Domestic Sulphuric Acid Prices Slightly Increased in December with Divergent Trends in Northern and Southern Markets [SMM Analysis]

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       In December, domestic sulphuric acid prices remained stable with slight increases. On one hand, downstream demand provided support as it is currently the traditional peak season for industries such as fertilisers, with winter stockpiling demand within the industry chain. On the other hand, raw material prices for sulphur remained high, and ore prices for pyrite also rose significantly, offering strong cost support for smelting acid.

       Specifically, at the beginning of December, sulphuric acid supply in some regions remained tight, with smelting acid prices rising in north-east China, central China, and south China. By mid-December, sulphuric acid prices in most regions stayed at high levels and remained stable. Entering late December, smelting acid prices in some regions showed signs of weakening, and the domestic sulphuric acid market showed mixed performance. The main reason was the reduced support from downstream phosphate fertiliser market demand, with smelting acid prices first declining in regions such as Hubei and Anhui. Meanwhile, smelting acid supply in Jilin remained tight, with ex-factory prices for smelting acid in the region reaching around 700 yuan/mt by month-end. Additionally, in Chifeng, Inner Mongolia, and Liaoning, where downstream fertiliser demand accounts for a higher proportion, current downstream demand remained sufficient, providing some support for local smelting acid prices. Overall, the market performance in the north and south has diverged, and the degree of differentiation between the two regions is expected to expand in the short term.

       SMM Expects the Spot Market for Smelting Acid to Weaken Slightly in January

       According to SMM, by late December, signs of loosening downstream demand had already emerged in some regions, and the tug-of-war between supply and demand in the sulphuric acid spot market is expected to intensify in January. From the supply side, new sulphuric acid capacity will gradually come online, alleviating tight supply in some regions. From the demand side, downstream fertiliser winter stockpiling demand will also gradually weaken. Therefore, SMM believes that the supply and demand structure of the domestic sulphuric acid market may shift in January. However, from the raw material side, prices for sulphur and pyrite remain high, providing cost support for smelting acid prices. As a result, SMM expects smelting acid prices to weaken slightly in January.