After the domestic 98% industrial grade concentrated sulfuric acid began its downward trend in August, the downward trend continued in October. In terms of market conditions, the domestic price dropped by nearly 25.88% from around 2092 yuan/ton in early August to October 30th. The decline accelerated in mid to late October, and the market center continued to shift downwards. The pressure on acid companies to ship remained high, and the overall market was filled with bearish sentiment.
This round of continuous decline, with the core contradiction concentrated on the weak demand side, coupled with relatively abundant supply, resulting in an imbalanced supply-demand pattern. The downstream of sulfuric acid is mainly concentrated in the fields of phosphate fertilizer, titanium dioxide, metallurgical acid washing, etc. Entering October, the phosphate fertilizer industry has not yet entered the stage of large-scale winter storage, and manufacturers are holding onto essential procurement with low enthusiasm for stocking up; Although there have been reports of price increases in the titanium dioxide industry, terminal acceptance is limited, and the increase in production is not significant, resulting in insufficient incremental consumption of sulfuric acid raw materials; Other fine chemical and metal pickling industries have flat orders and mainly rely on on-demand procurement, with few large-scale hoarding operations. The overall downstream procurement efforts are insufficient, making it difficult to support acid prices.
On the supply side, domestic sulfuric acid sources are divided into sulfur based sulfuric acid production, smelting based sulfuric acid production, and pyrite based sulfuric acid production. Although some regional facilities undergo periodic maintenance, which to some extent compresses supply, the production of smelting by-product acid continues to stabilize, and the overall social inventory continues to accumulate. In order to reduce inventory, acid factories continuously lower their prices and offer discounts to sell goods, leading to an increase in inter regional bidding sales and further lowering the market transaction center. The price of sulfur on the cost side has fluctuated and weakened, and the cost support for acid production has weakened, which has also dispelled the willingness of manufacturers to raise prices. Under the dominance of negative supply and demand, prices have declined accordingly.
At the market mentality level, the continuous decline in the market has strengthened the downstream wait-and-see sentiment. Purchasing parties generally buy when prices rise and do not buy when prices fall, adopting a strategy of buying as needed to avoid the risk of price decline. There are few intermediaries hoarding goods in the circulation process, and the market trading atmosphere is quiet, forming a negative cycle of “price drop, less procurement, and further price reduction”.
For the future, it is difficult to reverse the weak pattern of the sulfuric acid market in the short term. In the short term, the start-up pace of downstream phosphorus fertilizer winter storage is relatively slow, and the demand increment brought by winter storage is limited; The current situation of high inventory levels will continue, and acid enterprises have a heavy task of destocking. It is expected that prices will mainly fluctuate at a low level and operate slightly weakly, with insufficient rebound momentum. Only when downstream winter storage is concentrated, acid plants undergo centralized maintenance leading to significant supply contraction, and inventory continues to decline, can the market have a chance to stop falling. In the medium to long term, it is necessary to continuously track the prices of sulfur raw materials, maintenance plans for smelting equipment, and the progress of winter storage of phosphate fertilizers.
Overall, the fundamental situation of oversupply in the current sulfuric acid market has not substantially improved. The market is likely to remain under pressure in November, and a sharp rise is unlikely to occur. It is recommended for upstream and downstream to purchase according to demand, and acid companies to reasonably control production load and avoid operational risks caused by continuous price declines.
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