The ceasefire memorandum between the United States and Iran has an impact on the trends of the Strait of Hormuz, global sulfur and hydrofluoric acid

This agreement is essentially a 60-day temporary ceasefire memorandum, not a final peace treaty. It initiates a long and variable recovery process rather than a one-click restart. The passage of ships through the strait and the price of sulfur will both undergo a complex process of "expectation leading, reality lagging". Under this framework, the future trends of the Strait of Hormuz and sulfur are mainly characterized by "the expectation has changed, but the actual recovery will take time". In simple terms, the news has given the market hope for a decrease in raw material costs, but for the supply chain to truly recover, it will still take a long time. Therefore, the high price of hydrofluoric acid will remain firm in the short term.

1. The Strait of Hormuz: From "legal lifting of restrictions" to "resumption of commercial navigation", the road is long and arduous

1.1 Rapid Response: After the agreement was signed, the market immediately traded on the "reopening of the strait" logic. The US side claimed that it would reopen immediately upon signing, but the draft disclosed by the Iranian side and the media indicated that it would be within 30 days, and only after 30 days would the pre-war navigation volume be fully restored. This means that it will take time for the waterway to be completely smooth.

1.2 "Free" Dispute: The reopening is certain, but there are differences in details.

This is the most critical potential point of disagreement. The US side insists that the strait will be "permanently free of tolls", but Iran claims that it will only offer a 60-day free passage period, and then it will charge "navigation service fees". The issue of charges after 60 days will be the focus of subsequent negotiations.

1.3 Practical Obstacles: However, from the legal opening to the commercial normalization, there are still multiple obstacles. The "opening" of the strait is not achieved overnight; it is a complex process that occurs in stages:

1.3.1 Credit Reconstruction, Insurance and Trust: Shipowners and insurance companies need time to rebuild the confidence in insurance coverage and will not immediately resume operations. Shipowners and insurance companies are extremely cautious. Major shipping companies such as Mitsui and Hapag-Lloyd have clearly stated that they will not rush to resume navigation based solely on diplomatic documents. The Red Sea crisis experience shows that even if the shipping route risks ease, it will still take a very long time for the mainstream shipping fleets to recover. 1.3.2 Channels and Facilities: Demining, repairing damaged ports and refineries will take several months. The transit volume through the straits has plummeted by over 90%, and the Gulf region has accumulated hundreds of oil tankers and over 172 million barrels of floating crude oil. Clearing the backlog of capacity and restoring the rhythm of ports itself will take several weeks. The channel blockade has spread from the transportation end to the production end. About 11.5 million barrels per day of crude oil production has been passively shut down due to storage constraints. Even if the ships resume sailing, the resumption of production of some damaged facilities may take several months to two years.

1.3.3 Alternative Inertia: Many buyers have locked in alternative suppliers and will not immediately return to the original route.

1.3.4 Political Uncertainty: Core disputes (such as the nuclear issue) have been postponed to subsequent negotiations. Iran demands pre-conditions for negotiations, and the Israeli factor remains a potential "trigger point". If the subsequent 60-day negotiations fail, the conflict may resurface. "Whether the agreement can be implemented effectively in the long term" is what the market is most concerned about. Overall, the industry generally expects that the channel traffic volume will recover to approximately 50% of pre-war levels within 30 days, but a fully smooth supply chain may take 6 to 12 months.

2. Global sulfur Prices: From "Sharp Drop" to "High-level Fluctuation"

The trend of sulfur is similar to that of oil, but due to its physical properties, the recovery process will be slower. The price of sulfur experiences significant short-term fluctuations, but the medium and long-term average has risen.

Severe price reaction: During conflicts, sulfur prices in China soared to RMB 11,750 per ton due to the blockade of the strait. After the agreement, the price plummeted by RMB 1,500 - 3,250 per ton in a single day, falling back to RMB 8,500 - 9,500 per ton.

2.1 Short-term (1-2 months): High-level wide-range oscillation

There is a time lag in supply recovery: Over 40% of global maritime sulfur shipments pass through this strait. Even after the lifting of restrictions, it will take 2-3 months for refineries to resume production and logistics to recover, and there will be no large-scale new shipments arriving before the end of July.

