Market and product

Purchasing of sulphuric acid has undergone a "dramatic turnaround" so far this year, according to CRU International, which says "rising demand is evident from the industrial sector, the phosphate fertilizer industry and copper leaching operations."

However, inventories still are well in excess of renewed demand. So, near-term prices should stay around the $144/ton average of the first quarter and not approach the $200/ton average of 2009, according to the CRU report presented at this week`s World Copper Conference in Santiago, Chile.

While there is some tightness in the U.S. acid market, ICISpricing.com says production rates were slightly improved from a month ago. So, there is quite some debate whether spot prices will rise in the second quarter back to $150-$200, as sought by producers.

Another issue is that phosphate fertilizer prices have begun to weaken, "undermining sentiment in the sulphuric acid market," says CRU. "It is too early to say whether the price boom-that brought U.S. market prices up from an average $107/ton in October and November-has come to an end, but market activity is very thin and there are growing indications that further increases may not be sustainable."

The analysis suggests that supply of sulphuric acid is forecast to remain tight. So, drop in prices is unlikely for the next few months. However, the peak application season for phosphate fertilizers is almost over, and stocks of sulphuric acid are expected to gradually increase over the summer. "For this reason, the second half of the year will probably see prices coming down for both products," CRU forecasts.

In another analysis of the world fertilizer market, TD Bank analysts also are cautious about offshore demand due to recent weakness in global crop prices, "which may limit the global demand fertilizer rebound volume and/or price gains."

(Source: http://www.purchasing.com/)