US Sulphur Transportation

Here are a few thoughts on US sulphur market fundamentals during these turbulent times.

A major challenge facing the industry is the severe lack of rail infrastructure available to transport sulphur out of key US production hubs along the US Gulf and West Coasts.

On the US Gulf Coast, molten sulphur is moved locally via truck or barge, or routed to four regional terminals where it is shipped in molten form to Louisiana and Florida for fertilizer production. Alternatively, it is exported offshore in both molten and solid forms. As an example, the largest crude capacity refinery in the US, located in Port Arthur, Texas, has no capability to ship sulphur out by rail.

A similar dynamic exists on the US West Coast. Here, sulphur is either trucked locally or exported offshore exclusively in solid form through terminals in California and Washington.

While some suggest that lowering rail freight costs would ease the cost burden on US sulphur consumers, it is not that simple when the physical infrastructure does not exist.

As I often tell clients: your closest tonne can end up being your most expensive tonne. Because moving sulphur inland from key coastal production hubs is constrained by rail limitations, buyers in regions like the US East Coast and western US are forced to source supply from the US Midwest and Canada, where molten rail transport is available.

With recent declines in US sulphur production due to refinery closures, firmer demand for offshore volumes, and upcoming demand from Nevada, the US market is undeniably primed for structural adjustments.