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Nantong port on the Yangtze river will ban the imports of all solid sulphur. The decision is
intended to limit pollution to the nearby residential population of Nantong. Bulk crushed lump
sulphur imports have been restricted to all Yangtze river ports since Q2 2018 with the product
now only accepted in jumbo bags. The processing of molten sulphur to solid at sites along the
Yangtze is also restricted.
From October 2018, the port of Nantong will cease imports of sulphur and begin the process of
selling off remaining port stocks. There is currently no official timeline for stock drawdown at
the port but CRU expects that most of the current volume will be sold into the market in Q4
2018.
The policy has increased the price spread between granular and crushed lump sulphur from RMB
10-20 /t to RMB 40-50 /t. Bulk arrivals of crushed lump are now expected to target consumers in
Southern China where there are not unloading restrictions. One origin which will benefit from
the restrictions is Turkmenistan as it transports sulphur in jumbo bags to Bandar Abbas in Iran
and had been breaking the bags at the port to load bulk carriers. This practice can now be
avoided which will reduce the cost to get Turkmenistan sulphur to market.
Molten sulphur trade has also been affected by the crushed lump product restrictions as molten
importers had solidified surplus sulphur in ponds and processed this to form a crushed lump
product in China. This practice has now been banned along the river as the crushing process
causes high levels of dust formation.
Zhenjiang can handle 4.0 Mt /y of sulphur with the port also an export point for phosphates,
which may present some backhaul opportunities. The port currently has lower port changes than
major sea ports (RMB 30 /t) although, with the closure of Nantong and additional environmental
protection costs, this is expected to increase. Zhenjiang currently has sulphur inventory capacity
of 0.8-1.0 Mt. Due to the increase in total product volume flow through the port there is expected
to be increased pressure importers of all products to process volumes through storage more
quickly than in the past.
The primary short-term market impact is expected to be the selloff of Nantong port inventory
which could release 0.5 Mt of supply into the market in Q4 2018. Zhenjiang has the capacity to
handle the expected trade volumes but the limiting of unloading locations could increase
congestion.
In the longer term, demand for sulphur from the Yangtze phosphate fertilizer industry is
expected to remain robust, as discussed in the recent Insight “Hubei phosphate producers in no
hurry to relocate”.
The environmental drivers behind the decision at Nantong port is another sign of the “red dragon
going green”. The concern will be that the type of restrictions and limitations to sulphur trade are
adopted more widely at Chinese ports and that this adds to the costs of bringing sulphur into the
country.