Chinese sulphuric acid market is relatively stable with domestic equilibria and firm agrochemical demand, Germany is faced with a more complex scenario defined by price fall, weak demand, and rising feedstock prices. The next couple of weeks will be instrumental in establishing whether seasonal demand can salvage bearish sentiment of sulphuric acid market in Europe or dips will realign the market direction into the last quarter of the year.
In China, the sulphuric acid prices witnessed stability in its trend during the second week of September. However, the limited demand from the overseas markets had the potential to lower the market sentiments. But the steady production costs amid the stable prices of the feedstock sulphur and the gradual surge in the domestic agrochemical market cushioned prices from falling. Therefore, market participants reported that despite the soft sentiment, a stronger domestic demand further. The onset of the plantation season also paved the way for steady consumption of sulphuric acid in the downstream agrochemical sector, which usually picks up during this time. Feedstock sulphur prices have remained stable to aid production margins further and help manufacturers in not having to shift any cost change to buyers.
On the contrary, the German Sulphuric Acid market continued to experience bearishness in its trend. Sulphuric acid prices across Europe have further dropped, with sellers actively offering material across delivered markets. Demand, however, continues to remain on the lower side, and the volumes are not being absorbed at the expected pace for this time of the year. Some market participants are contemplating price drops as the weeks progress, drawing assumption that by September, the sulphuric acid market may briefly touch double digits.
The downstream agrochemicals sector in Germany is also entering into the planting season, giving rise to a typical demand build for the sulphuric acid. Nevertheless, this seasonal demand has not brought forth much activity to the market, either because of apprehensive buying patterns in the market or inventory overhangs. Driving the prices of feedstock sulphur up by 4.44% are further considerations which could adversely affect the cost of production and hence squeeze producers' margins if the prices of sulphuric acid are to continue dipping. This divergence of rise in input costs and fall in product prices presents an uphill battle for producers who may thus be compelled to either review their pricing strategies or claim less output just to stay profitable.
As per ChemAnalyst, global market rates of sulphuric acid are expected to keep on falling shortly because as of now there are ample inventories in the European nation. The customers are anticipated to remain cautious and purchase when they get a good opportunity, and therefore fewer overall transactions are expected to occur. This limited activity is indicative of a market in which demand is cautious, but supply is strong, and thus sulphuric acid prices are set to continue in a declining trend for a while as traders compete to capture buyers during this slower trading phase.
