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The Sulphur Outlook The Fertilizer Institute – Fertilizer Industry Round Table Outlook and Technology Conference Tampa, Florida November 19-21, 2013 Donald Messick The Sulphur Institute

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The Sulphur Outlook

The Fertilizer Institute – Fertilizer Industry Round Table Outlook and Technology Conference

Tampa, Florida

November 19-21, 2013

Donald MessickThe Sulphur Institute

Sulphur Consumption by End Use

• Fertilizer (about 50%)– Phosphates

• Phosphoric Acid• SSP

– Non-Phosphates• Ammonium Sulphate• Potassium Sulphate• Elemental Sulphur-based fertilizers

Sulphur Consumption by End Use

• Non-fertilizer (the balance)– Metallurgical processing– Caprolactam– Feed and industrial phosphates– Titanium dioxide– Petroleum refining– Hydrofluoric acid– Pulp and paper industry– Other

Elemental sulphur demand 2011-2013

0

10

20

30

40

50

60

70

2011 2012 2013

Demand 2011-2013 (million tons)

Source: IFA

For non-acid production

For acid production

Variables - Demand

• China• Saudi Arabia• Industrial

activity

0

50

100

150

200

250

1994 1996 1998 2000 2002 2004 2006 2008 2010F 2012F 2014F

ROW*USSE AsiaBrazilIndiaChina

Fertilizer consumption by major markets

Million Nutrient Tons

Asia and Latin America Are the Key Fertilizer Growth Markets

Data reported by individual countries in a combination of fertilizer and calendar years. For example, 2010F is based on 2010 calendar year and 2010/11 fertilizer year data.

* Rest of world

Forecast

Source: Argus, IFA, Fertecon

0

2000000

4000000

6000000

8000000

10000000

12000000

14000000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Chinese Sulphur Imports

Chinese Sulphur Imports in 1996 – 2012, tons

Source: BAIINFO

China – world’s largest importer

• 2012 imports were 11 million tons• One-third of world trade• Fertilizer industry consumes bulk• Nearly 16 million tons was used to produce

phosphoric acid• Trend is for phosphoric acid production to

increase and SSP continue to reduce• …domestic sulphur production will rise

Source: CSAIA, IFA

Consumption in the Middle East could reach 4.5 million tons in 2016

Source: Integer, IFA

600 650 650500

850

1200

50

1100

1900

0200400600800

100012001400160018002000

2010 2013 2016

‘000 TonsIran Iraq IsraelJordan Saudi Arabia LebanonSyria Turkey

Incredible India

Photo credit: Vivek Chugh

Variables - Supply

• Middle East• Caspian Sea

Majority of supply growth to come from gas processing

• Sour Gas Processing– To reach 36.9 million tons in 2017– Regional output from Middle East, FSU, China

• Oil Refining– To reach 30.3 million tons in 2017– Oil sands in Canada– Crude oil in the US

Source: Integer

Middle East production shows significant growth

10

14.3

9.6 10.1

4.3

0.5

11.5

14.2

9.4

11.2

4.1

0.60

5

10

15

Middle East NorthAmerica

FSU Asia NW Europe Other

Million Tons

2011 2012

Source: IFA

Middle East sulphur production to grow by 6 million tons in 2013-2018

Source: Integer, IFA

02468

101214161820

2013 2014 2015 2016 2017 2018

Million TonsBahrain

Iraq

Others

Kuwait

Iran

Qatar

Saudi Arabia

Abu Dhabi

Abu Dhabi to become a top global sulphur exporter

• Annual production to rise to 7 million tons– Gas production at Shah scheduled to start end

2014– Impact on sulphur supply from 2015– 120 km rail infrastructure between Shah and

Ruwais under construction for sulphur transportation

– ADNOC’s granular sulphur storage close to 290,000 tons at port, further 290,000 ton storage facility to be added at plant

