the outlook for sulphur and sulphuric acid...the outlook for sulphur and sulphuric acid preppy ,...
TRANSCRIPT
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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
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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
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Part 1: SULPHUR Part 1: SULPHUR
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Recent DevelopmentsRecent Developments
Late 2006 to mid-2008.
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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
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… 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
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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
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… 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 $768/t in 20 months
400450500550600
200250300350400
050
100150200
0
2005
Jan Mar
May Ju
l
Sep
Nov
2006
Jan Mar
May Ju
l
Sep
Nov
2007
Jan Mar
May Ju
l
Sep
Nov
2008
Jan Mar
May Ju
l
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Market fundamentals supported price increases.4 Global supply surplus 3.4 Mt.
P i t d l
2
3Prices at record lows.
1
2
n to
nnes
)
-1
0
(mill
ion
Global supply deficit 1 2 Mt
3
-2
Global supply deficit 1.2 Mt.
Prices soaring.
-3
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
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Recent DevelopmentsRecent Developments
Mid-2008 to the present.
What went wrong?
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China
• Fertilizer special export tax introduced Apr Sep 2008 later extended to• Fertilizer special export tax introduced Apr-Sep 2008, later extended to Dec 2008.
• Olympics depress sulphur demand furtherOlympics depress sulphur demand further.
• China is awash with sulphur, sulphuric acid and finished phosphate fertilizers.fertilizers.
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The credit crunch
• Commodity prices came under huge pressure as the credit• Commodity prices came under huge pressure as the credit crunch became a global financial crisis.
• The price of crude oil metals grains etc all fell sharply OceanThe price of crude oil, metals, grains etc all fell sharply. Ocean freights dropped massively as world trade slowed.
• Sulphur could not escape the storm.Sulphur could not escape the storm.
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Phosphates
• Demand destruction now in full force• Demand destruction now in full force.
• Production cutbacks have been announced by numerous fertilizer producersfertilizer producers
• Sulphur prices have collapsed. Disposal is now the focus.
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Adnoc Monthly Contract Price
800850900($/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
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Market OutlookMarket Outlook
Supply
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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
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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
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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
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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
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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.
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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.
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Part 2: SULPHURIC ACID Part 2: SULPHURIC ACID
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Recent DevelopmentsRecent Developments
Late 2006 to mid-2008.
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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
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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)
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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
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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
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Recent DevelopmentsRecent Developments
Mid-2008 to the present.
What went wrong?
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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)
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Copper prices succumb to financial meltdown…LME cash price and supply/demand balance, quarterly, 2002-2010
Forecast
¢/lb000t Cu
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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
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Market OutlookMarket Outlook
Supply
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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
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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
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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.
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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