Sulphur and Sulphuric Acid 2011: event reportНазад
Sulphur and Sulphuric Acid 2011: event report
The majority of participants of world sulphur market are satisfied with the current situation only in their words. Just the fear of uncontrolled changes secures the industry from revolution
On Monday, 12 December at Baltschug Kempinski Moscow hotel Creon Conference "Sulphur and Sulphuric Acid 2011" was held. Quest International Trading Company was the partner of the event, IAC Kortes supported the Conference. Russian and world markets of sulphur have recently entered the rising wave as sulphur becomes more and more expensive. Raw materials have become cheaper after peak pre-crisis prices, however now prices gradually move up again. All market participants worry about stability of this growth and about chances of global sulphur overproduction. For Russia, which is one of the key players of world market of this chemical product, the industry`s future has an extreme importance. New projects of gas production expansion, announced reduction of sulphur concentration in motor fuels and ongoing ecological programs of metallurgical companies mean an emergence of new volumes of sulphur. But, it`s yet unclear, whether it will find the customers. At the same time there is no State program of development of non-traditional directions of sulphur usage in construction and manufacture of road materials yet. To make the industry`s future transparent and favorable, coordinated efforts of many market participants` are necessary both in Russia and abroad. These ideas were told by Creon CEO Sandjar Turgunov in his welcome address to the audience.
Consultant of CRU Group Company Peter Harrison presented an overview of world sulphur market. In 2011 world sulphur production in all forms will reach 80 million tons. The output of this product grows not rapidly enough, however, it have shown resistance to late 2000s crisis. Production of sulphur itself is about 55 million tons. Almost all volumes of sulphur being produced now as side product of oil and gas refining and non-ferrous metallurgy, production of sulphur made of pyrite is negligible (7%), and preserved mainly in China. World demand on sulphur in all forms (83 millions tons) now exceeds its production insignificantly and is satisfied thanks to large previously made stocks. Sulphur and its derivatives are used in general for manufacture of mineral fertilizers, primarily phosphate ones (56%) and also in metallurgy and mining industry (32%). Demand structure is roughly stable and has not changed significantly for recent 5 years. However, global supply and demand balance on sulphur has changed dramatically. While in 2008-2009 there was an 2,5 mln tons excess of this raw material in the world, now slight deficit is experienced. It affects prices weakly as they grow slowly after the crisis; during all 2011 they hold on the level of about 200 dollars per ton. It`s quite good result, as both 5 years ago and during the height of crisis the sulphur was four times cheaper. For the recent two years, according the data given by the reporter, sulphur has rose in price much more than copper and nickel or diammonium phosphate. Both metals being manufactured with the sulphur as a side-product while sulphuric acid used in DAP production.
Geographic structure of sulphur production and consumption is stable enough and will not significantly change in coming five years. Sulphur is produced mainly in global oil-gas production regions (North America, Middle East, CIS), and being consumed in countries with developed primary industry, especially manufacture of phosphate fertilizers (East and South Asia, North Africa). The tendency of sulphur production and consumption concentration in appropriate world regions will get stronger. In USA and Canada sulphur production will grow thanks to oil sands development and appropriate projects realization in oil refinery. Gas sulphur production in Canada declines. In the Middle East volumes of sulphur production will grow by 9 million tons in 5 years making this region the main supplier of sulphur in the world due to oil and gas refining projects in Saudi Arabia, Qatar and UAE. In CIS countries CRU expects an increase of sulphur production by 5.5 million tons, 3.2 million tons of which will be produced in Turkmenistan after launch of gas scrubbing complex at South Iolotan deposit. In Russia and Kazakhstan the volumes of produced sulphur will grow as a result of gas production growth in Astrakhan and at Kashagan field. Sulphur production in China will grow from 3 to 7 million tons, mainly due to treatment of natural gas. Demand on sulphur in the world will grow in times slower than production. It means a sharp increase in stocks of yellow chemical. The CIS and Middle East will be the regions with most excessive growth. Middle East producers are traditionally oriented to Asian market, while CIS companies supply sulphur to Northern Africa. In Africa and Middle East announced fertilizer projects will develop the market for 5 million tons of sulphur additionally. In China the consumption will increase by 7 million tons more, herewith share of technical usage of sulphur derivatives will grow. Demand deficit will lead to the probability that roughly 2 million tons of produced sulphur will not find the customers in the world in 2012, and by 2016 the annual addition of stocks will exceed 4 million tons. This factor will prevail over phosphate fertilizers demand growth and sulphur will fall in price. In order to prevent the collapse of the market, according to the reporter, it`s necessary to effectively limit the volumes of supply and implement better price management. If key producers send at least half of product to the stockpiles, the prices remain high enough, Mr Harrison proposed. However, while Canadian and Russian companies have long-term experience of sulphur storage operation, in the Middle East sulphur storages are absent and, most likely, will not emerge.
