European sulfuric acid market cautious after global financial market slide

Sulfuric acid market participants remained cautious following the recent volatility in global financial markets since Aug. 5, which could potentially reverse the upward momentum that has propelled prices for much of 2024.

One source close to a major European producer said that so far the reaction in sulfuric acid markets has not been "too drastic, as yet." Prices for much of the year, he said, have been moving steadily, with little volatility. Still, he sees the risk of extended shocks. "If [the negative economic sentiment] prolongs longer, then yes [there will be an impact on the sulfuric acid market]," he said.

"If I was a trader with open positions, I would be very cautious right now," said one sulfuric acid trader in Europe. "A correction is not out of the question."

Sulfuric acid levels remain buoyant

It has been a buoyant year for sulfuric acid prices so far in 2024. Since hitting a low of $35/mt in late January, the average of Platts FOB West Europe sulfuric acid spot price has more than doubled to $85/mt as of July 31— the highest level in nearly two years.

The average of Platts CFR Brazil spot price likewise rose to its highest level since August 2022 to $152.50/mt CFR on July 31. Brazil is a major importer of sulfuric acid from the European Union, taking in nearly 10% of the region's exports from January-May 2024, according to data from S&P Global Commodity Insights.

"Prices over $150-$160/mt CFR Brazil usually do not last forever," the trader said. Indeed, excluding the jolts from COVID-19 and Russia's invasion of Ukraine, when average prices soared above $280/mt. CFR Brazil average prices last peaked at $132.50/mt in late 2018 and early 2019.

Changes in European market

Another source close to a major European sulfuric acid producer is less concerned about their exposure to an economic shock thanks to developments that he said have reshaped the regional sulfuric acid market since the last two major global economic crises. In the years since the 2008 recession, the closure of some producers meant European consumers became more accepting of extended transport routes for sulfuric acid. "It is more normal today to have longer distances to customers compared to 10 years ago," he said.

A second shift since the COVID-19 pandemic, he said, is that many end-users have sought out multiple suppliers to hedge against supply chain snarls. "This offers new chances to go into businesses," he said. "We're optimistic."