Tampa settles near $90/lt as refinery surplus rebuilds

Fourth-quarter 2022 locked in the post-spike reset. USGS recorded Tampa molten at $90 per long ton after the April peak of $481. BC Insight noted the fourth-quarter Tampa drop of $262 per long ton to $90 as the lowest since the fourth quarter of 2020, citing higher US production and weaker processed-phosphate demand. USGS January-August 2022 US production was higher year on year as fuel demand recovered. Average elemental unit value for the year was about $150 per tonne, from $92.30 in 2021, shipments near $1.3 billion, production about 8.6 million tonnes. $150 is the year's mean, pulled up by the first half. $90 is the exit. 2023 would open near $90, spike to $130 in mid-January, then find $55 in mid-July. The $90 close is the new regime, not a one-month accident.

Vancouver nonetheless finished 2022 at 2,787,073 tonnes of sulphur, up 22 percent from 2.29 million in 2021, proving that volume can expand even as prices collapse if stems were already programmed. Argus citing the port had shown January-October exports of 2.39 million tonnes, already above full-year 2021. The remaining two months completed the annual at FOB under $65 after a May midpoint near $478, Argus, the highest since 2008. Fertilizer-category cargo rose 13 percent to 12.8 million metric tonnes, potash 10.0 million. Sulfur 2.79 million is the yellow slice of a strong fertilizer harbour year. Soft FOB into year-end revived Alberta pour-to-block economics for tonnes that could not clear export netbacks. Remelt that was strongly profitable at $478 became marginal at $65. Export-process costs often cited above $150 per tonne do not clear at that Pacific print.

Alberta recovered sulfur still leaves mainly through the Vancouver stem. USGS Canada about 4.9 million tonnes is the recovered book. Heartland forming existed. South Cheecham construction progressed through 2022, Keyera's AIF, about 4,000 to 4,400 tonnes a day expected to lift Vancouver export capacity 5 to 10 percent in 2023 subject to demand. Argus's late-2022 viewpoint expected elevated North American output from resilient fuel demand and Canadian bitumen processing to stabilize prices after 2022's extreme volatility, though lost refining capacity since 2019 still capped a return to 2018 peaks. December 2022 is that recovery thesis written at $90 Tampa. 2023's 3.10 million tonne harbour year and $55 mid-July Tampa would confirm volume growth with a still-soft contract.

China granular CFR rebounded to about $197.50 per tonne on 12 December, Argus, from the August collapse to $95, as buyers leaned on domestic sulfur and import demand stayed selective. The bounce set up a softer but still volatile 2023. It did not restore June's $471 CIF or May's $460 Qatar QSP. January-October Chinese imports of 6.65 million tonnes, down 22 percent, had already printed. IndexBox put 2022 import value near $2.3 billion after a 2021 value surge. 2023 would recover volume 16 percent to 8.8 million tonnes at about $1.1 billion. Fourth-quarter 2022 is the value year exiting toward the volume-recovery year. Huaxicun remained halted. Paper did not return in the same form.

Mosaic's sinking utilization, expected to continue into 2023, freed Gulf sulfur for export as domestic phosphate runs stayed weak. Higher Gulf refining added recovered tonnes. Two supply increases met a Chinese demand hole. World output about 82 million tonnes, roughly unchanged, UAE about 6.0 million, is the Claus planet. USGS said 2022 world sulfur supplies were hampered by the Ukraine conflict even as output was unchanged. Hampered is logistics and origin risk. The crash cause is still China's July quota. BC Insight later framed late 2022 as the start of a global surplus lasting into 2023-24 even as Kazakhstan and Saudi Arabia began voluntary stock drawdowns. Those destocks are 2023. December 2022 is the surplus diagnosis becoming the base case.

Canadian Pacific solids do not transit the Black Sea. They still repriced because fertilizer is a globally traded chain. USGS Canada at 77 percent of US elemental imports for 2019-22 is the molten rail book that delivered into $90 Tampa after delivering into $481. Two contracts, one corridor. Licensed weekly assessment grids are not restated here. The $90 and $481 Tampa figures are USGS. The $197.50 CFR China bounce is Argus open news. The 2.79 million tonne harbour print is VFPA.

Alberta recovered sulfur still leaves mainly through the Vancouver stem. World surplus shows up there as a 22 percent harbour year at a $65 FOB exit and remelt tickets that pause. UNCERTAIN: fourth-quarter 2022 Alberta inventory build magnitude without a published AER close in open press. Directionally pour-to-block was the winter default for tonnes that could not clear. Looking forward from December 2022, the market expected calmer 2023 volatility if North American output stayed healthy, a view Argus articulated. That calm arrived in prices more than in Canadian volumes, which kept climbing. The public lesson is to track USGS Tampa, port tonnes, and inventory switches as three separate series rather than one price chart. Argus's December CFR China bounce to $197.50 and USGS's $90 Tampa are not a single North American price. They are a delivered Chinese cash print and a Florida molten contract after the same quota. Basis is freight, form, and contract structure. Canadian Pacific labour risk had briefly raised rail concern in the first quarter before settlement. Fourth-quarter 2022's concern is netback, not labour. If FOB does not cover remelt, rail, forming, and terminal, pad stays pad. $65 FOB said it did not. The 2.79 million tonne year said the first half had already covered enough of the calendar.

Key points

• USGS: Tampa Q4 2022 at $90/lt after $481/lt April peak.
• BC Insight: Q4 Tampa down $262/lt; US Jan-Aug 2022 production higher YoY.
• Vancouver 2022 sulphur 2.79 Mt despite H2 price collapse.
• Soft export netbacks favor Alberta inventory build over remelt.
• UNCERTAIN: tonnes poured to Alberta block in H2 2022.

30-day watchlist

• USGS 2023 Tampa open versus the $90/lt Q4 close.
• January Vancouver loadings versus the 2.79 Mt 2022 year.
• Any remelt commentary as sub-$65 FOB carries into 2023.
• Chinese January import tonnes versus the 6.65 Mt January-October contraction.

Sources

• USGS Mineral Commodity Summaries 2023 - Sulfur
• Price Trends (BC Insight / CRU, Nov 2022)
• Port of Vancouver 2022 Statistics Overview
• Viewpoint: Sulfur volatility to wane as supply recovers (Argus)
• Viewpoint: Increasing supplies pressure Chinese sulphur (Argus)

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Public reference summary. Weekly PRA assessments require a commercial license. Not investment advice.