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09 May 2024 | 17:58 UTC
By Matt Hoisch
Highlights
Prolonged strike would be 'devastating,' producer says
Uncertainty remains over whether strike will occur
Possible rail disruptions in Canada from proposed strike action later in May could heavily impact plant operations and production in sulfuric acid and sulfur markets, participants said in the days leading up to May 9.
The Teamsters Canada Rail Conference announced on May 1 nearly 10,000 workers with Canadian National Railway and Canadian Pacific Kansas City voted to authorize strike action as early as May 22, pending labor negotiations.
"It would be really, really devastating" if there's a strike longer than two weeks, one sulfuric acid producer who exports to the US said this week, adding that a work stoppage would have major ramifications for their plant.
A sulfur consumer in the US -- who said he is very dependent on imports from the North -- said the possible strike was a big deal, as almost 50% of his sulfur supply come from Canada via rail. The consumer said his company is trying to prepare by accelerating shipments into its plant, but have run into challenges as other companies rush to do the same.
"There's not much we can do about it unfortunately," the producer said, adding if sulfur supply becomes constrained, rather than shut down, the company would likely slow down production.
A sulfur trader was also preparing for possible constraints, hoping any stoppages would be short-lived, but noting it would nevertheless be very disruptive.
A fourth source involved in the sulfuric acid market said a strike would have a major impact on the market, but he also expected the government would step in, given the potential ramifications for the wider Canadian economy.
Still, a source close to a major North American sulfuric acid importer was unsure a strike will move ahead.
"There's lots of time for this thing to get solved before it's ever a problem," he said.
Major maritime shipping company Maersk announced contingency plans on May 9 for a potential strike, including working to reduce congestion at West Coast Canada ports and exploring "feasible rail routings and transit times to US destinations via Tacoma [Washington]."
If a strike lasts more than a few days, the company said market participants should expect "significant backlogs with knock-on effects and an extended recovery period."
Canada is a major source of both sulfuric acid and sulfur in global markets. In 2023, the country exported about 1.8 million mt of sulfuric acid -- just over 8% of the global total, according to S&P Global Commodity Insights. Almost all of those cargoes went to the US.
In the same year, Canada exported about 3.7 million mt of sulfur, which amounts to just over 10% of the global trade total. The US brought in about 1.3 million mt of those cargoes, while China imported just under 900,000 mt.
Platts, part of Commodity Insights, last assessed its FOB Vancouver sulfur spot price at $74/mt on May 9.