Source: Integer

Expansion at Habshan to increase export potential

• Habshan gas processing plant built in 1984

• Habshan-5, an Abu Dhabi Gas Industries (GASCO) facility to add 5,200 tons/day sulphur production

• October 2013: rail transport between Habshan and Ruwais undergoing testing

• Habshan Sulphur Granulation Plant (HSGP): liquid sulphur to be transported from Habshan 1-4 via heated pipelines

• Discussion over stockpiling options

Source: Integer

Over 3 million tons production to be added by other Middle East producers

• Kuwait– Clean fuels project to push production over one million tons, from 2015

• Iran– Increases to come from South Pars gas expansions, potential to reach

two million ton mark in 2016

• Iraq– Sour gas processing plant at Kirkuk; volume uncertain– Badra oil field development, second half 2015: 100,000 tons/year

sulphur

• Qatar– Barzan gas developments scheduled – Potential to reach 2.6 million tons in 2017

Source: Integer

Another Supply Variable - China

• Puguang is operational• Now extracting about 2 million tons• Expected to grow an additional 1 million

tons

Source: Devco

Puguang Summary• Gas - Design Capacity: 36 MMCM/d• Gas – Design Composition: 15-17% H2S• Sulphur – Design Production Capacity:

8,640 metric t/d, or 3 million t/y• Molten sulphur storage: 100,000 tons in 10 tanks• Formed sulphur storage, bulk: 230,000 tons in 2

silos • Bagged sulphur storage: 9,000 tons • Sulphur shipment: bag and bulk by rail and truck

Source: Devco

Other Chinese projects

• Chuandongbei - 2013– 1.5 million tons per year capacity

• Yuanba – 2015– Smaller than Puguang or Chuandongbei

• Smelter acid increases also expected

Source: CSAIA, IFA

Source: BAIINFO

China Top 10 Sulphur Producers 2012

Enterprise 2012 2011 Change(YoY)Puguang Gasfield 1,983,710 1,573,416 26.08%Zhenhai Oil Refining & Chemical 210,300 211,800 -0.71%Qingdao Oil Refining & Chemical 18,307 162,700 12.79%Fujian Oil Refining & Chemical 169,000 131,000 29.01%Jinling Petrochemical 161,400 176,100 -8.35%Tianjin Petrochemical 160,600 193,400 -16.96%Maoming Petrochemical 148,200 151,400 -2.11%Dalian Petrochemical 140,000 101,700 37.66%Qilu Petrochemical 138,700 146,100 -5.07%Guangzhou Petrochemical 132,200 126,900 4.18%

Chinese import outlook

• With increasing domestic production will come, decreasing imports.

• Import levels have been averaging about 10 million tons per year recently.

• New projects…and some new demand… will have number at about 7 million tons per year.

Source: BAIINFO, CSAIA

Canadian inventory augments supply

• Inventory at gas plants depleted – 9.1million tons end of 2002– 1.4 million tons end of 2012

• Inventory at oil sands grows– 9.5 million tons end of 2012

Source: ERCB, Argus

US sulphur production

8,360

7800

8000

8200

8400

8600

8800

9000Production (thousand tons)

Source: USGS

US takes large volume of Canadian production

1,463

2,308

2,585

2,319

0

100

200

300

400

500

600

700

800

2009 2010 2011 2012

1Q 2Q 3Q 4Q

Imports (thousand tons)

