Tampa: Sources said evolving fundamentals in the crude market, in flux for weeks as worldwide oil prices plunge amid ballooning supply, now threaten to spill into the sulfur market.
Noting some refiners’ recent shift toward processing crude slates of widely varying sulfur content, the domestic market could be faced with “significant decreases in sulfur production,” one contact said, despite early signs that 2015 could be a banner year in domestic refinery utilization. Additionally, supply could be further threatened thanks to “exceptionally high” supplies of finished products such as gasoline and diesel, which could trigger refinery slowdowns in the near future.
Others in the industry questioned whether sulfur supply could be so easily diminished, however, pointing to the sheer volume of crude barrels produced by the U.S. oil boom as likely to prolong the rise in U.S. refining capacity throughout 2015 and beyond. Even with reduced yields gleaned from the use of sweeter crude slates, domestic supply levels are likely to approach historic levels, they argued.
The supply debate caught fire as first-quarter negotiations for the price of molten sulfur delivered to Tampa kicked off last week. Sentiment in the market primarily pointed toward a rise in first-quarter prices based on unexpected strength in a number of international markets. Molten sulfur delivered to Tampa for the fourth quarter was $129/lt.
Domestic refinery utilization fell for the week ending Jan. 2, according to the U.S. Energy Information (EIA). Refining capacity was listed at 93.9 percent, a decline of 0.5 percent from the EIA’s Dec. 26 utilization rate of 94.4 percent. The number beat both the year-ago rate of 92.3 percent and the 89.5 percent five-year average, however.
Conversely, average daily refinery inputs rose during the same week, to 16.420 million barrels/d, up 43,000 barrels/d from 16.377 million barrels/d in the week ending Dec. 26.
U.S. Gulf: Traders continued to see significant tightness in material offered from Gulf Coast refineries. Coupled with the rise in international pricing, an increase from the last-done $135-$140/mt FOB was expected to accompany new business.
U.S. Imports: November sulfur imports were off 28 percent, to 130,349 st from the year-ago 181,460 st. July-November imports were down 21 percent, to 763,240 st from 966,564 st.
Vancouver: Spot prices in the Vancouver sulfur market exploded last week, thanks to firming in the Chinese market, where levels were largely quoted around $185/mt CFR. Sources attributed the price run-up to dwindling supply spurred by record DAP production in China.
Vancouver spot was called $160-$170/mt FOB, with average transactions registering around $165/mt FOB.
Off-spec hydrogen sulfide levels present in finished Syncrude 21 product prompted the suspension of loading on Dec. 24, sources said. The facility hoped to resume production as early as Jan. 8.
The price of Alberta sulfur was (-)$10-$75/mt, unchanged from the week before.
West Coast: Offshore transactions from the West Coast were predicted to follow Vancouver levels upward in the next round of business. For now, last done in the region was quoted in a range of $135-$140/mt FOB.
Negotiations were underway for first-quarter molten sulfur last week. Fourth-quarter 2014 contracts were quoted in a range of $90-$130/lt FOB.
Benelux: The price of sulfur at Benelux was $158-$172/mt FOB for the fourth quarter.
ADNOC: ADNOC sulfur was set at $158/mt FOB for January, an increase of $8/mt from the December 2014 price.
Aramco: The January price of Aramco sulfur was $