Sulphur Trends Catherine Randazzo, President

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Sulphur TrendsCatherine Randazzo, President
CEO
The Sulphur Institute

• China Phosphate Fertilizer Industry Association
  Phosphate Fertilizer Fair and Exhibition,
  Weifang, Shandong, China
• October 25, 2008

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The Sulphur Institute Mission
TSI is the global advocate for sulphur,
representing all stakeholders in producing,
buying, selling, handling, transporting, or
adding value to sulphur.
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A Global Organization Representing Production,
Consumption, Handling, Trade
Abu Dhabi National Oil Company Agip/KCO BCT Chemtrade Corporation BHP Billiton Marketing, Inc. BP Products North America, Inc. California Sulphur Company Canadian National Chemical Initiatives ConocoPhillips Company Devco USA LLC Enersul Inc. ExxonMobil Oil Corporation H.J. Baker Bro., Inc. Interacid Trading S.A. Inter-Chem International Commodities Export Corporation (ICEC) JSC Oteko Jupiter Sulphur L.L.C. Koch Sulfur Products Company LLC Kuwait Petroleum Corporation Marsulex, Inc. Martin Operating Partnership, L.P. Mitsubishi Corporation Mitsui Co. (U.S.A.), Inc. Mosaic Fertilizer LLC OCP Group PetroChina Polish Steamship Company PRISM Sulphur Corporation Savage Services Corporation Shell Sulphur Solutions solvadis GmbH Sultran Ltd. Tessenderlo Kerley, Inc. Transammonia, Inc. Valero Marketing and Supply Company Zwaans van der Heuvel Tankvaart BV
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Sulphur and Sulphuric Acid

• Important raw materials for fertilizer and
  chemical industries
• the worlds most widely used chemical

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Sulphur Production Types
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• Elemental Sulphur or Brimstone
• Frasch/Native
• Recovered
• Gas
• Oil
• Other (increasingly oil sands and heavy oils)
• Non-elemental
• SOF (mostly smelter acid)
• Pyrites

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Recovered Sulphur

• From Minor Source in 1960s to Major Source Today,
  and Growing
• By-Product from Sour Oil/Gas Industry, and Oil
  Sands removes H2S
• Growth Predicated on Higher Oil/Gas Output, More
  Sour Streams, and Increased Environmental
  Restrictions

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World All Sulphur Production Million Tons
Sulphur Equivalent
Total output is projected to rise by 3.9 per
year, 29.5 million tons
Projection
Source Sulphur Outlook, TSI 2008
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World All Sulphur Production by Source
Future Growth from Elemental and Smelter Acid
Pyrites Recent Growth, Long-Term Decline
Three Years of Slow Production Growth
Preliminary Projection
Source Sulphur Outlook, TSI 2008
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World Elemental Sulphur Production by Source
Oil and Gas Industry is Source of Growth
2005 to 2007 was flat
Preliminary Projection
Source Sulphur Outlook, TSI 2008
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World Sulphur Trends

• Production
• Greater Production of Recovered, mostly in W.
  Asia, FSU, and N. America
• U.S. exporter in both coasts West and Gulf
• China potential from oil and gas recovered
• Greater production of SOF, largely in Asia, Latin
  America, spurred by China-led growth
• Pyrites show short term increase in China, but
  should decline in long term worldwide

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World Sulphur Trends

• Consumption
• Trend to Developing Regions Continues
• E. Asia, Africa, S. Asia, Latin America
• Decline in W. Europe, N. America
• Developing regions offer larger growth, but
  volatility
• Fertilizer to continue as major demand source,
  about 2 growth rate (93 phosphates) faster
  growth for sulphur fertilizers about 3 to 4
• Non-Fertilizer use includes
• Fast-growth sectors (nickel leach, specialty
  phosphates, HF)
• Slow/negative-growth sectors (TiO2, Caprolactam,
  Pulp Paper)

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All Sulphur Production by Region Million Tons
Sulphur Equivalent
GROWTH SECTORS Gas West Asia, FSU, China Oil
USA, China, Middle East, India Oil sands/Heavy
Oils Canada Smelter Acid Asia (East and
South),Latin America
Projection
Source Sulphur Outlook, TSI 2008
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World Sulphur Consumption by End Use
Rapid Growth in Recent Years Agriculture and
General Economy
Three Years of Rapid Growth
Preliminary Projection
Source Sulphur Outlook, TSI 2008
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Sulphur Consumption by Region
Strongest Growth in E. Asia (China), Africa, L.
America, Oceania Declines in North America,
Western Europe
Projection
Source Sulphur Outlook, TSI 2008
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World Sulphur BalanceMillion Tons Sulphur
Tight market conditions were temporary
Preliminary Projection
Source Sulphur Outlook, TSI 2008
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FSU Sulphur Balance (Million Tons S)
Surplus to Grow- Not all Marketable
Preliminary Projection
Source Sulphur Outlook, TSI 2008

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TSI Market Study Group 2007West Asia (Middle
East)
West Asian Sulphur BalanceMillion Tons Sulphur
West Asian Sulphur BalanceMillion Tons Sulphur
Marketable Supply Overwhelms Increasing Demand
rojetion
Preliminary Projection
Source Sulphur Outlook, TSI 2008
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China Sulphur Status

