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INSIGHT
AUTHOR
Peter Harrisson
https://www.crugroup.com/knowledge-and-insights/insights/how-do-acid-prices-affect-smelter-revenues-in-different-regions-of-the-world/ 1/11
7/25/2017 How do acid prices affect smelter revenues in different regions of the world?
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The global sulphuric acid market has shown a declining price trend since 2011, as
sulphur prices have fallen and the traded acid sector has tended towards oversupply. In
both 2013 and 2015, FOB East Asia and FOB NW Europe have had prices at negative
FOB levels, reecting delivered acid prices not covering the cost of delivery to the
https://www.crugroup.com/knowledge-and-insights/insights/how-do-acid-prices-affect-smelter-revenues-in-different-regions-of-the-world/ 2/11
7/25/2017 How do acid prices affect smelter revenues in different regions of the world?
FOB levels, reecting delivered acid prices not covering the cost of delivery to the
customer.
The global trend of decline in acid prices has cut the average revenue from acid at smelters but this effect has not
impacted all smelters to the same degree. The factors that affect the scale of change in revenues are the share of acid
sold to export vs. domestic markets and the relative pricing of those export and domestic market.
Domestic market prices are typically more stable and follow a longer term trend whereas traded market prices have a
higher degree of volatility. For example, the domestic contract price for acid in NW Europe has fallen between 2011
and 2015 by 41% where as the NW Europe export price has fallen by 76%. The differences are more signicant when
looking at the extremes of the price ranges since 2011.
https://www.crugroup.com/knowledge-and-insights/insights/how-do-acid-prices-affect-smelter-revenues-in-different-regions-of-the-world/ 3/11
7/25/2017 How do acid prices affect smelter revenues in different regions of the world?
acid sales thank exporting smelters. NW Europe, Japan, South Korea and SE Asia are the major smelting regions
which are actively engaged in the international sea borne trade of sulphuric acid. In contrast, Chile, India and China are
markets which have the major share of sales into domestic markets. The effective price a NW European would have
achieved in 2015 could have ranged from $75/t to $26/t depending on whether all sales were placed domestically or in
export markets. The variance in realised prices has increased in 2016 due to the weakness in the global traded acid
market. In Europe and Japan/South Korea there have been negative FOB prices whilst domestic markets have
remained stable. This causes average realised prices to fall faster as some sales to the export market have actually
made a negative contribution to revenues.
https://www.crugroup.com/knowledge-and-insights/insights/how-do-acid-prices-affect-smelter-revenues-in-different-regions-of-the-world/ 4/11
7/25/2017 How do acid prices affect smelter revenues in different regions of the world?
Chile, India and China, which have little or no exports, show essentially no change in revenue as international prices
vary. In SE Asia, which as a region where the major share of sales exports, revenues change signicantly. With a 25%
increase in the global benchmark price acid revenues in SE Asia increased by 66%. This increase seems dramatic but
it is partially a function of SE Asia having a particularly low acid price in 2015. West European revenues increased 11%
https://www.crugroup.com/knowledge-and-insights/insights/how-do-acid-prices-affect-smelter-revenues-in-different-regions-of-the-world/ 5/11
7/25/2017 How do acid prices affect smelter revenues in different regions of the world?
for a 25% increase in the global benchmark with Japanese revenues increasing by 28%. The analysis is intended to
show how the impact acid prices at a point in time vary by region but in reality domestic market prices would move up
or down if the international market prices remained depressed or elevated for a signicant period of time.
Conclusions
There is signicant potential for acid prices to move within a given year and therefore there is signicant potential for
smelter revenues to vary but the variance more likely in certain regions. China, India and Chile are most insulated from
international price volatility due to either the large, and self sufcient domestic markets in India and China, or the
annual contract pricing structure in Chile. In contrast, West Europe, Japan and South Korea show signicant change in
acid revenues on both an annual and quarterly basis. In the near term, the market balance looks to be favouring prices
in domestic markets over international markets and therefore having a less negative revenue impact on domestic
focused smelter regions.
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7/25/2017 How do acid prices affect smelter revenues in different regions of the world?
Sulphur
Sulphuric Acid
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7/25/2017 How do acid prices affect smelter revenues in different regions of the world?
WEBINAR
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7/25/2017 How do acid prices affect smelter revenues in different regions of the world?
INSIGHT
INSIGHT
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7/25/2017 How do acid prices affect smelter revenues in different regions of the world?
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