The domestic sulfur market at the start of July has clearly shed the momentum and enthusiasm seen in May and June. Despite relatively limited import vessel arrivals and port inventories lingering at low levels, spot prices have been unable to sustain the upward momentum seen previously. On the contrary, there is no sign of imminent downstream demand release, and the cautious观望 sentiment among traders remains hard to break, gradually wearing down holders' confidence and dragging market prices into a continuous downward correction. Upon closer examination, perhaps since the signing of the U.S.-Iran memorandum of understanding and the resumption of navigation through the Strait of Hormuz, the market has nurtured and accumulated such a tangled trading sentiment. Barring any surprises, this sentiment may continue to influence the market. Of course, this sentiment also reflects the current contradictions in the game between industrial and trading sectors.
First, although overseas supply constraints have not been fully lifted, the traditional off-season for demand has exerted downward pressure on spot prices. It is well known that Russia has once again extended its sulfur export ban, and Kazakhstan has also suspended resource shipments to China. However, a review of China's sulfur import source data in recent years shows that these two developments have an impact on the global sulfur market but limited direct impact on China. Meanwhile, the targeted supply guarantees from the "three major oil companies," restrictions on sulfuric acid exports, and the moderate substitution of smelter acid in some regions have stripped the spot market of its previous driving force for rapid price increases driven by tight supply.
Second, the demand side's resource selection, allocation, and adjustments in related plant operating rates are continuously diluting the pricing power, acting as factors suppressing price rises. Since the end of last year, the phosphate fertilizer industry has been mired in cost inversion difficulties. Importing sulfur to produce monoammonium phosphate and diammonium phosphate both resulted in negative margins that widened. Therefore, relevant plants have had to resort to unfavorable capacity adjustments and alternative resource allocation to cope with the high cost burden posed by sulfur. Of course, some enterprises have more or less postponed their startup plans, which, combined with the traditional off-season for fertilizer application, has provided the key downstream phosphate fertilizer companies with a foundation to curb sulfur price increases.
At present, the divergence of opinions within the market, mixed with traders' cautious hesitation, has been amplified since the beginning of July. The market is now closely watching the attitudes of end-users and long-term contract enterprises, as well as the arrival schedules of related import cargoes. According to Chempricehub information, the volume of imported resources arriving at related ports in July has increased compared to June, but it is still relatively low compared to last year. However, the haze released by the resumption of navigation through the relevant straits and rumors of U.S. dollar-denominated negotiations continue to tug at the sentiment and mood of domestic traders. In particular, the upcoming industry conference this week will both divert market trading attention and provide many participants with an opportunity to continue waiting and watching.
Of course, in terms of the U.S. dollar market dynamics, although it is no longer as firm as before, the cost line for imports has not dropped significantly, and the likelihood of a sharp decline in the short term is low. Moreover, given the current attitude of domestic traders toward imported resources, the possibility and magnitude of the supply side quickly replenishing imported resources are relatively small, providing some buffer for holders. The future direction of the market will likely depend on the outcome of the tug-of-war between the arrival of overseas stranded/newly negotiated resources and the release of downstream demand. Until that outcome is determined, market sentiment fluctuations may continue to drive prices in a volatile manner.
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