China: Surging Sulfuric Acid Prices And Their Market Impact

In the ever-evolving chemical industry landscape, the pricing trends of key substances often serve as vital indicators of market dynamics. The first week of September 2023 brought a significant development in the domestic sulfuric acid market of China, with prices surging by 6.12%, reaching a new high of $43 per ton. This surge, accompanied by a year-on-year increase of 23.81%, warrants a closer examination of the factors driving this trend and the potential impact, particularly on countries like India. Let’s explore more about the same:

Driving Forces

The driving forces behind this notable price increase are multifaceted: 

1. Upstream: The sulfur market has witnessed a continuous uptrend, providing a strong foundation for the rise in sulfuric acid prices. This increase in raw material costs has exerted upward pressure on the final product.

2. Downstream: The market for hydrofluoric acid and titanium dioxide (significant consumers of sulfuric acid) has experienced slight growth. This, coupled with increased enthusiasm among downstream customers for procuring sulfuric acid, has contributed to the price surge.

In essence, a confluence of positive factors has set the stage for this upward trajectory in sulfuric acid pricing.

Impact On India

For India, the implications of these global sulfuric acid price trends are noteworthy. In 2022, India imported approximately 6.24% of its sulfuric acid, with a substantial 32.4% of imports originating from China. Given the recent surge in sulfuric acid prices, the Indian chemical industry, which relies on imports for a significant portion of its sulfuric acid requirements, may experience cost pressures.

This price increase could potentially lead to higher production costs for various industries in India, including those involved in manufacturing chemicals, fertilizers, and other essential products. Consequently, it may impact the competitiveness of these industries in both domestic and international markets.

Market Outlook

The domestic sulfuric acid market is expected to exhibit slight fluctuations with a tendency toward further upward movement. The average market price is projected to hover around $46.5 per ton. This forecast underscores the need for industry stakeholders to remain vigilant, adapt to changing market conditions, and strategize accordingly.

OFB’s Insight

The recent domestic sulfuric acid price surge reflects the complex interplay of factors influencing the chemical industry. This uptrend, driven by increased raw material costs and growing demand from downstream sectors, holds implications for countries like India, where imports play a crucial role in meeting sulfuric acid demand. As the market continues to evolve, businesses need to stay informed and adaptable to navigate the challenges and opportunities that lie ahead in the dynamic world of chemical pricing and supply.