Inventory and demand support: The inventory in Chinese ports has halved from 2 million tons to below the safety level of 900,000 tons. Moreover, the downstream demand for phosphate fertilizers and new energy sources remains strong, and the agreements are only temporary. All these constitute strong support.

2.2 Medium to long-term: The center moves downward, but it is difficult to return to the lower level

With import replenishment, the cost center of china is expected to move downward by RMB 2,000-3,000 per ton. However, due to the restricted operation of global refineries and the continuous growth in demand for new energy, the long-term average price is expected to remain above RMB 6,000 per ton, ending the previous low range of RMB 2,000 - 4,000.

3. Hydrofluoric acid: the cost end is ushering in "decompression expectations", but the conduction still needs time

The core of this memo's impact lies in the key raw materials of hydrofluoric acid - sulfur and sulfuric acid. As a downstream product of sulfur, the raw material cost pressure faced by hydrofluoric acid is also expected to gradually ease as the price of sulfur drops. However, due to the time lag in the recovery of sulfur supply and the fact that high-end varieties such as electronic-grade hydrofluoric acid are supported by semiconductor demand, the price decline will be slower than that of the raw material end. In the short term, it will mainly follow the expected fluctuations of raw materials.

3.1 Core logic: More than 30% of the world's sulfur is produced in the Middle East. Previously, due to the blockade of the strait, the supply sharply decreased, and the price soared by more than 80%. The sulfur then transmitted to sulfuric acid, causing its proportion in anhydrous hydrofluoric acid's cost to increase from 30% to over 50%, which was the direct driver of the previous price increase.

3.2 Expected effect: The signing of this memo implies the possibility of the strait's reopening. The market first trades in the expectation of "collapse in raw material costs", which brings psychological cooling pressure to the already high price of hydrofluoric acid.

3.3 Practical Constraints: Why Won't Prices Drop Dramatically in the Short Term?

Despite the positive expectations, the actual industry situation dictates that the price of hydrofluoric acid will remain high for the next 1-2 months.

There is a time lag in raw material recovery: Even if the legal restrictions are lifted, it will take time for the waterways to be dredged, insurance to be restored, and shipping schedules to be arranged. The time lag from restarting production to sulfur output at refineries can be several weeks or even months.

Spot costs remain high: Currently, the June contract price of anhydrous hydrofluoric acid in China is still as high as RMB 14,500-14,600 per ton. Although the price of fluorite has slightly loosened recently (the reference price for wet powder is 3,000-3,300 RMB per ton), there has been no collapse.

The downstream of the industry is still "bearing the brunt": The prices of anhydrous hydrofluoric acid purchased by Korean manufacturers (such as Solbrain) from China have risen by approximately 40% since the beginning of the year, and have gradually been passed on to semiconductor giants like Samsung and SK Hynix in June-July. This high-priced inventory and long-term contract orders mean that the terminal prices will not immediately reverse.

4. Summary and Outlook of the US-Iran Ceasefire Memorandum

This agreement has put a "pause" on the war, but it is far from being ready to "restart". The reopening of the strait and the resumption of sulfur supply will be a slow process measured in months. This memorandum is merely a temporary ceasefire framework that lasts for 60 days and is far from being an ultimate peace treaty. The subsequent 60-day negotiation process remains the biggest variable determining the future direction of both. The formal negotiations that follow will be the real test. If the negotiations break down or if external factors such as Israel interfere, geopolitical risks may resurface and trigger a resurgence in the prices of sulfur and other commodities.

In summary, this memorandum merely initiates the "de-foaming" of hydrofluoric acid. In the short term (1-2 months), due to high-cost inventories and the time lag in supply recovery, the price is likely to remain in a high-oscillation state. In the medium to long term (after 60 days of negotiations), if the Strait of Hormuz truly becomes a regular passage, with the downward shift in raw material costs, the price center of hydrofluoric acid is expected to gradually fall.