• 2007 Records in
• Phosphate production
• Sulphur consumption
• Sulphur imports
• 2008 Declines expected across the board
• Sulphur market conditions impact phosphate/other
  end uses
• Phosphate fertilizer export restrictions
• Phosphate fertilizer domestic price controls
• Earthquake Sichuan May 2008
• 2008 Increases in Pyrites/smelter acid
  production favored by market conditions

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China Rapid Rise in Phosphate Fertilizer SD is
Close to Plateau
Source China Sulphuric Acid Industry Association
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Sulphur Consumption in China
Whereas most fertilizer use growth is past,
non-fertilizer use growth to continue
Source China Sulphuric Acid Industry
Association and TSI
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Sulphuric Acid Production in China
A more balanced sourcing of sulphur is likely
Source China Sulphuric Acid Industry Association
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Recovered Sulphur Production in China
The need for energy drives sulphur production
Source China Sulphuric Acid Industry Association
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Sulphur Production in China
Source China Sulphuric Acid Industry Association
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China Sulphur Supply and Demand
Declining Deficit Results from Rising Production
and Reduced Consumption Growth
Source China Sulphuric Acid Industry Association
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China Sulphur Imports
Era of Growth is Likely over
Preliminary Projection
Source China Sulphuric Acid Industry Association
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Sulphur Market in ChinaToday and Tomorrow

• China sulphur industry experienced major changes
  last five years
• Becomes largest sulphur consumer
• Largest sulphur producer
• Largest sulphur importer
• Phosphate fertilizer production will decline to
  12.0 million tons in 2008
• Phosphate production could grow to 13.6 million
  tons in 2010sulphur demand would increase to
  21.5 million tons

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Sulphur Market in ChinaToday and Tomorrow
(Contd)

• Much of new Chinese sulphur demand will come from
  increased domestic production SOF and recovered
  ES
• Sulphur imports will decrease in short term
• Chinas decreasing deficit status could impact
  global market
• Global financial crunch on commodities also will
  affect SD of sulphur

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East Asia Sulphur Balance Million Tons Sulphur
Prospects for Declining Deficit end of Decade
Preliminary Projection
Source Sulphur Outlook, TSI 2008
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TSI Market Study Group 2007North America- USA
North American Sulphur BalanceMillion Tons
Sulphur
Declining Demand, Surplus Growth
Preliminary Projection
Source Sulphur Outlook, TSI 2008
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World Sulphur Imports Million Tons
China has driven global demand during last decade
Preliminary
Source Based on IFA and TSI data
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World Sulphur Inventories
Mostly held in Canada, FSU
Reference Figure 5, Sulphur Outlook, TSI, 2008
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What will impact future production?

• Energy Growth, Product and Regional Sources
• Sour gas/oil
• Oil/tar sands
• Alternative fuels coal?
• Environment/Climate Change
• Clean fuels
• Bunker/diesel
• Biofuels

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Sulphur (S) The Fourth Major Nutrient

• Sulphur is required in similar amounts to P,
  about 21 million tons S in 2006.
• Ten million tons S fertilizer applied worldwide
  additional total S fertilizer market potential
  for 11 million tons.
• 12.5 million tons potential by 2015 primarily in
  Asia and the Americas.

Plant Nutrient Sulphur Requirement and Deficit
(Mt)
2015 Deficit 12.5 Million Tons
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Regional Plant Nutrient Sulphur Deficit Worldwide
Asia has the largest regional deficit in the
world with China and India in the lead
Million Tons Per Year
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What Does the Future Hold for Sulphur

• Sulphur surpluses likely to grow
• More than ever, developing world (BRIC countries)
  holds key to global growth
• Caveat Global Financial Crunch to Impact all
  commodities, including sulphur SD
• But sulphur and fertilizer demand will continue
  to grow (food is first necessity)

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A Global Organization Representing Production,
Consumption, Handling, Trade
Abu Dhabi National Oil Company Agip/KCO BCT Chemtrade Corporation BHP Billiton Marketing, Inc. BP Products North America, Inc. California Sulphur Company Canadian National Chemical Initiatives ConocoPhillips Company Devco USA LLC Enersul Inc. ExxonMobil Oil Corporation H.J. Baker Bro., Inc. Interacid Trading S.A. Inter-Chem International Commodities Export Corporation (ICEC) JSC Oteko Jupiter Sulphur L.L.C. Koch Sulfur Products Company LLC Kuwait Petroleum Corporation Marsulex, Inc. Martin Operating Partnership, L.P. Mitsubishi Corporation Mitsui Co. (U.S.A.), Inc. Mosaic Fertilizer LLC OCP Group PetroChina Polish Steamship Company PRISM Sulphur Corporation Savage Services Corporation Shell Sulphur Solutions solvadis GmbH Sultran Ltd. Tessenderlo Kerley, Inc. Transammonia, Inc. Valero Marketing and Supply Company Zwaans van der Heuvel Tankvaart BV
Thank you!