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Sulphuric Acid Market Presented at ISM Chemical Group Winter Meeting 2008 Galveston, TX February 28, 2008 PowerPoint Presentation
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Sulphuric Acid Market Presented at ISM Chemical Group Winter Meeting 2008 Galveston, TX February 28, 2008. rboyd@pentasul.com. Sulphuric Acid – a hot market!!. In the US prices have tripled to an all-time high in the last twelve months, from $50-70/st to $150-250/st cfr customer tank.

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Sulphuric Acid Market Presented at ISM Chemical Group Winter Meeting 2008 Galveston, TX February 28, 2008


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slide1

Sulphuric Acid MarketPresented atISM Chemical GroupWinter Meeting 2008Galveston, TXFebruary 28, 2008

rboyd@pentasul.com

sulphuric acid a hot market
Sulphuric Acid – a hot market!!
  • In the US prices have tripled to an all-time high in the last twelve months, from $50-70/st to $150-250/st cfr customer tank.
    • Why did they get so high?
    • Have they peaked?
    • When will the market turn?
    • Is this a structural change?
    • How low will prices go and when?
sulphuric acid in phosphate
SULPHURIC ACID in PHOSPHATE

Up to $30/tonne acid

of byproduct

energy available

SULPHUR - one tonne

SULPHURIC ACID - 3 tonnes

PHOSPHATE ROCK - 3 tonnes

PHOSPHORIC ACID

one tonne P2O5

PHOSPHATE FERTILIZERS

0.5 tonne NH3

DAP - two tonnes

copper price history
Copper Price History

2.5 to 3.5 tonnes acid per tonne copper.

slide7

Sulphuric Acid Long-Haul Trade 2006

1.2

0.3

0.5

0.2

0.5

2.3

0.5

0.3

0.1

0.4

0.6

0.1

0.6

0.3

0.5

Total Trade 11.8

Seaborne 7.2

Long-Haul 5.3

0.1

million tonnes

market developments
Market Developments
  • A spike in import demand in Chile in late 2006 started the acid price surge.
  • By mid-2007 world sulphur prices started to move as well.
  • Not fully reflected in the United States until Q1-2008.
  • Sulphur increase began to be passed through to US sulphuric acid buyers.
chile sulphuric acid imports million tonnes
Chile Sulphuric Acid Imports(million tonnes)
  • Growth in first-quarter 2007 based on expected arrivals from Peru.
  • Q2-2007 shows imports from other sources returning to more manageable level.
  • And Q3 even more so.
chile imports much more in 2007
Chile Imports Much More in 2007

Chile’s long-haul acid imports surge, even

with increased imports from Peru.

japan korea both export more
Japan, Korea both export more

Surging world prices attract more sales outside the region.

Less to China.

new acid supply 000 tonnes
New Acid Supply(‘000 tonnes)
  • Bulgaria – expansion complete to add 170.
  • Egypt – 420 imminent. Displaces around 200 imports from India.
  • Finland – 340 by January 2008. Part from Harjavalta expansion part from Growhow.
  • Namibia – 300 end-2010. Displacing 225/250 imports.
  • Chile – Altonorte up 300 Q1-2009.
  • Cuba – 400 end-2009. Displacing imports.
  • Peru – Doe Run up 315 by end-2009. New exporter. Cajamarquilla up 280 in 2010. Ilo up 500 in 2010?
new acid demand 000 tonnes
New Acid Demand(‘000 tonnes)
  • Turkey – Caldag will look for start-up tonnes in 2009.
  • Finland – Talvivaara needs 280-320,000 t.p.a. from 2010.
  • Cuba – Debottlenecking prior to new acid plant completion in 2009.
  • Philippines – Doubling of Coral Bay Nickel will add 260 to import demand Q2-2009.
  • U.S.A. – Freeport needs 250-350 for Safford, AZ.
  • U.S. Gulf/Mexico – Phosphate producers could use a lot more if affordable.
  • Chile – Gaby among several imminent projects.
sulphur prices
Why are sulphur prices high?

Production(supply) development slower than expected as projects slow to come online on labor and cost constraints.

Canada and Russia exports fall in Q1 2007.

Strong demand by China.

Phosphate market shows strength.

