Sulfur          

*Thousands of long tons per year of elemental sulfur, excluding values produced or reclaimed in the form of sulfuric acid, hydrogen sulfide, or pyrites. Elemental sulfur is recovered from oil refinery acid gas streams, containing H₂S and SO₂, and natural gas production, where H₂S is removed from the raw gas.

**Companies whose refinery or natural gas recovery sulfur capacity totals less than 100,000 long tons per year.

Earlier this year, IMC Global Inc. acquired the sulfur transportation, marketing and distribution assets of Freeport-McMoRan Sulphur, a subsidiary of McMoRan Exploration Co., which exited the sulfur business. The acquisition was made through a new 50-50 joint venture with Savage Industries Inc., to be known as Gulf Sulphur Services Ltd. In 2000, Freeport McMoRan closed its last mine employing the Frasch method of producing sulfur, at Main Pass, La. Reduced demand, low sulfur pricing and high production costs were the driving forces that closed the mine with more than 2 million tons per year of capacity.

Exxon and Mobil merged in 1999 to form the new entity, ExxonMobil. ARCO (Atlantic Richfield Company) was acquired in 2000 by BP Amoco. A new unified global brand, centered on the name BP was subsequently adopted. Fina Oil and Chemical Company is now AtoFina Petrochemicals, a subsidary of AtoFina, which was formed in 2000 by the merger of Elf Atochem with TotalFina.

Equilon Enterprises is the joint venture that was formed in 1998 by Shell Oil and Texaco. In October 2001, Chevron Corp. and Texaco Inc. merged, forming ChevronTexaco Corp. As part of the merger, Texaco sold its stakes in Equilon Enterprises and Motiva Enterprises to Shell Oil Company and Saudi Refining, with Shell becoming the sole owner of Equilon, and Shell and Saudi Refining jointly owning Motiva. As of March 2002, Equilon Enterprises was renamed Shell Oil Products US. In 2000, Tosco Corp. purchased the Wood River, Ill., Equilon Enterprises refinery from Shell Oil and Texaco. In September 2001, Phillips Petroleum Company finalized its acquisition of Tosco. In August 2002, Phillips Petroleum Company and Conoco Inc. merged to form ConocoPhillips.

In January 2001, Premcor announced that due to economic factors, the company was closing its 80,000 barrel per day Blue Island, IL refinery, which eliminated 5 thousand tons of recovered sulfur capacity. Premcor operates the refinery assets formerly known as Clark Oil & Refining.

At the end of 2001, Valero Energy acquired Ultramar Diamond Shamrock and its six sulfur recovery operations.

El Paso Energy acquired Coastal Corporation in 2001, and with it three refineries and one natural gas field which produced sulfur. The chemicals business is being operated within El Paso Refining and Chemical. Delhi Gas Pipeline is a subsidiary of Texas Oil and Gas Corp.

DEMAND
2000: 12,730 thousand long tons; 2001: 10,650 thousand long tons; 2005: 11,530 thousand long tons, projected. Demand equals production plus imports (2000: 970 thousand long tons; 2001: 550 thousand long tons) less exports (2000: 690 thousand long tons; 2001: 465 thousand long tons).

GROWTH
Historical (1996 - 2001): -5.1 (negative) percent per year; future: 2.0 percent per year through 2005.

PRICE
Historical (1996 - 2001): high $77.00 per long ton, contract, del.; Tampa, Fla.; low, $25.00 per long ton, same basis. Current: $58.00 per long ton, same basis.

USES
Sulfuric acid (primarily for fertilizer manufacture) 96 percent; other uses including production of carbon disulfide, sulfur dioxide and phosphorous pentasulfide; pulp and paper uses; and rubber vulcanizing, 4 percent.

STRENGTH
While demand has improved modestly this year, the supply-side has been constrained, particularly during the second half of this year. The tightening market is chiefly the result of increased fertilizer operating rates and the curtailment of Canadian smelter capacity, which reduced the production of smelter sulfuric acid. This shortfall called for more elemental sulfur to produce virgin sulfuric acid. The tight market has increased sulfur pricing significantly.

WEAKNESS
In the early 1990s, sulfur prices were more than $100 per long ton but have been below $80 per long ton since 1993 due to excess sulfur supplies. Significantly decreased production in the domestic phosphate fertilizer industry, resulted in dramatically lower sulfur consumption and correspondingly lower prices last year. Sulfur prices fell to below $30 per long ton for a short period in mid-2001 due to excess supplies as phosphoric acid production was reduced.

OUTLOOK
This year, increased production of phosphate fertilizers has stimulated demand for sulfur, but most of this increase is being met with additional imported product as world supplies remain in surplus. This trend in both demand and supply is expected to carry forward into 2003. Production of recovered elemental sulfur from petroleum refineries will continue its steady growth, supported by new facilities being installed to increase refining capacity and the capability of current operations to handle higher sulfur crude oil. Additional equipment will be installed at many refineries to reduce the sulfur in gasoline and diesel fuel to comply with the new environmental regulations going into effect in 2004 and 2006, which limit the sulfur content of gasoline and diesel fuel. Demand growth over the forecast period is anticipated to be 2 percent annually.