Uncertainty overhangs 2022

By: Fiona Boyd and Freda Gordon, Directors, Acuity Commodities

Fiona Boyd, Acuity Commodities Freda Gordon, Acuity Commodities

At the time of our last writing, the conflict in Russia-Ukraine was just beginning with the outlook uncertain. Now about six months later, the conflict is ongoing with no end in sight while impacts from political to economic continue. What is important to point out is as the conflict escalates, concerns over higher inflation, lower economic growth, and greater uncertainty prevail.

Many commodity prices surged after the onset of the conflict due to reduced exports of goods from the region, resulting in a disruption to many trade flows. Scarcity of raw materials also applied to products related to sulfuric acid including sulfur, copper, and phosphate fertilizers.

In March amid firm market prices, spot availability of sulfuric acid from base metal smelter acid producers remained constrained. Japanese, South Korean, and European smelters had little to offer at this stage, as had been the case for many months. This was in part due to smelter maintenance turnarounds in Asia and Europe occurring in 2Q as well as some unplanned issues in Asia.

At the same time, however, it was clear China was exporting more sulfuric acid than before, reflecting its growing impact on the globally traded market. A lull was developing for April and May, however, due to smelter maintenance in China taking place.

On the demand side, healthy copper economics were supporting higher consumption of acid along with unplanned operational issues in the key import market of Chile resulting in spot buying at higher prices.

Meanwhile, sulfur prices continued to firm in 2Q, which resulted in a wider gap between sulfur and sulfuric acid prices. This kept interest for smelter acid high across the globe. Ammonia prices were also increasing due to ongoing tighter availability, in part caused by a looming energy crisis.

Amid the tight supply backdrop and increasing input costs, signs of weaker demand were widely expected and beginning to emerge, tied to weaker demand for phosphate fertilizer production. This was in part due to high ammonia costs.

While supply tightness prevailed and concerns over downstream demand mounted, high sulfuric acid freight rates were an ongoing issue. This was particularly of note from Asia, where demand for stainless steel ships continues to outstrip supply. Ship owners’ price targets were bullish on the back of strong demand for long haul journeys from non-sulfuric acid sectors, such as chemicals and palm oils.

The influence of China’s sulfuric acid availability also remained topical as it is hard to predict because producers there ultimately weigh between the netbacks of domestic sales— which can be influenced by China’s dynamic zero-Covid policy— and export sales. This was reflected through weaker domestic demand for some industrial applications and delayed smelter maintenance shutdowns resulting in more availability for the offshore market. The market was also seeing unexpected sulfuric acid exports from Mexico and Turkey related to downstream issues with phosphate fertilizer production.

Along with the increased availability, buyers were also putting downward pressure on acid prices, citing much weaker sulfur and copper pricing, as well as still uncertain outlook for phosphates. Out of the three components, it was clear freight is the least likely to move down.

As 3Q progressed, freight continued to firm and spot demand relatively slow, pressure began to mount on FOB pricing. Then a sudden and sharp slide in sulfur prices occurred, largely due to sustained reduced buying to support phosphate fertilizer production.

For European smelters, a knock-on effect was created as Morocco’s demand for sulfuric acid also waned, putting pressure on certain supplies from the region. At the same time, industrial demand in Europe began to pull back as surging energy costs made operations uncompetitive in some downstream markets. Both factors are crucial in keeping the European market balanced.

Heading toward 4Q, market sentiment was eroding fast, largely due to weak demand with activity in typical spot import markets such as Chile, India, Morocco, southeast Asia and the US slow. This left suppliers with few options, resulting in CFR numbers all lower than last concluded business.

With no signs of freight easing, this is putting a lot of pressure on FOB numbers, proving a hard pill to swallow for some smelters. There remains a lag between some FOB values and netbacks as a result, but the gap will continue to narrow assuming there will be relatively more spot liquidity as prices drop.

In 4Q, key to watch will be the impact of the energy crisis in Europe on both supply and demand as well as direction of the phosphate market. Sulfur prices are rebounding with some believing the floor has been reached while others remain cautious on the phosphate market outlook.

Meanwhile, sulfuric acid freight rates for 2023 will remain a heavily discussed topic. For now, a lack of new stainless steel builds in the line up until 2025 will keep availability tight if demand for tankers does not slow in the coming year. The so-called IMO 2023 measures will also result in longer voyages as they represents a series of regulations, targeting vessel efficiency and carbon intensity.

