ADNOC considering 'game changer' shift of sulfur sales to ADNOC Trading: sources

The Abu Dhabi National Oil Co. is considering a major change in the way it sells sulfur to rely more heavily on its trading arm, ADNOC Trading, according to multiple market participants.

While the exact details remain uncertain, one trader said he had been instructed to coordinate with ADNOC Trading for any cargo from January 2025 onwards. ADNOC reportedly told the trader's company it is aiming to split sulfur offtake between sales directly to end-users and spot sales to a limited pool of potential buyers. "We will get more clarity by next month," the trader told S&P Global Commodity Insights in early November.

Five other market participants confirmed hearing that similar developments are under consideration by the major sulfur producer.

A second trader said the outcome was "still pending" and they are "trying to fight" a full cancellation of their contract as they continue discussions with the producer.

Nevertheless, a third trader expects ADNOC will push forward with the shift to do more of its own trading. "No one sees a reason why they will not do it," he said. If the move away from trader contracts does happen, he said it would be a "game changer."

The UAE is the world's largest sulfur exporter, shipping over 6.2 million mt of the oil and gas byproduct in 2023, according to S&P Global Commodity Insights analysts. That accounted for about 17.7% of the 35.2 million mt of sulfur traded globally in 2023 and is over 50% more than the next highest exporter, Kazakhstan, which had shipments of just under 4.1 million mt.

ADNOC currently sells sulfur mainly through quarterly contracts with end-users and traders. It also issues a monthly sulfur selling price which applies only to sales into the Indian subcontinent. The fate of these existing schemes remains unclear. Nevertheless, market participants are gearing up for the likelihood of a new sulfur landscape in 2025.

"It's a radical shift," which would make quarterly contract prices less relevant said a fourth market participant of the potential ADNOC pivot. Another trader said they expected a move away from quarterly contract prices with traders would lead to increased volatility in the sulfur market. "There will be more active spot trading," he said. "In a way it's good."

ADNOC declined to comment on "ongoing commercial processes."

Platts, part of S&P Global Commodity Insights, assessed its weekly FOB Middle East (excluding Iran) sulfur spot price at $134-136/mt on Nov. 7.