Analysis of The Global Sulfur Supply Chain Crisis And Future Trends

The global sulfur market is currently undergoing a "perfect storm" driven by supply shocks, structural changes in demand, and geopolitics. In 2026, the core characteristics of the market will be extremely tight supply, record-breaking prices, and the beginning of a reshaping of the downstream industry landscape. The supply chain landscape is also being significantly restructured by geopolitics and the demand for new energy.

1. Supply-side: Passive production, gas fields are more crucial than refineries

Sulfur is not a mineral but an industrial by-product. Approximately 90% of the world's sulfur comes from natural gas purification and petroleum refining. Therefore, its price logic is highly tied to crude oil and natural gas rather than its own extraction costs.

Natural gas-associated sulfur dominates: As global sulfur removal environmental standards rise, sulfur recovery facilities in high-sulfur gas fields such as those in the Middle East and Russia remain in operation. This will be the largest supply source in the future. As long as natural gas continues to be extracted, sulfur will be "passively" produced continuously.

Refinery sulfur is facing a decline: In the long term, the global energy transition may reduce the operating rate of refineries, which in turn will lead to a decrease in sulfur by-products, creating certain supply-side support.

Logistics bottlenecks are often present: The major global exporters of sulfur are concentrated in the Middle East, and the transportation of solid sulfur relies on port infrastructure. If geopolitical conflicts lead to congestion in key straits or ports, a short-term supply shock will once again push up the spot price.

2. Extreme Prices and Supply Crisis

Due to supply disruptions, the global price of sulfur witnessed a revolutionary increase in 2026, breaking the long-standing price range. The landed prices in the international market have exceeded $1,150 per ton. The contract price in the Middle East has soared. The June sulfur contract price (FOB) of Qatar, which serves as a global benchmark, has risen to $805 per ton, a 65-dollar increase compared to the previous month. The market in the Americas is in a state of emergency. On the demand side, the landed price of sulfur in Brazil (CFR) has exceeded $1,150 per ton, having more than doubled compared to before the conflict. The market in Asia is also affected. Due to strong demand from countries like Indonesia, the transaction price of international granular sulfur at ports in East China of China has risen to RMB 8,350 - 8,400 per ton, with offers even reaching RMB 8,500 or above.

3. Supply Chain Crisis: Critical Routes Disrupted and Export Controls

Halting of shipping in the Strait of Hormuz: The Middle East region typically accounts for nearly half of the global maritime sulfur export volume. Currently, the strait is blocked, directly cutting off this crucial artery. Global trade volume temporarily dropped to 50% of the normal level, and Russia has shifted from an exporting country to a net importer. Analysis indicates that even if the shipping route resumes in June, the recovery of the supply chain will require several months to rebuild inventories and adjust shipping schedules.

China's Export Ban: As the world's largest exporter of sulfuric acid, China implemented a new export ban (except for electronic-grade) starting from May. In 2025, China exported up to 4.6 million tons of sulfuric acid. The introduction of this ban has caused a huge supply gap in the already tight global market (especially in mining countries such as Chile and Indonesia). China is accelerating the development of phosphogypsum-based sulfuric acid production technology, aiming to reduce its reliance on imports of sulfur from abroad from over 65% to 30%.

4. Competition for Demand: New Energy Is Eating Up Fertilizer's "Rations"

If geopolitical conflicts are the "trigger", then the drastic change in demand structure is the fundamental driving force.

Traditional demand is strong: large agricultural countries such as Brazil are in their planting season, and the production of phosphate fertilizers cannot be separated from sulfur. The shortage of sulfur has already led some fertilizer factories to reduce production, threatening global food output.

The explosive demand for new energy sources is the real "sulfur-consuming beast". In 2025, global demand for sulfur in the new energy sector increased by 29% year-on-year. This was mainly due to China's lithium iron phosphate projects and Indonesia's wet-process nickel projects (producing 1 ton of nickel requires consuming 9-11 tons of sulfur).

Indonesian nickel mines: The production of battery-grade nickel through high-pressure acid leaching requires the consumption of over 10 tons of sulfur per ton. In 2025, Indonesia imported 5.35 million tons of sulfur, and it is expected to increase to 6.5-7.7 million tons in 2026. In the cost of lithium processing, the proportion of sulfur has soared from 3% to 11%-22%, becoming the largest cost variable.

5. Trade Flow Reconfiguration: Regional Price Disparities and Supply Interruptions

Global trade is undergoing significant structural changes:

Imports are shrinking sharply: Take China as an example. Due to the disruption of supplies from the Middle East and high prices, in April 2026, the sulfur import volume was only 295,500 tons, A decrease of 42.76 percent month-on-month, reaching the lowest point since 2009.

Major Shift in Supply Sources: To make up for the shortage in the Middle East, ocean-going shipping sources from countries like the United States and Canada are attempting to fill the markets in Brazil and Morocco. However, the high shipping costs and limited production volumes are unable to fully cover the shortfall.

6. It is difficult to resolve in the short term, and high prices have become the norm. It's easy to rise but hard to fall, but there will no longer be a super cycle.

The current consensus is that even if geopolitical conflicts ease, the price of sulfur is unlikely to return to its previous low levels. There will be a shortage of more than 5 million tons of sulfur supply and demand globally in 2026, and new production capacity will release slowly.

Taking supply and demand into account, the price of sulfur is likely to remain at a relatively high level over the next 2-3 years:

The cost transmission chain is solidified: As long as the prices of crude oil and natural gas remain at relatively high levels, the marginal recovery cost of sulfur determines that it will not fall too much.

It's unlikely to achieve super profits: After all, sulfur is a by-product. If the price becomes outrageously high, it will encourage more high-sulfur oil and gas fields to increase production, thereby self-regulating the price.

China's influence: China is the world's largest importer of sulfur. Its phosphate fertilizer export policies and port inventory cycles have a significant marginal impact on international sulfur pricing.

7. The sharp increase in global sulfur prices is causing a domino effect, profoundly reshaping the global semiconductor material supply chain and bargaining power.

The core logic is as follows: International geopolitical conflicts such as the disruption of shipping in the Strait of Hormuz have led to the interruption of over 30% of global sulfur supply. The price of sulfur has soared by approximately 80% this year, directly increasing the cost of downstream concentrated sulfuric acid; and sulfuric acid is the core raw material for anhydrous hydrogen fluoride (with the cost accounting for 30% soaring to over 50%), ultimately causing profound cost and demand fluctuations for electronic-grade hydrogen fluoride and fluorine-containing special gases (such as sulfur hexafluoride, carbon tetrafluoride, nitrogen trifluoride, etc.) at the apex of the fluorine chemical industry pyramid.