All of the above could result in changes to trade flows in 2023 due to factors such as current cheaper freight from Europe to Chile than from Asia to Chile. Therefore, even though China supplied 37% of Chile’s acid import needs in the first seven months of 2022, the freight differential begs the question of whether traders will move more European acid to Chile (and to the US) in 2023. The knockon questions, to name a few, are where will be the outlets for Chinese acid, how this will compete with markets that Japan/ South Korea traditionally serve, and what happens if importation of sulfuric acid in Morocco resumes from 4Q22.

Acuity Commodities provides insight into the sulfur and sulfuric acid markets through price assessments, data and supporting analysis. Offerings include weekly reports on the global sulfur and sulfuric acid markets . For North America, we offer a bi-weekly report on sulfur and sulfuric acid as well as a monthly report on industrial chemicals, including caustic soda and hydrochloric acid. In addition, Acuity does bespoke consulting work. For more information, please visit www. acuitycommodities.com. q

Department SAFETY SECTOR

Confined spaces: key elements of safety

success By: Alan Williamson, CSP, VIP International

“Appearances are a glimpse of the unseen.” Though the notion hails from ancient Greek philosophy, it could easily describe confined spaces in today’s sulfuric acid plants. Confined spaces present unique hazards that can be relatively deceptive and unpredictable. The hazards are not always evident to the naked eye and may develop unexpectedly as a result of the work being performed.

OSHA developed its confined space safety standard to protect workers from injury or fatality when working in confined spaces. OSHA defines a confined space as “large enough that a person can bodily enter, has limited means of entry or exit, and is not designed for continuous occupancy.” OSHA requires spaces be classified and marked “Permit Required” when the space contains one or more of the following: • potential for a hazardous atmosphere; • potential for engulfment; • internal configuration that could result in entrapment or asphyxiation; • any other recognized serious hazard.

Performing this kind of work comes with great risk, but accidents and fatalities are preventable if a safe work system is established and procedures are followed. Companies should promote a safety culture that gives employees the knowledge and tools necessary to carry out their jobs with confidence. OSHA federal regulations require companies to develop, implement, and enforce a confined space safety program. The program must comply with all applicable standards and be enforced among employees. All employees performing or involved in confined space work should be trained on their responsibilities. They should understand all aspects of the confined space(s) they will be working in, be aware of the hazards, understand why the hazards exist as well as the associated risk, and have knowledge of the safety precautions in place for them to safely execute their assigned duties.

All hazards found in a normal work area, both physical and atmospheric, can exist in a confined space. Physical hazards may include falls from height, chemical burns, slips and trips, noise, and engulfment. Atmospheric hazards are the number one cause of confined space fatalities; and more than 60 percent of these occur among wouldbe rescuers. Atmospheric hazards (asphyxia, fire and explosion, and toxic air) are not always easy to identify and are often invisible to the naked eye. The work performed can adversely affect the conditions. A common example is hazardous atmosphere that can displace breathable air. OSHA states that “Before an employee enters the space, the internal atmosphere shall be tested, with a calibrated direct-reading instrument, for oxygen content, for flammable gases and vapors (LEL), and for potential toxic air contaminants, in that order.” Testing should be conducted at a set time interval and recorded while work is being performed. Depending on the facility, its specific process, and what the confined space is used for, the specific toxic air contaminants may vary. For example, they can include H2S, Cl2, NO2, and CO. It is imperative the space is monitored adequately to ensure everything stays within a safe range and no permissible exposure limits (PELs) are exceeded.

Ventilating a confined space serves many important roles. Its purpose is to help control fumes, dust, and other toxic materials to a concentration below the permissible exposure limit (PEL). Ventilating is the method of mechanically introducing continuous fresh air into a space to maintain an acceptable atmospheric level. In addition to helping maintain a safe oxygen level, ventilation helps remove contaminants produced from work in the space and can help cool down the space. There are two main methods of ventilation used for confined space applications: forced-air ventilation and exhaust ventilation. Forced-air ventilation uses fresh air forced into the space to displace and dilute the air. Exhaust ventilation is used to continuously remove contaminants from the space. Elimination of atmospheric hazards by means of continuous ventilation is preferred over the use of personal respiratory devices.

After all known hazards are identified, the hierarchy of controls should be used to assess and mitigate the identified hazards or lower the risk to an acceptable level, if elimination is not possible. Once control methods are agreed on, select the PPE and respiratory protection required to safely perform work inside confined space. PPE selection for confined spaces can be tricky. You have to consider the possibilities of changing conditions and hazards created by the work being performed. Confined space entrants should always wear a full body harness when making entry. The harness serves several purposes, the primary being for rescue. It can also be used for fall protection when access and egress via ladder is required or when 100% tie-off is required while working.

