KUALA LUMPUR (Dec 23): Sulphur supplies from Malaysia are likely to remain tight until the second half of 2022 (2H22).

Global energy and commodity market business intelligence provider Argus Media on Thursday (Dec 23) reported that a fire last year at state-owned Petroliam Nasional Bhd's (Petronas) 300,000 b/d Pengerang refinery and petrochemical complex had curbed the firm's granular sulphur production, while technical problems and Covid-19 measures at its 300,000 b/d Malacca refinery have cut supplies of molten sulphur.

The Pengerang refinery — a joint venture between Petronas and Saudi Arabia's state-owned Saudi Aramco — is scheduled to restart only later next year.

Argus said Chinese port congestion since August has tightened vessel availability and lifted freight rates, leading to a rise in sulphur export prices to a year high of US$266/t fob Middle East in early December and import reluctance among most Southeast Asian buyers.

It said prices have risen by US$86.50/t since the beginning of the third quarter and from US$99/t fob at the start of 2021, prompting many buyers in Southeast Asia to hold off import purchases for now.

It said a rapid rise in global sulphur prices in the second half of the year already weakened buyers' profit margins, pushing them out of the import market and encouraging a turn to domestic supply sources.

Meanwhile, refineries in the region such as in Malaysia are finding it difficult to meet this sudden influx in demand, with some already running at lower rates because of Covid-19 control measures.

However, Argus said the elevated global sulphur prices have not dampened buying interest from Indonesia, with buyers in Sulawesi and on Obi island purchasing 25,000t and 40,000t of granular sulphur at US$310/t cost and freight (cfr) in late November and US$305/t cfr in early December.