Deputy Head of Division of sulphur Export Management of Gazprom Export Pavel Zaitsev told about company`s prospects as a global player of this product. Russian gas monopoly owns two sulphur manufacturing plants. Orenburg gas processing plant produces up to 1.1 million tons, which is mainly directed on domestic market while Astrakhan gas processing plant produces up to 4.8 million tons of sulphur, which primarily being exported. Complex in Astrakhan at this moment is the largest single sulphur producing plant in the world. Demand on sulphur in the country have reached 2.1 million tons, by 2015 it will increase up to 3.6 million tons. Gazprom doesn`t plan to increase sulphur production significantly, however, additional volumes of product can be supplied from Nornikel (800 thousands tons, if logistic problems will be resolved) and many oil refineries, which are implementing new ecological standards. The possible increase of demand in the country, according to Mr. Zaitsev, will reduce sulphur export from CIS. Competitiveness of Russian production globally more and more depends on not only sulphur price, but effective logistic too. As the speaker noted, it`s exceptionally important, taking into account the instability and weak predictability of world prices. Now export to the Mediterranean countries and Latin America being managed primarily via Black Sea ports. It`s planned to build specialized sulphur terminal in Taman with the capacity of 5 million tons per year in addition to existing facilities. But the reporter got no information whether Gazprom would finance this project or not. The other trend is gradual transition to output of granulated sulphur, which is more easy-to-use during transportation, then agglomerated one. In the long run Russia as well as other players will feel consequences of global sulphur overproduction. Various options of sulphur utilization are proposed already now to solve this problem. These ideas include processing of the product into sulphur-asphalt and sulphur-concrete and building of long-term storages for sulphur. Designed capacity of sulphur storages in Astrakhan is up to 4 million tons, but, according to Mr. Zaitsev now the stockpiles are almost empty due to high demand and consist of technological volumes only.
Nikolay Motin, The Head of Gas Sulphur Laboratory of Gazprom VNIIGAZ confirmed that vast stocks of sulphur in CIS countries remain only in Kazakhstan, but their being systematically extinguished by selling the product off, mainly to China. In Russia sulphur production`s increase is predicted due to oil refineries` upgrades and non-ferrous metallurgy`s development. Along with the production growth the consumption of sulphur increase is predicted in Russia and CIS countries too with estimated volumes of demand will be raised from 4 to more than 5 million tons. To increase sulphur`s competitiveness, the producers manufacture it in granulated form and by 2015 the reporter expect complete phasing out of solid sulphur in favor of granulated and liquid one, with the share of the latter up to 28 %. However, liquid sulphur`s share increase in domestic trade is limited by number of reasons; the main one is the lack of special vehicles for its transportation. The creation of new industries of sulphur consumption (production of sulphur-based modifiers for construction, advanced road materials) is predicted for the nearest future. Now the work on introduction of technologies of sulphur asphaltic concrete and sulphur concrete of in industry is underway. Presently no more than 60-100 tons per year being used for research and test works.
Reporter is sure that these technologies have good future, however, due to lack of financing and conservatism of some structures their mass distribution will begin no earlier than 2015. Mr. Motin estimated the potential Russian market for these products by 2030 at 1,4 million tons sulphur per year.