Source: CN Rail, CP Rail

Gas Recovered Sulphur StorageTengiz, Kazakhstan

Sulphur exports - 2012

1.3 1.2

1.9 1.7

33.6

4.7

6.1

1.1 1.2

2.2 2.2

3.1 3.13.3

5.5

0

1

2

3

4

5

6

7

Exports 2011/12 (million tons) - preliminary

2011 2012

Source: IFA

Sulphur imports - 2012

1.11.8 2.1

3.2

4.4

9.3

11.8 1.9

33.5

10

0

2

4

6

8

10

12Imports 2011/12 (million tons) - preliminary

2011 2012

Source: IFA

Canadian offshore exports

Australia, 22% Chile, 2%

Mexico, 33%

China, 35%

Cuba, 5%

Israel, 6%

New Zealand, 5%

South Africa, 13%

Others, 8%2.98 million tons in 2012

Source: Argus

Middle East sulphur producers reliant on Asian import markets

2011Middle East sulphur export destinations

Source: IFA

1% 1%

50%

19%

4%

19%

7%Oceania

North America

East Asia

South Asia

West Asia

Africa

Latin America

Canadian exports to China decline as Middle East exports increase

Source: Integer, GTIS

2.39

1.92 1.931.8

1.051.2

0.39 0.38

1.5

0.74 0.810.93

0.540.71 0.64

0.26 0.34 0.37

0

0.5

1

1.5

2

2.5

3

2010 2011 2012

Million Tons

Saudi Arabia Canada UAE Qatar Iran Kuwait

Ras Laffan, Qatar

Trade patterns to shift as Middle East production increases

• Block storage options limited

• Additional surplus production to go to export market?

• Production close to ports – further competition for other exporters

• Different end-user markets being researched for sulphur

• Metals leach projects gain interest

Plant Nutrient Sulphur Deficit in 2010

Source: TSI

Global Elemental Sulphur Trade – 2010

Demand Versus Production

• Demand – Increasing…

• Deficit supply – End near?

• Sulphur stockpiles – Reversing trend?

All forms of sulphur potential balance

Source: IFA

2013 2014 2015 2016 2017Demand 86,925 89,381 91,598 93,514 95,655Supply 87,735 92,659 96,970 100,591 103,421

Potential Balance 810 3,278 5,372 7,077 7,767Share of total supply 1% 4% 6% 7% 8%

Sulphur in All Forms Potential Supply / Demand Balance(‘000 tons S)

Elemental sulphur potential balance

Source: IFA, May 2013

2013 2014 2015 2016 2017Demand

Sulphuric acid 49,423 50,875 52,126 53,846 55,941Non-sulphuric acid 7,902 8,017 8,132 8,202 8,272

Total Demand 57,325 58,892 60,258 62,048 64,213Supply

Oil 26,255 27,620 28,700 29,600 30,300Gas 28,165 30,760 33,060 35,310 36,885Other 3,715 3,790 3,870 4,215 4,795

Total 58,135 62,170 65,630 69,125 71,980

Potential Balance 810 3,278 5,372 7,077 7,767Share of total supply 1% 5% 8% 10% 11%

Elemental Sulphur Potential Supply / Demand Balance(‘000 tons S)

Elemental sulphur potential balance

2012 2013 2014 2015 2016

DemandSulphuric acid 50.7 53.1 54.9 56.5 57.6Non-sulphuric acid 7.7 7.8 8.0 8.1 8.2

Total Demand 58.4 60.9 62.8 64.6 65.9Supply

Oil 25.1 26.2 27.2 28.1 28.6Gas 27.5 28.7 32.4 35.9 36.2Other 3.5 3.7 4.0 4.3 4.8

Total 56.1 58.6 63.6 68.2 69.6BALANCE -2.3 -2.3 0.8 3.6 3.7

Source: IFA / Argus, September 2013

Source: Integer, IFA

Middle East balance forecast reflects increased export potential

2012 2015 2018 2021Production 11.5 15.0 17.8 21.8Consumption 2.7 4.1 5.0 5.9Export Potential 8.80 10.90 12.80 15.90

• Export potential growth to impact trade patterns

• Increased volatility in market has led Middle East producers to shift to short term contracts

Middle East sulphur balance 2012-2021 (million tons)

TSI’s Sulphur World Symposium 2014

April 7 – 9, 2014Long Beach, California, USA

For more information on TSI programs please visit:

www.SulphurInstitute.org/symposium14

Thank You

• For more information:• Donald L Messick

• Email [email protected]

• Phone - +1 202 331 9586

• The Sulphur Institute• www.sulphurinstitute.org