THE INTERNATIONAL SULFUR MARKET: REGIONAL SUPPLY/DEMAND BALANCES, PROJECTIONS, AND IMPACTS ON THE INTERNATIONAL MARKET FOR SULFUR.

Abstract

The sulfur supply situation in the international market is expected to change considerably in the future. Previously, sulfur supply came from mineral deposits and depended on the availability of reserves and conditions in the industry. These mineable deposits have deteriorated as production costs increased, as result of exploiting lower-quality reserves, increases in energy consumption, and environment costs. In addition, less expensive, non-discretionary, abatement sulfur has emerged as a result of the enforcement of public environmental regulations, product market specifications, and transportation technologies which require the removal of sulfur from sulfur-bearing products. These developments are seen as molding the conditions in the international sulfur market of the future. The market is expected to be characterized by: (1) a potential for an abundant supply of low-cost market-insensitive sulfur; (2) the declining role of those resources which have been supplying relatively high-cost discretionary sulfur; and (3) a broader supply base in terms of both source type and geographical distribution. This study provides a future perspective of the non-communist international sulfur market in view of the emerging non-discretionary sulfur sources and the declining role of conventional sulfur sources. The international sulfur market is divided into ten regional markets, defined primarily by geographic location, production and consumption concentration. Supply is divided into: non-discretionary and discretionary sulfur. Supply and demand are projected primarily econometrically, and surplus or deficit regions are identified. Two types of projection methods are used: regression based and non-regression based. The choice of the method used for a region is based on: (1) the availability of historical data, and (2) how closely the past and future economics of a region are expected to be related. The conclusions of this study are: (1) on world basis, sulfur is expected to be in continued excess; (2) virtually all sulfur is expected to come from non-discretionary sources; (3) some regions are expected to have a supply deficit, most will have supply surpluses; (4) the co-existence of deficit and surplus regions will result in inter-regional or international trade. However, the resulting trade pattern will be quite different from the present pattern; (5) the basis for price determination and the relative levels are expected to change; and (6) discretionary sulfur will be permanently forced out of the market.