Some type of respiratory protection is typically required. Depending on the internal conditions, respiratory protection can include air-purifying respirators (APRs) or atmosphere-supplying respirators (ASRs). The type of cartridges worn for the APR should be chosen to protect against the particular hazard that is present. Other PPE may also be needed, such as special eye protection, hearing protection, chemical protective clothing, and special gloves. Remember that PPE should always be the last line of defense against hazards.

Confined space permits are a critical tool required for entry into any permit-required space. Entry permits are the document provided by the equipment owner that allows access and controls the entry into a confined space. Some of the key items included in a confined space permit are: Details of the space, purpose of the entry, the personnel who will serve as the entrants/ confined space attendant/entry supervisor, hazards present in the space, isolation procedures, acceptable entry conditions, atmospheric testing requirements, rescue and emergency services, and required PPE.

The ability to maintain effective communication between the confined space entrants, the attendant, and the entry supervisor is imperative. There are many ways to achieve this, but the methods used will hinge on the particular characteristics of the space. Line of sight is ideal but not always possible. Non-electric communication can be used, although it is not always effective or the most efficient. When workers are inside a complex confined space where direct line of sight is not possible and verbal interaction unreliable, radio becomes your primary and most reliable communication method. If communication is lost at any point, all entrants should exit the space until the issue can be resolved. The confined space attendant as well as the entry supervisor should have a thorough understanding of the method of calling for a rescue and the radio channel used to summon emergency services. Performing this task in a timely manner can be the difference between life and death.

Preparing and planning for a confined space rescue is equal to, if not more important than, the rescue itself. Before entry is made into any permit confined space, it should be analyzed thoroughly inside and out. A rescue plan should then be developed and communicated to all employees involved. When you begin to analyze the space, the first thing to look at is its characteristics including: type of space, function, configuration, construction, size, and entry points (size, number, location). Non-entry rescue is often the preferred method, although, for many confined space rescue situations, rescue by entry is the only option. Analyzing the characteristics of the space will help determine the safest method for everyone involved in a rescue.

In a perfect world, all confined space entries would be performed in a clean hazard free environment where the attendant has direct line of sight and constant communication with entrants. These types of entries still require planning to be performed safely but are much lower risk. To perform specialty work and inspections in certain types of confined spaces, what some people would consider a “Complex Confined Space Entry” must be performed.

There are many attributes that could make a confined space entry complex. One characteristic is having multiple secondary entry points within the space to allow access to various areas and levels where work must be performed. Once the worker enters the initial confined space and progresses into a secondary space, the attendant will lose line of sight of the worker. Atmospheric conditions become a concern as well; the secondary space may have considerably different conditions than the area where the attendant will be performing atmospheric tests. These types of spaces can also be notoriously difficult to ventilate.

Safety entrants can be placed at all secondary entry points inside the vessel. The role of the safety entrant is similar in some ways to a confined space attendant, but they are actually positioned inside the confined space. The safety entrants must maintain communication and line of sight with the entrants performing the work and the confined space attendant outside of the space. Their primary responsibility is to monitor the workers inside and perform atmospheric monitoring of the secondary space(s) where the work is taking place. Lastly, the safety entrant can play an important role in a rescue, if they are trained to do so, like assisting in the removal of an injured worker from the space. Another characteristic that makes a confined space complex is internal conditions that are Immediately Dangerous to Life and Health (IDLH).

The first step to safely perform work in these types of confined spaces is having complete understanding of the internal layout. In addition, the internal hazards need to be examined. Once you understand the hazards that are inherently present, you must next consider the hazards that are created by the work performed. A safe work plan and a rescue plan need to be created and must at least include: PPE and respiratory protection to be worn, internal and external rescue device placement, details of the confined space, methods of incapacitated worker removal, ventilation procedures, placement of internal safety entrants (if needed), and method(s) of communication.

In many cases, confined space work cannot be avoided yet its hazards can be very deceptive and unpredictable. If you run into trouble in a confined space, the consequences can be fatal. The key to success is preparation. Setting your employees up for success is an integral part to completing confined space work safely. It is the employer’s responsibility to provide employees with the knowledge, equipment, and training they need to do their jobs safely and effectively.

For more information, contact Alan Williamson, Safety Coordinator, VIP International, Inc., at (225) 753-8575 or alan@vipinc.com. q