Multiple Favorable Factors Resonating: Domestic Smelting Acid Prices Surge Strongly in February [SMM Analysis]

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       In February, domestic sulphuric acid prices gradually increased, showing an overall optimistic performance. Reviewing the situation, the early February period coincided with the end of the Chinese New Year holiday, marking the beginning of market demand recovery. Against the backdrop of gradually recovering downstream demand, domestic sulphuric acid prices remained firm. In mid-February, supported by demand, sulphuric acid prices entered an upward trajectory, with sulphuric acid producers in many regions raising prices. By late February, sulphuric acid prices remained strong, with robust market demand in many regions supporting further price increases. Regionally, the price increase of sulphuric acid was most pronounced in east and central China, followed by south and south-west China, while the northern market, especially north-east China, showed relatively muted performance.

       According to SMM, the rise in domestic sulphuric acid prices was mainly influenced by the following factors:

1. Recovery in demand across multiple end-user industries: Currently, spring plowing is gradually starting in China, driving growth in downstream fertilizer demand. Additionally, demand from industries such as titanium dioxide and LFP batteries is also increasing, supporting the continuous rise in domestic sulphuric acid prices.
2. From the raw material perspective, sulphur prices surged rapidly due to market news, providing further support and momentum for sulphuric acid prices.
3. Domestic copper smelters faced significant challenges in raw material procurement, leading some domestic smelters to switch to Russian ore, which has relatively lower sulphur content. Consequently, the sulphuric acid production of some copper smelters decreased, impacting market supply in the short term.

       SMM expects that in March, domestic sulphuric acid prices will still have some upside room. From the demand side, the downstream fertilizer market is performing well, with short-term demand remaining strong under the support of spring plowing. After the domestic spring plowing season ends, the fertilizer export market will gradually open. According to SMM, current overseas fertilizer prices are also optimistic, providing demand support. From the raw material side, although sulphur prices still face uncertainties, they are unlikely to decline significantly in the short term, continuing to support sulphuric acid prices. From the supply side, some domestic copper smelters are scheduled for maintenance in March, which may impact regional sulphuric acid supply. SMM estimates that domestic sulphuric acid prices in March still have an upside room of 30-60 yuan/mt.