Rising sulfur costs create affordability crisis for European acid producers

European sulfur and sulfuric acid producers are facing a severe affordability crisis as sulfur feedstock costs surge, forcing some facilities to consider closures and prompting a fundamental shift in regional trade patterns, market participants said Nov. 18.

Producers in Europe reported that sulfur prices have surged, approaching levels seen in 2022, with the latest FOB Middle East prices assessed at $455-$460/mt on Nov. 13, marking a $30/mt increase week-over-week.

The price escalation has created financial strain across Europe's sulfur-dependent industries, particularly affecting fertilizer producers and sulfuric acid manufacturers who rely heavily on imported sulfur as a key feedstock.

Many plants are reportedly grappling with financial difficulties, according to sulfur traders in Europe, with some even considering closures due to the escalating costs. In response, Mediterranean sulfur buyers have begun shifting their purchasing strategies to secure cheaper products from alternative seller locations, further altering trade flows in the sulfur market.

While fertilizer prices, particularly phosphate fertilizers, have decreased, according to market sources and Platts data, the higher sulfur costs have become unaffordable for producers.

Additionally, sulfur buyers in Europe who utilize sulfur as a feedstock for chemical production have been reported to have closed plants, Platts reported earlier.

The severity of the situation was underscored at the recent European sulfuric acid association's autumn conference in Catania during Nov. 12-14, where market dynamics and pricing pressures dominated discussions among industry participants. Many attendees emphasized the need for a "correction" in the sulfur market, citing an excessive price differential between sulfur and sulfuric acid.

As of Nov. 12-13, Platts, part of S&P Global Commodity Insights, assessed its FOB West Europe sulfuric acid price at $100/mt, in contrast to Mediterranean sulfur prices, which were assessed around $410/mt FOB.

One trader at the conference said, "We are at a tricky point where buyers who can switch to purchasing acid instead of sulfur may still find sulfur more advantageous at around $400/mt. If sulfuric acid is priced at $100-$150/mt FOB, why would they opt for acid when one sulfur cargo can produce 4-5 sulfuric acid cargoes?"

The pricing imbalance reflects broader structural challenges in the market, where the economics of sulfur-to-acid conversion have become increasingly unfavorable for producers.

One sulfuric acid producer in Europe said, "There can't be a mismatch between sulfur and acid for long periods in the market."