Recently, the domestic sulfur spot market has been generally lackluster, with trading sentiment turning subdued, resulting in limited price fluctuations. Taking the Zhenjiang Port market as an example, the current mainstream granular price is 9,170 yuan/ton, compared to 9,200 yuan/ton in mid-month, a variation of only 30 yuan/ton. Over a period of time, the spot price level has not changed significantly, forming a stark contrast with the previous sharp fluctuations, leaving many market participants feeling uncomfortable. The main reasons for this situation are the very limited release of spot demand and the rational view of market players regarding the renewed tensions in the Middle East geopolitical situation. As for the subsequent market trend, in my opinion, although the Middle East geopolitical conflicts continue to disrupt the core global sulfur supply source for some time, if the domestic demand side does not see substantial changes, the sentiment in the spot market is likely to remain under pressure.
Given the current Middle East geopolitical situation, the domestic sulfur supply side will still be affected by external constraints, and overseas supply-side risks will continue to hang over the market. The Middle East geopolitical conflicts have led to delays in the delivery of related long-term contract shipments, which is likely to become a common phenomenon, inevitably curbing the room for a decline in US dollar-denominated market prices. Such external supply-side risks should normally provide upward support to the domestic market, but the domestic circulation chain has not formed a tight short-squeeze situation. Reasons: 1. Domestic major refineries are implementing targeted guaranteed supply of their output resources. 2. Restricted exports of phosphate fertilizers and sulfuric acid have reduced the volume of demand for sulfur resources. 3. Other chemical and new energy end-users will continue to seek the best balance point of smelting acid in their production cost control. Combined with the current relatively high spot market price level, traders' willingness to actively enter the market remains low, and there will be no opportunistic market entry actions. Except for long-term contract traders, even if some enterprises make purchases, they will mainly adopt a fast-in, fast-out approach and will not ignore the operational risks brought by market fluctuations.
On the demand side, realistic constraints will curb market trading activity and become an important factor restricting the rise of sulfur prices. Regarding phosphate fertilizers: Currently, the domestic monoammonium phosphate market has entered a seasonal demand gap, terminal agricultural demand is weak, and the pace of autumn fertilizer preparation continues to be delayed. Downstream compound fertilizer enterprises, constrained by slow product digestion, have weak willingness to purchase raw materials, and the market lacks sustained transaction support. Under the constrained demand transmission, some monoammonium phosphate producers may consider reducing operating rates to avoid risks, and their industry equipment operating rates may gradually decline. The diammonium phosphate market is also in a "slow lane," with its demand side showing obvious weakness, downstream purchasing pace significantly slowing, and due to insufficient consumption momentum, new orders for diammonium phosphate are sluggish, naturally spreading cautious sentiment in the market.
Regarding titanium dioxide: Raw material costs remain generally firm, and the cost pressure on titanium dioxide enterprises has not eased, continuing to squeeze corporate profit margins. In addition, domestic demand continues to be weak, with downstream end-users having insufficient willingness to purchase, gradually increasing sales pressure on titanium dioxide producers, leading to considerable operational pressure. It is heard that most enterprises in the industry have chosen to lower product quotes, and overall operating rates have also decreased. Regarding caprolactam: Although its market price has shown an overall upward trend over the past period, the main reason driving the price increase is the rise in the price of its raw material, pure benzene. Additionally, in July, some caprolactam units in Shanxi, Shandong, and Henan were shut down or had their operating rates reduced, which also provided impetus for the high market price. However, looking at its subsequent demand side, there is no optimistic outlook, and it is possible that the industry may see reduced operating rates. In summary, its major downstream products provide very little support to the sulfur spot market.
Looking ahead, the blockade of the Strait of Hormuz is likely to persist, restricting the outflow of Middle Eastern resources. Even if major demand regions maintain a cautious stance, under the background of tight international market supply, the probability of a significant price decline is low. This may be the only psychological support for domestic spot holders, but relying solely on this, the market clearly lacks significant momentum for an upward push. This is because major refinery resources will maintain targeted guaranteed supply, phosphate fertilizers and sulfuric acid still cannot be exported, and other terminal enterprises will continue to seek reasonable substitution of smelting acid in their production raw materials. Importantly, entering August, some long-term contract receivers intend to sell the resources they have obtained, leading to a continued spillover of supply in the market. External positive factors only remain at the emotional level, while internal demand weaknesses are difficult to repair. The strength of inquiries and buying orders is hard to accumulate and release, and the tug-of-war between industry and trading parties will persist. Against this backdrop, it is expected that the spot market may experience volatile downward movement in the coming period. Market participants should continue to monitor the navigation status of the Strait, the dynamics of arriving cargoes, as well as downstream operating rates and procurement changes, to control their own operational risks.
Comments
0