US-Iran Conflict Shocks Raw Material Supply Pakistan's Mannheim France Potassium Sulfate Production Capacity Dramatically Downgraded

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According to feedback from local producers in Pakistan, due to the tightening of sulfur supply in Iran caused by the US-Iran conflict, enterprises in the country that use the Mannheim method to produce potassium sulfate (SOP) have reduced their operating rate from 80%-90% to 50%-75%.

According to feedback from local producers in Pakistan, due to the tightening of sulfur supply in Iran caused by the US-Iran conflict, enterprises in the country that use the Mannheim method to produce potassium sulfate (SOP) have reduced their operating rate from 80%-90% to 50%-75%.

1. raw material supply and cost pressure

The production of 1 ton of potassium sulfate using the Mannheim process consumes about 0.6 tons of sulfuric acid or 0.2 tons of sulfur. Potassium sulfate producers in Mannheim, Pakistan, are highly dependent on importing sulfur from Iran as raw material through border trade, and local sulfur production is far from meeting industry demand.
After the outbreak of the US-Iran conflict, the cost of sulfur landed has soared: according to an importer, the CIF (cfr) price of Iranian sulfur transported by border truck has climbed to US $750-780/ton. Driven by this, the delivery price of sulfur-based sulfuric acid warehouses in Lahore, Faisalabad and other places in Pakistan soared from 100000 rupees/ton in February before the war to 300000 rupees/ton (about US $1077/ton), and the cost pressure was directly transmitted to potassium sulfate production.

Start-up and resumption plans of enterprises in 2.

  • Barket Fertilizers: Since late March, its 50000-ton factory in Port Mohammed bin Qassim has maintained its operating rate at 75% and plans to resume full-capacity production after sufficient raw material supply is implemented on April 15.
  • Agven in April, due to planned overhaul, the operating rate of its Gwadar plant with an annual production capacity of 20000 tons dropped to 50%, and the overhaul will continue until the end of the month. The enterprise has not yet determined the time for resumption of production, and whether it will operate at full capacity will depend on the price and supply stability of sulfuric acid.
  • Suncrop, Akbari and other producers: Suncrop's 40000-ton factory in Rahim Yarkhan and Akbari's 20000-ton factory in Biki have maintained a 50%-75% operating rate due to tight raw material supply and strong prices.

3. market supply and demand and alternative paths

Despite the reduction in potassium sulfate operating rates, the industry is not expected to experience a supply shortage, with the core reason being that purchasers can switch to purchasing potassium chloride (MOP) as an alternative. At present, the delivery price of bagged granular potassium sulfate warehouse in Pakistan is 260000-280000 rupees/ton (about 934-1005 USD/ton). If the price rises further, buyers will probably turn to granular potassium chloride to hedge the cost pressure.

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