The report of Alexey Torgashov, Head of Purchases Department of Novotek-Trading Company triggered an outburst in the audience. He imaged inside`s view at Russian sulphur market and processes happening in it. According to him, stock exchange trading of sulphur is extremely weak. It is being sold by some oil refineries, regularly but deal sometimes means just an "offer for negotiations". According to Mr. Torgashov, there are about 1 million tons of sulphur in stockpiles near Orenburg and these improvised storages are not managed effectively. Regional officials have supported the project of reduction of sulphur deposits, but the company represented by the reporter, has faced great problems with implementation of such solutions, which didn`t receive support from the management of Orenburg GPP. At the same time another department of Gazprom working on Astrakhan GPP doesn`t have free volumes practically. Reporter called representatives of the Federal Antimonopoly Service to pay greater attention to the Russian market of the product, where there is no independent prices indicator now. Deputy Head of Marketing Department of Industry Group Gazprom Mikhail Parfyonov said that there is no need in traders on the sulphur market, no need in firms who would resale the product, as market is specific one and producers and consumers of products are in close circle and very familiar with each other. Deputy CEO of Gazprom Sulphur Evgeniy Igoshin answered that the company received a brief from Novotek-Trading; however, negotiations were over when the subsidiary of Gazprom had asked about directions of shipments. Kanat Kenzhebaev, Coordinator of Sulphur Sales of Kazakhstan TengizShevroil supported Gazprom and said that sulphur market needs especial terms of work and traders are necessary just for promotion of export. Senior specialist of NIUIF Yuri Filatov noticed that producers of mineral fertilizers are pleased with current supplies volumes, but form of raw materials doesn`t satisfy them. Mr Torgashev answered that, inspite of sulphur excess in Russia, now the Company imports sulphur from stocks of one of Ukrainian oil refineries and demand on it is huge among Russian companies, which normally receive the product from Gazprom`s plants.
Chief specialist of Morstroytechnology Olga Gopcalo told about present conditions and prospects of overseas transport. According to her, the actuality of problems of sulphur export rose dramatically in the beginning of 2000s when Kazakhstan started to increase supply volumes. Although part of Kazakhstan sulphur being exported to China via rail transportation, major volumes are exported through Russian and foreign ports. In 2010 the volume of transit has reached 2.8 million tons. Warehousing and transshipment of sulfur proves to be a great problem due to strict requirements of ecological and sanitary security around terminal locations. It`s required to have at least 500 meters distance to residential area for open transshipment of agglomerated and granulated sulphur and 1000 m for complexes of liquid sulphur transshipment. It`s not easy to implement these guidelines in densely populated areas and it was one of the reasons for revoking the project of sulphur terminal construction in Novorossiysk port. More than 1 million ton of sulphur being shipped via Ust-Luga, however, this port is far from both main locations of production (larger rail distance and additional costs) and from main sales markets (sea distance from this port is longer than from ports of Black Sea basin). After reconstruction of Ukrainian Ilyichevsk port it will be possible to ship more than 3 million tons of sulphur per year, now 1.8 million tons being exported. In Nikolayev and Mariupol development of shipping operations is complicated as first port is overfeeded with fertilizers and the latter has ecological restrictions. Last year 1.9 and 1.2 million tons of sulphur were transferred through river ports of Buzan and Ust-Donetsk respectively. The product being overdriven to larger vessels on Kerchensk reid (Kavkaz and Kerch ports). Even if the decision of specialized sulphur terminal construction in newly designed Taman port be made without delay and terminal projecting begins timely, the terminal will be able to start the work not earlier than 2020. Besides it, this port has maximum attractiveness for sulphur terminal placement. At first, it is the most conveniently located to main sulphur plants and it leads to reduction of rail costs for delivery, at second, the port will have an opportunity to accommodate river ships; Taman will be the safe port that prevents the risk of stagnation due to meteo reasons. Conference`s participants paid special attention to problems of sulphur rail transportation. Official rates, according to participants` consensus, should be increased minimum by 30-50% in calculations to make real rates of it.
