The core characteristics of the domestic sulfur market this week can be summarized as “emotional collapse, cliff like decline, and resonance formed by negative feedback from both internal and external markets
1、 Market Direct Strike: Price Cliff like Diving
1. Sharp decline: On October 13th, the benchmark price was still at 7179 yuan/ton, but on October 19th, it dropped directly to 6076.75 yuan/ton. The weekly decline exceeded 1100 yuan/ton. Especially on October 15th (a daily drop of 6.94%) and October 19th (a daily drop of 8.65%), there were two panic selling incidents.
As of October 20th, the benchmark price of sulfur was 6076.75 yuan/ton, a decrease of 20.93% compared to the beginning of this month (7685.67 yuan/ton). In half a month, the market value has dropped by more than one-fifth.
3. Sudden decline in position: The table shows that on October 13th, the one-year position was still in the “middle” range. After only one week, on October 19th, the one-year position dropped directly to the “middle low” range, and all short – and medium-term positions such as 10 days, 20 days, and 30 days fell to the “low” range.
In depth analysis: Why did the domestic market fall so badly this week?
The collapse of the domestic market this week is the result of the dual impact of international cost collapse and the freezing point of domestic demand:
1. The cost support of international stocks collapsed, and this week, the official prices in the Middle East (Qatar 835, Kuwait 820) and spot prices (CFR China 860-880) were significantly lowered across the board. The shift from “raising prices” to “lowering prices for shipments” in foreign markets has directly drained the confidence of domestic port traders in raising prices.
On the demand side, there is a “quiet trading” and negative feedback erupts. The operating rate of downstream phosphate fertilizers (monoammonium and diammonium) has dropped to a low of over 40%, and the company’s profits have suffered severe losses (theoretical losses exceeding 1000 yuan). Faced with high priced raw materials, downstream customers choose to “lie flat” and refuse to accept goods, leading to a collapse of the mentality of the holders and a stampede style price reduction and dumping of goods.
4、 Outlook for the future: “Game and Bottom Search” after the sharp decline
Although the market has been extremely volatile this week, the current market is entering a new phase of competition:
1. There is still downward momentum in the short term: the market is extremely weak, the moving average system has not been repaired, external downward pressure is still being transmitted, and high-level inventory still needs to be digested.
2. However, the “resistance style” bottoming out is about to emerge: currently, prices have fallen to the “low” range, and low-end transactions in some regions of China (such as Shandong) have begun to improve. Some businesses believe that the low level is expected to consolidate upwards. With the gradual start of domestic phosphate fertilizer winter storage and demand at the end of October, coupled with the long-term low inventory background caused by the geopolitical situation in the Middle East, it is highly likely that prices will face a situation of “intensified long short divergence, low-level oscillation and bottoming out” after a sharp decline.
In summary, this week’s domestic sulfur was hit hard by both external price reductions and downstream non buying, with a 20% evaporation in a week being an emotional release; Now that the price has fallen into the low zone, although the overall trend is still downward, the most panicked period of sharp decline may be coming to an end, and the market will enter a period of differentiation and bottoming out, with low-end trial buying and high-level replenishment.
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