Tampa: Mosaic and PotashCorp announced a second-quarter settlement with sulfur suppliers on April 13, agreeing to contracts valued at $70/lt DEL, $5/lt lower than the first quarter’s $75/lt.
The $70/lt figure was the end result of a slow shift in sentiment that began with expectations of a $5-$10/lt increase in late March. While some observers described the contract as “in line” with expectations, many market players expressed shock at the outcome.
Despite recent U.S. Gulf export sales in the $80-$85/mt FOB range heading into Q2, buyers were reportedly more focused on recently declining prices at China and Vancouver, viewing the softer markets as likely long-term indicators of direction.
“The prognosis is that Q2 will weaken, and thus the U.S. must remain at a discount in advance of the industry’s projections that Q2 will weaken,” one source commented. “It’s a moving target out there. The lines keep changing.”
Predictions were slanted heavily toward a price rollover from Q1 levels as recently as the prior report. In addition to the U.S. Gulf market, bulls pointed to Middle East producer levels in the mid-$80s/mt FOB as grounds for an increase or rollover.
Some talked of North American supply, which was described as “snug” in recent weeks, as incongruent with the second-quarter contract. “It’s frustrating that we can’t find any supply out there to meet our demand,” said one source. “And all the while, prices are coming down.”
The Houston and NOLA sulfur markets tracked the Tampa index lower, landing at $55/lt and $59/lt, respectively.
Refinery utilization edged higher last week, according to the U.S. Energy Information Administration (EIA). Refiners operated at a combined 91.0 percent capacity for the week ending April 7, a 0.2 percent increase from the prior week’s 90.8 percent and the fourth consecutive period of increased utilization. Current-week numbers compared favorably both to the year-ago 89.2 percent and the five-year average of 89.4 percent.
Daily crude inputs rose commensurately and averaged 16.697 million barrels/d, a 268,000 barrel/d jump from the prior week’s 16.429 million barrels/d.
Vancouver: Market watchers continued to call last-done Vancouver spot in an $83-$88/mt FOB range.
A Taiwanese prill tender concluding at a reported $83/mt FOB was rumored to be destined into the Chinese market. Shipping estimates varied based on the expected port of delivery, but sources generally put delivered pricing in the “mid-$90s/mt CFR.” Coupled with additional recent sales, sources called the Chinese market $90-$95/mt CFR, down from $97-$101/mt CFR at last report.
Sources described ongoing supply tightness in Alberta as stemming from a mid-March fire and explosion at Syncrude Canada’s Mildred Lake project, located north of Fort McMurray. An August 2015 fire at the facility forced an 80 percent production curtailment lasting approximately two months.
Alberta producer netbacks were called flat at (-)$55-$20/mt FOB.
West Coast: The PBF Energy Inc. refinery at Torrance, Calif., began shutting down a handful of systems on April 6 ahead of a planned three-month turnaround, local news outlets reported. The $100 million effort is geared toward reducing unplanned operational upsets, several of which have occurred since PBF assumed ownership of the facility in 2016. Full operations at the 155,000 barrel/d facility are slated to resume on July 10.
Sources put the West Coast solid sulfur market at $80-$83/mt FOB, unchanged from the week before. Second-quarter molten contracts were quoted at $55-$77/lt FOB, flat from first-quarter levels.