmark price was $60/lt delivered
at Tampa while the solid sulphur export price was around
$60/t fob ex-Vancouver. In the fertilizer market, then and
still the primary consuming market of sulphur and sulphuric
acid, the diammonium phosphate (DAP) price was $175/t
fob Tampa for exports. The copper price, then not seen as a
significant indictor for the markets, was around $0.85/lb.
World acid trade was then dominated by three Switzerlandbased trading companies. The market leader was Interacid,
then part European-owned and part by Sumitomo of Japan.
Interacid held a strong supply position in Europe and held
the exclusive rights to exports from Japan for destinations
outside Asia. In addition, Boliden Chemtrade (BCT) and
Metallgesellschaft (MG) had strong supply positions in
Fertilizers
illuminating the markets
The US market was then of huge importance to the global
traded market because of the significant phosphate fertilizer
industry. There were around 10 companies operating in
the Florida “Bone Valley” region alone including IMC, Cargill,
CF Industries and Agrico as leading producers.
The then higher volume of need for offshore imports to the
US was to support phosphate fertilizer production, and
demand was compounded further by the consolidation in
domestic smelter acid production which began in the late
1980s. As a result, sulphuric acid produced at smelters
in eastern Canada was exported to the US by companies
such as Marsulex. Alkylation acid majors, including General
Chemical and Rhone-Poulenc, also played an important supply role in the market as well as sulphur-based producers.
During these years, Interacid and BCT were starting to
invest in logistics to serve the emerging Chilean market,
whose importance in the global market was truly felt
by the 2000s because of its need for sulphuric acid to
support the copper industry.
2000-07 – stable prices amid industry
consolidation and restructuring
World sulphuric acid trade had steadily increased to about
8mn t by 2007 and long-haul trade accounted for a larger
portion of that volume, at around 5mn t. A contributing
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Global sulphuric acid market – back and to the future
factor was the opening of two large smelters in South Korea
in 1999, resulting in South Korean export volumes being
comparable to Japan’s by 2007. Exports from the region represented the largest source of supply, followed by Europe.
price was $70/lt delivered Tampa. Offshore solid sulphur
prices reached $65/t fob Vancouver and DAP prices firmed
more dramatically to $250/t fob Tampa for exports while
copper had risen to about $2.50/lb.
With more production from South Korea, China played
an important role in balancing the market, importing
2.1mn t of sulphuric acid in 2006. Out of the total, 58pc
was supplied from South Korea and 41pc from Japan,
mostly handled directly by smelter acid producers. By
2012, China’s import volume dipped to around 1mn t, but
its role in balancing the market has remained, particularly
during times when South Korean smelters are long.
2008-09 – unprecedented boom and bust
As a result of increased trade in Asia, the US played less a
role of balancing the market. Consolidation in the phosphate
fertilizer industry and a growth in sulphur production also
contributed to less offshore interest in the US, though imports
from Europe play an important role in the supply chain today.
Focusing on Tampa alone, the need for acid imports essentially disappeared after 2004, when Mosaic was formed
as the vehicle by which Cargill acquired the assets of IMC
including the former Agrico plants. Smelter acid closures
in the US did not have a major market impact although
the dependency on remaining eastern Canadian smelters
to supply the US industrial market increased, and remains
an important component of the supply chain.
At the same time, demand in Chile began to increase to
support copper ore leaching. As an indication, Chile’s sulphuric acid imports were around 340,000t in 2004 before
increasing significantly to close to 1.4mn t by 2007.
Outside of volume placed directly by smelters, Interacid and
BCT remained dominant while a new player – Transammonia
(now known as Trammo) – emerged. With the growth in
production in South Korea, Interacid, now wholly owned by
Sumitomo, had been unable to hold onto its exclusive position with regard to exports outside Asia, allowing others to
step in and resulted in Trammo’s market entry.
Meanwhile, since 1998 BCT had Canadian owners. German
trader MG had virtually exited the international acid market. All three leading traders invested heavily in Chile.
Major sulphur trader ICEC also began to be active in the
sulphuric acid market as did smelting major Glencore.
Fertilizer and base metal prices, compared with the 1990s,
had firmed and by 2007, the Tampa import price for sulphuric acid had increased to $50/t cfr and the molten sulphur
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The well-known run up in global commodity prices in
2008 impacted sulphuric acid and related markets. For
these markets, demand in China drove DAP prices up
to $1,200t/cfr China by mid-2008. This allowed sulphur
prices to rise accordingly, reaching a peak of $800/t fob
Vancouver. The Tampa molten sulphur price reached
$600/lt delivered in the third quarter 2008. The sulphuric
acid import price into the US peaked at $440/t cfr in the
same quarter. All these price surges were driven by the
need to make more DAP. Copper was trading at over $4/lb.