Senior analyst of Kortes Alexander Shkurin told about Russian market of sulphuric acid, the main sulphur derivative. According to preliminary results of 2011 approximately 10,6 million tons of sulphuric acid were produced in Russia, that is by 6.5 % more than year before. Besides, about 60 % of product output being made by producers of mineral fertilizers (PhosAgro, Uralchem, Evrochem), other is produced by metallurgical companies and, first of all, plants of Ural Mining and Metallurgical Company (UMMC). Capacities of sulphuric acid output were increased. The reconstruction of Complex in Belorechensk is over; Phosphorit plans to increase capacities up to 1 million tons. Sulphuric acid import to Russia is negligible; Syktyvkar Pulp Mill is practically the only importer from Finland. Plants located near the southern Russian border export sulphuric acid to Mongolia and Kazakhstan, the export doubled in 2011. Consumption structure of sulphuric acid in Russia is similar to global one, about 70 % of the chemical being used by mineral fertilizers` plants, which generally meet their demand with internal production. According to the data, 72 % of produced sulphuric acid in Russia is going on own needs of the plant. Free sulphuric acid market is small; it`s formed by metallurgical plants and oil refineries of Central Russia. Price on sulphuric acid in Russia increases following phosphate fertilizers price increase. Acid rose in price from 2000 to 4000 rubles per ton just for two years.
Yuriy Filatov, Head of laboratory of NIUIF, told about problems of sulphuric acid production in Russia. As he noticed in his report, the State standard of sulphuric acid quality goes back to 1977, now the changes are being prepared. World consumption of sulphuric acid for last 50 years increased by four times and has reached 225 million tons. Besides, 50 years ago sulphuric acid was produced, generally, as target product by pyrite burning; now it`s almost entirely made of secondary raw materials. Russia takes fourth place after China, USA and Morocco in sulphuric acid production. Capacities of production of the chemical of sulphur-containing off-gases will be expanded in Russia, in particular, new unit with capacity of 650 thousand tons is planned to be launched in Karabash. Mr Filatov told in details about projects of reconstruction acting plants in Balakovo and Cherepovets realized with the assistance of NIUIF. On the first plant the capacity has increased from 0.85 to 1.97 million tons. Director of Marketing of Kolskaya Mining and Metallurgical Company Pavel Egorov have called the audience to look at risks of significant budget increase of investment projects. Besides, project organizations frequently has to use more expensive catalysts and imported equipment, maintaining of which is extremely cost-rising. To decrease costs, according to him, domestic catalysts are used, and spares for imported equipment are made to order in Russia.
There were a number conference reports devoted to technological novations in the industry. Managing director of Hugo Petersen, Axel Schultze told about the methods of mercury disposal from sulfur-bearing gases of metallurgical industry. The technologies proposed by the company can reduce the mercury content in gases to 0.5 ppm or less. Head of Technological Pipelines Department of Adelant Company Pavel Anisimov presented pipes made of chlorinated PVC for aggressive substances. The enterprise with a capacity of 4 thousand tons by the technology of Lubrizol was launched in 2008 in Tyumen, and produces pipes made of material that is resistant to burning and oxidation, and is considerably easier and cheaper, than stainless steel that is traditionally used for these purposes. Director of Representative Office of Sandvik Process System Alexander Tarahtunov presented a facility for sulphur granulation. Granulation by roto-formation is very popular, as it allows packing up and carrying sulphur in easier way. The cost of the facility with a capacity of 40 thousand tons per year, according to reporter`s estimate, is 400-500 thousand euro. CEO of Samara Factory of Catalysts Igor Levchenko told about the ten-year experience of the domestic production of catalysts for sulfuric acid facilities. In spite of the fact that the production is located in Russia, the raw material for it (catalyst basis and vanadium oxide) is purchased abroad.
The Head of Creon Fares Kilzie believes that the world market of sulphur is currently in a state of unstable balance. Due to the management of warehouse stocks a number of large manufacturers support product prices at sufficiently high level, however, not all of suppliers of sulphur in the world want to follow this strategy. The growth of prices creates an incentive to sell sulphur from reserves, but it may bring the market down, as the current price situation is not comfortable for consumers. Besides, transportation costs have decreased during the crisis, but now logistics of sulphur becomes a problem again. To stabilize the situation combined efforts of all the key players of the industry are needed.
