Impact of Middle East tension on sulphur acid market

Since I received a lot of reactions to my post yesterday, I decided to share my views on the Middle East conflict’s impact on the sulphuric acid market as well.

𝗧𝗵𝗲 𝗯𝗶𝗴𝗴𝗲𝘀𝘁 𝗰𝗵𝗮𝗹𝗹𝗲𝗻𝗴𝗲 𝗳𝗼𝗿 𝘁𝗵𝗶𝘀 𝘁𝗿𝗶𝗰𝗸𝘆 𝗰𝗼𝗺𝗺𝗼𝗱𝗶𝘁𝘆 𝗶𝘀 𝗼𝗳 𝗰𝗼𝘂𝗿𝘀𝗲 𝗹𝗼𝗴𝗶𝘀𝘁𝗶𝗰𝘀. The shipping industry has effectively self-imposed restrictions on Hormuz transits, as insurers cancel war risk cover for vessels operating in the Gulf, pushing risks to unacceptable levels.

Saudi Arabia’s Ma’aden, which recently committed to multiple March and April shipments, is not thought to have announced a force majeure. However, 𝘄𝗶𝘁𝗵 𝗳𝗲𝘄𝗲𝗿 𝘀𝗵𝗶𝗽𝘀 𝗲𝗻𝘁𝗲𝗿𝗶𝗻𝗴 𝗛𝗼𝗿𝗺𝘂𝘇, 𝘀𝘂𝗽𝗽𝗹𝗶𝗲𝗿𝘀 𝘁𝗼 𝗦𝗮𝘂𝗱𝗶 𝗵𝗮𝘃𝗲 𝗯𝗲𝗲𝗻 𝗳𝗼𝗿𝗰𝗲𝗱 𝘁𝗼 𝗱𝗶𝘃𝗲𝗿𝘁 𝘀𝗼𝗺𝗲 𝗰𝗮𝗿𝗴𝗼𝗲𝘀.

𝗧𝗵𝗶𝘀 𝗵𝗮𝘀 𝗿𝗲𝘀𝘂𝗹𝘁𝗲𝗱 𝗶𝗻 𝗼𝗽𝗽𝗼𝗿𝘁𝘂𝗻𝗶𝘀𝘁𝗶𝗰 𝗽𝘂𝗿𝗰𝗵𝗮𝘀𝗲𝘀 𝗮𝗻𝗱 𝗲𝗻𝗾𝘂𝗶𝗿𝗶𝗲𝘀 𝗳𝗿𝗼𝗺 𝘁𝗵𝗲 𝗯𝘂𝘆 𝘀𝗶𝗱𝗲 in Indonesia. We are also aware of east coast Indian buyers actively engaging in spot discussions for tonnes diverted from Ras al Khair.

Despite the need to reallocate some product, the sell side has generally been unwilling to lower price offers from last concluded levels. In India, we are aware of discussions nearing the high end of our east coast assessment, with 𝘀𝗼𝗺𝗲 𝗯𝘂𝘆𝗲𝗿𝘀 𝗽𝗼𝘁𝗲𝗻𝘁𝗶𝗮𝗹𝗹𝘆 𝘄𝗶𝗹𝗹𝗶𝗻𝗴 𝘁𝗼 𝗽𝗮𝘆 𝗺𝗼𝗿𝗲 𝗮𝗺𝗶𝗱 𝗰𝗼𝗻𝗰𝗲𝗿𝗻𝘀 𝗼𝘃𝗲𝗿 𝗠𝗶𝗱𝗱𝗹𝗲 𝗘𝗮𝘀𝘁 𝘀𝘂𝗹𝗽𝗵𝘂𝗿 𝗯𝗲𝗶𝗻𝗴 𝘂𝗻𝗮𝗯𝗹𝗲 𝘁𝗼 𝗲𝘅𝗶𝘁 𝗛𝗼𝗿𝗺𝘂𝘇.

Over the coming two months, if no quick resolution is found to the conflict, Acuity Commodities 𝘄𝗶𝗹𝗹 𝗯𝗲 𝘄𝗮𝘁𝗰𝗵𝗶𝗻𝗴 𝗖𝗵𝗶𝗻𝗮’𝘀 𝗽𝗹𝗮𝗻𝘀 𝗳𝗼𝗿 𝘀𝘂𝗹𝗽𝗵𝘂𝗿𝗶𝗰 𝗮𝗰𝗶𝗱 𝗲𝘅𝗽𝗼𝗿𝘁𝘀. A quota system is currently in place until the end of April, limiting the volume of acid that can leave the country. The export quota could be extended for strategic reasons, although this remains speculative at this stage.

While US President Trump has said cargo ships operating in or near the Gulf would be eligible for political risk insurance from the US Development Finance Corporation, and that the US Navy would escort tankers through Hormuz if necessary, it remains to be seen whether these measures will ease concerns over transiting the waterway in the coming days.