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Oscillations in the demand-supply scenario fluctuates the Global Sulphuric Acid price
Oscillations in the demand-supply scenario fluctuates the Global Sulphuric Acid price

Oscillations in the demand-supply scenario fluctuates the Global Sulphuric Acid price

  • 26-Feb-2024 3:21 PM
  • Journalist: Nicholas Seifield

Hamburg, Germany: Globally, the prices of Sulphuric Acid are witnessing a decline in its trend due to the continuation of the weak Agrochemical sector leading to weak demand for the product. Due to several global causes, the equilibrium between supply and demand is disturbing which makes it difficult to maintain a smooth supply chain for Sulphuric Acid. The market players are cautious about their activities in the Agrochemical sector for Sulphuric Acid to avoid the potential losses in the prices of the commodity.

In Germany, the Sulphuric Acid market is showcasing an upward price trend due to the incline of 4.65% which settled at USD 45/MT (FOB-Hamburg) on 23rd February 2024. The reason for the increase in the prices of Sulphuric Acid is the disruption in the supplies of the product due to the ongoing farmer’s protests all over the European countries including Germany. The European Union is looking to address the farming sector's contribution of 11% to its greenhouse gas emissions by overhauling the Common Agricultural Policy, a nearly $60 billion yearly subsidy system. These changes, part of the European green deal aiming for climate neutrality by 2050, would require farmers to allocate a minimum of 4% of arable land to non-productive features, implement crop rotations, and reduce fertilizer use by at least 20%. The conflict in Ukraine has intensified the situation, causing supply disruptions, altering trade patterns, and increasing costs for energy, fertilizer, and transport for farmers in several EU countries.

The farmer's demand is for the establishment of a European law that guarantees the prices they receive adequately cover the entire cost of production, encompassing both expenses and revenue. Furthermore, the prices of the upstream Crude Oil market are witnessing an incline contributing to an overall increase in the prices of Sulphuric Acid. The demand from the downstream Agrochemical sector is not getting fulfilled by the existing inventories of Sulphuric Acid and the supply of the fresh stock of the commodity is hindered due to the ongoing protest. Therefore, the prices of Sulphuric Acid are inclining.

However, in the Japanese market, the prices of Sulphuric Acid are declining due to the accumulation in the existing inventories in the storage facilities and the demand from the downstream Agrochemical sector is low. Surprisingly, the Japanese economy experienced a contraction after the previous year, contrary to predictions of modest growth, leading the country into a recession. The unexpected downturn in Japan's economy during the fourth quarter can be attributed to a deceleration in spending by both businesses and consumers. This economic struggle is aggravated by inflation reaching four-decade highs, a weakened yen, and escalating food prices. The Bank of Japan is persistently stuck to policies aimed at keeping interest rates low and encouraging spending. This approach reflects the persistent efforts to combat deflation, which has been a longstanding challenge for the country. However, it is anticipated that the Bank of Japan may increase its interest rates now.

At the same time, the prices of Sulphuric Acid in the Saudi Arabian market are increasing along with the stable prices of its feedstock Sulphur market due to which the production cost of the product is maintained at a lower cost as well. However, the demand from the downstream Agrochemical sector is not fulfilled by the existing inventory levels of Sulphuric Acid due to which the producers are increasing their production rate to cope with the rising demand. Furthermore, the demand from the overseas market was less, however, due to the rerouting of the ships toward the Cape of Good Hope because of the attacks on the Red Sea by the Yemen-based Houthis, the delivery of the goods is delaying and increasing the freight charges, resulting in the price hike of the Sulphuric Acid.

During the week ending on 23rd February 2024, the prices of Sulphuric Acid are maintaining their stability in the US market with the previous week, along with the stability in the prices of its feedstock Sulphur market. The demand from the downstream Agrochemical sector is weak and getting fulfilled by the existing inventory levels. Therefore, it can be said that the equilibrium between Supply and demand is maintained due to the smooth supply chain for Sulphuric Acid in the US market. Therefore, the market players are keeping their quotations at the same prices to not disturb the maintained equilibrium. The buyers are also cautious about their purchasing activities and have opted for on-demand procurement activities rather than bulk procurement.

As per ChemAnalyst, the prices of Sulphuric Acid are anticipated to lower further due to the weak Agrochemical sector and sufficient inventory levels. It is expected that the prices of its feedstock Sulphur as well, might decline in the upcoming few weeks in the global market.

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