The upward trend in smelting acid prices has persisted for over half a year, with further room for growth expected in the fourth quarter. [SMM Analysis]

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The Chinese market for 98% smelting acid has experienced a significant price increase this year, providing copper smelters with some relief amid continuously declining spot treatment charges for copper concentrate.

Reflecting on this year's smelting acid market, supply-side constraints have been a major factor. Many smelters reported insufficient acid storage capacity. In addition to recovering demand, another reason is the reduction in copper concentrate input by Chinese smelters. Without desulfurization and capture of sulfur elements from copper concentrate for flue gas acid production, the accumulation of smelting acid inventory has been limited.

On the demand side, the National Development and Reform Commission eased restrictions on fertilizer exports through window guidance early this year, boosting demand for acid in fertilizer production and driving up smelting acid prices.

Furthermore, with the rise of industrial and new energy sectors in Southeast Asia, demand for sulfur-based acid in the region has surged, leading to a sustained increase in sulfur prices this year. Additionally, an explosion at the Shahid Rajaee Port in southern Iran in May caused another spike in sulfur prices. The rising cost of sulfur has been a significant driver of increased demand for smelting acid. This is also reflected in China's sulfuric acid export data: from January to July, China exported 2.62 million tons of sulfuric acid, a cumulative year-on-year increase of 103%. Chile accounted for 42% of these exports, followed by Morocco (16%), India (11%), Saudi Arabia (11%), and Indonesia (10%).

Lastly, the growth of China's domestic new energy industry has increased demand for acid in intermediate processes of the sector.

Will the upward trend continue into the fourth quarter? The answer is yes. On the supply side, ten smelters are scheduled for maintenance in the fourth quarter, affecting 2.7 million tons of crude smelting capacity, which will significantly limit smelting acid supply. Additionally, recent shutdowns of small acid plants in southwestern China have tightened acid sources.

On the demand side, winter fertilizer preparation needs will gradually emerge in the fourth quarter, stimulating demand for smelting acid. Moreover, recent renewed increases in sulfur prices have bolstered demand for smelting acid as a substitute for sulfur-based acid. Finally, at the end of August, the EU revoked the carcinogenic label for titanium dioxide, which is expected to benefit China's titanium dioxide export demand.