Tampa: Observers and market players stuck to previously-voiced expectations for the fourth-quarter contract price of molten sulfur delivered to Tampa. Most speculation centered on a rollover from the $65/lt DEL third-quarter contract, although there were exceptions.
Those expecting a rollover pointed to a combination of balanced-to-long domestic supply, a relatively static Gulf export market, and price uncertainty regarding the importation of solid sulfur tons into Tampa.
Strengthening in a number of international markets, including market-movers China and the Middle East, led some to argue for possible domestic increases at home. “China will trickle down (to Tampa),” one observer remarked. “Tampa has traditionally followed international pricing, which is up a bit,” said another.
For the shorter-term, some turned an eye toward Hurricane Matthew’s potential effect on the market. The hit to logistics was of particular concern. “Railroads are already beginning to embargo parts of the region in advance,” said one contact. “It’s possible that a large (area) of sulfur demand could be impacted.
No details were offered regarding settlement talks themselves, which were reported to have begun in the previous week. The third-quarter Tampa contract was valued at $65/lt DEL.
Domestic utilization took another tumble last week, according to the U.S. Energy Information Administration (EIA), who reported the refining sector’s fourth consecutive period of declining run rates. Capacity was calculated at 88.3 percent for the week ending Sept. 30, a 1.8 percent decline from the prior week’s 90.1 percent and also trailing the 88.5 percent five-year average, but slightly ahead of the year-ago 87.5 percent.
Daily crude inputs slipped as well. Refiners processed an average 16.032 million barrels/d for the week, a 302,000 barrel/d drop from the previous week’s 16.334 million barrels/d.
U.S. Gulf: A spate of refinery turnarounds has contributed to Gulf export market firming, sources speculated.
Among those believed to be operating at reduced capacity was Motiva Enterprises’ 603,000 barrel/d Port Arthur, Texas, refinery, where a $250 million overhaul was expected to take the unit’s 60,000 barrel/d hydrocracker offline this week.
Motiva has previously hinted at long-term plans to increase Port Arthur’s capacity to 1 million barrels/d, although no timeline for such an expansion has been announced. Jointly owned by Saudi Aramco and Royal Dutch Shell Plc, Motiva is expected to be dissolved in first-quarter 2017.
Price ideas for Gulf formed sulfur were quoted in the $65-$70/mt FOB range, unmoved from the previous report.
U.S. Imports: August imports were down 39 percent, to 94,489 st from 155,876 st. July-August were off 35 percent, to 177,004 st down from 270,830 st.
Vancouver: Vancouver traders put last-done sales in the $65-$70/mt FOB range. The market remained unchanged despite recent firming reported in the Chinese import market, quoted at $88-$90/mt FOB. The lack of trickle-down to the Canadian offshore market served to further illustrate Vancouver’s reduced dependence on China, some claimed.
Meanwhile, sellers said Chinese activity remained essentially on hold due to the national Golden Week holiday. Business is projected to resume around Oct. 10.
Alberta sulfur pricing was steady at (-)$55-$20/mt.
West Coast: Fourth-quarter contract negotiations for the price of molten sulfur from the West Coast were underway last week, sources said. Predictions generally centered on a rollover or slight increase from the $50-$75/lt FOB third-quarter range.
West Coast prills were called flat at $60-$65/mt FOB.
ADNOC: The Abu Dhabi National Oil Co. (ADNOC) announced plans to merge its two largest offshore oil operations last week. Zakum Development Co. (Zadco) and Abu Dhabi Marine Operating Co. (Adma-Opco) account for most of ADNOC’s approximately 1.7 million barrel/d offshore production capacity. Total ADNOC capacity stands at 3.1 million barrels/d, observers estimated.
ADNOC formed sulfur was offered at $77/mt FOB Ruwais for September.
Aramco: Sources believed Saudi Arabia’s 400,000 barrel/d Samref refinery continued to operate at full capacity despite rumored mechanical issues. Sources said the speculation has focused on the facility’s 155,000 barrel/d vacuum distillation unit.
Observers welcomed Aramco plans to release detailed, “industry-friendly” financial reports for the 2015-2017 fiscal years ahead of a planned 2018 IPO. Aramco is expected to offer shares amounting to a $2 trillion valuation, leapfrogging $600 billion Apple Inc. as the world’s most valuable company.
Traders described Aramco as “sold out” of sulfur for September and October. Aramco’s September prill price was $74/mt FOB Jubail, an $8/mt increase from the $66/mt FOB August price.