Does this signal a fundamental change in pricing structure?

Probably not.

Higher costs raise price floor level.

Production restrictions will eventually be removed.

Domestic sulphur production in China will grow and reduce the need for imports.

Sulphur Prices
major suppliers provide less sulphur in q1 2007
Major Suppliers Provide less Sulphur in Q1-2007

Estimates

Vancouver 25% decline

Russia 50% decline

slide21

ADNOC posting (fob)

$240/tonne November 1st

$360/tonne December 1st

$495/tonne January 1st

$600/tonne February 1st

Accelerating rate of price increases:

$54-$100 – elapsed time 5 months

$100-$200 – 4 months

$200 - $600 – less than 4 months

dap price history
DAP Price History

0.5 tonne sulphur per tonne DAP produced.

more sulphur in the longer term but slightly reduced growth to reflect delays in the short term
More sulphur in the longer term, but slightly reduced growth to reflect delays in the short term

All forms; sulphuric acid, SOX, Ammonium sulphate, etc.

slide25

World Elemental Sulphur Production and Demand

Forecast

‘000 tonnes S

25%

22%

13%

China as % World demand

7%

2%

slide26

World Sulphur Balance & Price Forecast

US$/tonne

?

Source: IFA/FRC

Revised January 2008

north america sulphuric acid market

North AmericaSulphuric Acid Market

Struggle to obtain offshore imports

north america recent developments
North America - Recent Developments
  • Total absence of sea-borne imports in first-half U.S. imports. Four cargoes booked for second half by Interacid/SATCO.
  • Martin adds 400 t/day production in Texas.
  • DuPont in start-up at El Paso.
  • FCX 20-30,000 t.p.m. requirement for Safford started January 1, 2008 - not covered.
north america late breaking news
North America – Late Breaking News
  • Southern States to add 200,000 t/yr. capacity at Wilmington, NC, bought gently-used old burner from US ordinance plant.
  • Chemtrade Logistics decides not to sell after lengthy bidding process.
  • Vale Inco tenders sulphur products marketing, stays with Chemtrade.
  • Vale bids for Xstrata. Canada competition??
  • Martin to build 400 t/day merchant plant at Beaumont.
us imports ocean going now minimal
US Imports – Ocean Going Now Minimal

Rail deliveries from Mexico depressed in 2006/7.

mexico acid availability poor
Mexico – Acid Availability Poor

Mine strikes curtail acid availability for Southwestern US market

canada sulphuric acid balances
Canada - Sulphuric Acid Balances

Sulphuric Acid Balance 2006

million tonnes H2SO4

Prodn. 4.8

- smelters 3.2

- elemental 1.6

Cons. 2.8

- fertilizers 1.5

- non ferts. 1.3

Net Exports 2.0

Dom. Purchases 0.9

2.0

2.1

0.8

2.7

0.1

2.1

latin america the key import region
Latin America the Key Import Region

Taking account of Mexico’s exports out of the region and

Chile’s higher than expected net imports, Latin American

imports will be even stronger than forecast.

us acid prices may track sulphur
US Acid Prices May Track Sulphur

$250-270

In 2008

But only when global smelter acid surpluses need to be absorbed here

Or when sulphur-based acid is part of merchant supply.

north america points to watch
North America – Points to Watch
  • How FCX acid procurement for Safford via Martin goes, impact on Southwest balance.
  • Implications of Vale and Xstrata’s cooperation in Sudbury area – or a merger of the two?
  • Construction of new spent acid regeneration capacity to service refinery expansions.
  • Use of any sulphur-based capacity in the US in next phosphate downturn in the merchant acid market.
summary and market outlook
Summary and Market Outlook
  • Prices in the US have tripled in 12 months.
  • Caused first by world demand for imports bidding up the price, driven by strong end- product prices.
  • Then the ‘sulphur effect’ later in 2007 was additive.
  • All markets look set to remain strong through 2008.
  • During 2009 new supply of smelter acid and sulphur will begin to materialize and the market should turn.
  • Sulphuric acid prices in the US should be back below $100/st by 2010, but will not return to the sub-$50 range.

Reason: the US will be supplanted by China as the ‘dumping ground’ for the next round of smelter acid surpluses.