The over-heated market collapsed even faster. By the first
quarter of 2009 Tampa sulphur was $zero/lt delivered and
sulphuric acid was landing in the US at below $15/t cfr for
most of 2009.
In the US market, early in 2009 was the first time eastern
Canadian marketers could not guarantee movement of
acid from smelters and for containment issues, involuntary
production cutbacks were imposed on smelters.
The consequences of the global economic recession for
the sulphuric acid market were significant. During the
boom, new sources of smelter acid such as west coast
India were attracted into the market. Sulphur-based acid
in Europe and even China also became exportable. Most
of these new sources disappeared as quickly as they came,
but new opportunities were thereby revealed.
The key change going forward was the acid trading
community became still more fragmented. ICEC (now owned
by Oxbow) took the opportunity to get involved in exports
out of China and increased its acid trade volume. The opportunities in sulphuric acid were noted by a number of fertilizer traders. Several jumped into the market, with some like
Ameropa and Quantum still involved in the business.
2010 and beyond – supply to increase on new
smelter capacity but how will demand match up?
Demand for phosphate fertilizers and other commodities
improved in the fourth quarter of 2009 which saw prices
for products increase going into 2010, when relative
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Global sulphuric acid market – back and to the future
stability was also exhibited in sulphuric acid. Since then
the sulphur market has been in a supply deficit which
not only supported prices, but also encouraged volatile
pricing cycles when traded levels can yield a $30/t spread
in one month.
For a market that is typically more closely tied to the base
metals market, the price volatility in sulphur had a stronger-than-expected influence on price ideas in the sulphuric
acid market. Prices weakened during the second half of
2013 in response to the sulphur price collapse. This was
attributable to reduced demand for phosphate fertilizer in
India putting downward pressure on sulphur prices. This
also reduced demand for spot sulphuric acid to augment
sulphur-based production to support phosphoric acid.
In today’s market, smelter sulphuric acid prices have fallen
back to historical levels while prices for sulphur and DAP
trend much higher. The US import price for sulphuric acid
is $50/t cfr but the molten sulphur price has ticked up to
$133/lt delivered Tampa. Offshore solid sulphur prices are
higher at $145/t fob Vancouver and DAP prices rise significantly from 2007, to $455/t fob Tampa for exports. On the
base metals front, copper is trading at around $3.12/lb,
still up on historical levels.
Global acid trade at present is stable with players
remaining the same. Chile is still the main importer but its
import needs are peaking.
North American Sulphur, Sulphuric Acid and DAP Prices 2007 – 2014
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DAP $/t fob Tampa
Sulphur $/t fob Vancouver
Sulphur molten $/lt del Tampa qtly
Sulphuric acid $/t cfr US
Chile’s prominence as the world’s largest seaborne importer had been rising with its import needs peaking at 3.2mn
t in 2012. Buyers received acid from diverse locations with
the majority coming from Peru, Japan, South Korea, Mexico
and Spain, augmenting Chile’s domestic supply. But
Chile’s offshore import needs are already tailing off since
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Noracid’s sulphur burner in Mejillones came on stream in
2011. The sulphur burner encountered operational problems and only managed to run uninterrupted in 2013,
producing sulphuric acid at a rate of 720,000 t/yr for
its four offtakers: BHP Billiton, Antofagasta Minerals,
Freeport McMoRan Copper & Gold and Barrick Zaldivar.
Chile’s reliance on offshore imports will weaken in the
medium term as more heap leaching operations discontinue. Between now and 2025, copper production from
solvent extraction and electrowinning (SX-EW) plants in
Chile is widely expected to drop, meaning the demand for
sulphuric acid will decrease. The only significant project
that could add to Chile’s current sulphuric acid demand
is Antofagasta Mineral’s Antucoya copper project, which
is expected to have an annual requirement of around
500,000t. But if Noracid manages to find investors to
support the building of a second sulphur burner, the
country’s import needs will only fall further.
This leaves sulphuric acid markets looking for other markets to absorb supply that is expected to rise by a further
7pc to nearly 260mn t in 2017.
The attention is now on the Philippines, where nickel leaching projects Coral Bay and Taganito together consume around
1.3mn t/yr of sulphuric acid when running at nameplate
capacities. In recent years, the Philippines had been a net
importer thanks to the two nickel leaching projects. Exports
out of the Philippines declined to 98,000t in 2013 from
384,000t in 2010. But in 2014, more exports will be coming
from the Philippines – particularly from the PASAR smelter,
owned by GlencoreXstrata – because PASAR’s major sulphuric acid offtaker Philphos suffered heavy structural damages
from typhoon Yolanda, which landed on the island of Leyte in
November 2013. Philphos is not expected to restart in 2014,
and until it does, one-third of the 600,000 t/yr smelter acid
production from PASAR will have to find a new home.
