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Published: June 2012
Sulfur is one of the chemical industry's most important raw materials. It is used principally as the derivative sulfuric acid in many chemical and industrial processes and is particularly important in the manufacture of phosphate fertilizers, the single largest end use for sulfur. Sulfur's great importance to industrial economies and its relative ease of transportation have made it a commodity of major international interest.
The following pie chart shows world consumption of sulfur:
Unlike other chemicals in the mineral industry, sulfur is not produced intentionally as a primary product. It is derived as a by-product from operations such as petroleum refining, tar sands recovery, heavy oil and natural gas processing, and from coking and metallurgical plants.
In the medium to long term, sulfur supply could be impacted by the advent of an emerging supply of shale gas. As shale gas production increases, it could decrease the production of current sulfur sources, resulting in lower production from oil and natural gas sources. This effect could lead to increased prices. However, increasing extraction from poorer-quality gas and crude oil, along with oil sands production, may lead to increased sulfur production, mitigating the supply situation.
Major issues include the following:
- Growth in the Chinese Market. The production and consumption of sulfur in China will continue to grow as a result of demand for sulfuric acid for fertilizers and chemicals. Imports of crude oil have almost doubled in the past five years. The processing of high-sulfur-content crude results in large quantities of sulfur.
- Demand for Phosphate Fertilizers. The sulfur market is very dependent upon the cyclical world phosphate fertilizer market. Global phosphate fertilizer consumption spiked in the mid-2000s; however, it is expected to grow at a nominal rate of about 2.7–2.9% during 2011–2016.
- Production from Oil Sands. The treatment of oil sands in western Canada is proving to be a significant source of sulfur. As the supply of regular crude becomes scarce, exploitation of oil sands will lead to an increasing supply of sulfur. However, it is possible that if the switch to more and more shale gas occurs, there might be a reduction in production of crude from oil sands.
- Production from Unconventional Sources. Traditionally, production from involuntary sources has been able to satisfy demand, resulting in excess production being stored for future use. The changing dynamics of oil and gas production could affect the status quo. While certain geographies process more sour crudes and increase sulfur production, the increased production of shale gas with improved extraction techniques could reduce sulfur from traditional gas sources.
A cautious improvement in the phosphate fertilizer market is seen to improve current demand for sulfur. Production of ammonium phosphates in China is increasing, which could benefit the sulfur market. Trade is expected to fall globally, except for South Asia which will continue to depend on imports. Nonfertilizer markets such as metals, fibers and plastics have started to pick up and growth in these areas will increase demand for sulfur during the next five years. Supply is expected to increase from natural gas operations in the Middle East and oil sands operations in Canada.
Prices in mid-2012 are stable with an optimistic forecast for increased Chinese consumption, which could keep prices healthy for producers. The global sulfur market experienced unprecedented turbulence in pricing in 2008. Prices climbed from about $150–200 per metric ton in the fall of 2007 to about $750–800 per metric ton in July 2008 before declining to about $45–50 per metric ton by the end of 2008. Supply shortfalls, coupled with increasing demand from the fertilizer and industrial sectors, along with decreasing inventory levels, contributed to price hikes. A reduction in Chinese imports and the effect of the steep drop in the global economy, reducing demand for phosphate fertilizer, resulted in reduced trade causing a collapse in pricing by the end of 2008.
The major environmental issue surrounding sulfur is air pollution control, for which regulations exist to limit the release of sulfur as sulfur dioxide, such as that contained in petroleum, natural gas and ores, into the atmosphere when the starting material containing the sulfur is burned. Most of the sulfur contained within organic fuels is recovered in the form of elemental sulfur by oil refineries and natural gas processing plants. The sulfur contained within ores is generally recovered in the form of sulfuric acid. Therefore, in addition to the amount of sulfur originally contained within the starting material, the degree of regulations concerning the release of the contained sulfur has a significant impact on sulfur recovery rates.