Turning to the supply side, major exporters of sulphuric acid
are unchanged, featuring South Korea, Japan and Europe.
Between 2010 and 2013, South Korean sulphuric acid
production averaged around 2.7mn t/yr. To market this production, smelters offered some of the sulphuric acid under
tenders. Traders that took positions in 2012 under these
tenders saw prices dipped in 2013 and suffered losses.
Going forward, Korean smelters are keen to allocate more
of their quantities to China and the Philippines, given that
Chilean buyers’ price ideas dropped lower as their import
needs decreased. For the same reason, smelters will also
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Global sulphuric acid market – back and to the future
raise their game in competing with other southeast Asian
suppliers for market shares in India, Thailand and Vietnam.
In northwest Europe, the majority of the business is still
represented by regional trades but smelters are still dependent on offshore trading. In the second half of 2013, the
dip in phosphate prices led to a cut in global DAP production and demand for sulphuric acid dropped in markets
such as Morocco. Exports of sulphuric acid out of northwest Europe corresponded with this and fell to negative
values as smelters struggled to find outlets for their byproduct acid production. Fertilizer and industrial demand
for spot acid from the US, North Africa and Latin America
will still have a grip on what free on board levels European
smelters can achieve in the future.
China’s role in the global trade market could also change
in the coming years, moving from a net importer to a net
exporter as new smelter capacity is added. One of the
smelters that can change the balance is the Jinchuan
copper smelter in Guangxi, which started up in 2013. The
plant is ramping up and is expected to reach closer to its
nameplate capacity of 1.2mn-1.5mn t/yr of sulphuric acid
later in 2014. Until then, the smelter is managing its stock
levels via sales to local customers and is under no pressure to export. Other than Jinchuan, more smelters are set
to enter, or expand, production in the coming years and in
2015 alone, there are expectations of a 1.5mn t/yr increase
in smelter acid production for the said reasons.
Mergers and shakers – the rise of GlencoreXstrata
The players producing and marketing sulphuric acid
have changed in the past few years. In 2011 ICEC was
acquired by leading petroleum coke marketer Oxbow, and
Chemtrade Logistics bought Marsulex, from which it had
spun off in 2000. In 2014, Chemtrade Logistics acquired
General Chemical and Mosaic agreed to buy CF Industries’
phosphate business.
But the potential game changer took place in 2013, when
Glencore acquired Xstrata. This put several smelters under
new ownership, including ones in Canada although acid
marketing from those via NorFalco was not affected. The
immediate impact is that GlencoreXstrata now handles a
significant 6mn t/yr of sulphuric acid production globally –
although not all tonnage is for seaborne trading – but one
of the more subtle implications of the acquisition applies
to the marketing and running, or discontinuing, of several
production points.
One example is in Australia, where GlencoreXstrata owns
the Mount Isa copper smelter that is feeding smelter gas to
Incitec Pivot’s Phosphate Hill operation to supply around
700,000 t/yr of sulphuric acid to the phosphates project.
Following Glencore’s acquisition of Xstrata, there has been
speculation over the status of the smelter, originally set to
shut in 2016 when under Xstrata ownership. The decision
may be reversed, with the market waiting for an official
announcement sometime in 2014, and this will have a
strong bearing of the balance of sulphuric acid in Australia
in the medium to long term.
Meanwhile, in North America, Xstrata was poised to cease
supplying nickel concentrates to Noranda Income Fund’s
Valleyfield, Quebec, smelter by 2017 resulting in the loss
of around 500,000/t yr of by-product sulphuric acid production. As with the Mount Isa copper smelter, this could
change under the GlencoreXstrata regime, which has until
November 2016 to make a decision.
In the US, despite less dependency on offshore import supply, additional sulphuric acid tank capacity in coastal areas
to facilitate imports could be added. Locations in the US
Gulf coast and eastern seaboard have been discussed in
the market with companies such as GlencoreXstrata among
the companies said to be considering adding infrastructure.
Increased US import ability could allow suppliers place volume in a market where import needs in key markets such as
Chile are peaking and global production is set to increase.
Contact Information
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2929 Allen Parkway, Suite 700
Houston, Texas 77019
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Email: [email protected]
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Editorial:
Fiona Boyd
Editor, Argus FMB North American Sulphur
Email: [email protected]
Commercial:
Email: [email protected]
Freda Gordon
Editor, Argus FMB Sulphuric Acid
Email: [email protected]
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