China Sulfur Prices Surge 7% Amid Hormuz Disruption

China's sulfur market has rebounded sharply after escalating geopolitical tensions in the Middle East disrupted shipping through the Strait of Hormuz, tightening global supply and driving up import costs.

As of March 1, mainstream sulfur transaction prices across multiple regions in China rose to RMB 4,100 per ton, up from RMB 3,800 per ton on February 27 — an increase of more than 7%. The reversal came after prices had retreated from February's earlier peak of RMB 4,200 per ton, reflecting a sudden shift in market sentiment.

Geopolitical Escalation Reverses Market Trend

According to market sources, on February 28, the United States and Israel conducted joint airstrikes on key Iranian facilities, sharply escalating regional tensions and sending shockwaves through global energy and petrochemical supply chains.

Sulfur, which is highly dependent on Middle Eastern production, has emerged as one of the most sensitive bulk commodities in this round of geopolitical risk. China relies on imports for more than 50% of its sulfur consumption, with 56.2% sourced from the Middle East — making it the most significantly affected major consumer market.

Iran is the world's third-largest sulfur exporter, accounting for 5%–10% of global trade volume, and serves as China's second-largest supplier, representing approximately 31% of China's sulfur imports. Following the airstrikes, Iranian refineries reportedly halted operations, and loading activities at Bandar Abbas were suspended, effectively reducing short-term Iranian sulfur supply to near zero.

Other sulfur-producing countries in the Middle East have simultaneously restricted shipments and raised prices, driven by risk aversion and profit considerations. As a result, effective global sulfur circulation volume has dropped by more than 10%. Meanwhile, Russia has shifted from a net sulfur exporter to a net importer, limiting its ability to offset the Middle Eastern supply gap and reinforcing structural global supply contraction.

Prior to the escalation, China's sulfur prices had already declined from RMB 4,200 per ton in early February to RMB 3,800. The sudden geopolitical shock triggered renewed downstream attention and stronger restocking demand. The market is currently experiencing a high-level pulse phase characterized by supply disruption and precautionary stockpiling. However, industry insiders expect the event-driven rally to be short-lived, with prices ultimately returning to fundamentals-driven supply-demand equilibrium.

Shipping Disruptions and Red Sea Crisis Intensify Supply Pressure

Industry representatives noted that the reduction in international cargo availability is not only due to production cuts in major exporting countries but also the dual impact of shipping bottlenecks.

The Strait of Hormuz, a critical artery for Middle Eastern sulfur exports, handles over 30% of global seaborne sulfur trade. Amid the ongoing conflict, navigation through the strait has largely stalled. At the same time, the continuing instability in the Red Sea has further strained global bulk shipping routes, pushing up freight rates and extending delivery cycles.

Logistics congestion has delayed Middle Eastern cargo arrivals at Chinese ports, effectively closing the import arbitrage window and increasing reliance on spot cargoes. This has exacerbated the already tight supply situation in the domestic market.

Shipping costs have surged sharply. With restricted passage through the Strait of Hormuz, vessels are being rerouted around the Cape of Good Hope, adding 15 to 20 days to transit times. Marine insurance premiums have reportedly jumped by more than 300%, further inflating landed costs. Data show that international sulfur landed prices have exceeded RMB 4,300 per ton, providing a direct basis for price hikes at major Chinese ports.

Spring Fertilizer Demand and New Energy Sectors Provide Price Support

From a consumption perspective, sulfur demand in China is heavily concentrated in the phosphate fertilizer sector, which accounts for nearly 50% of annual sulfur consumption. Since mid-February, operating rates at downstream phosphate fertilizer producers have continued to rise.

Capacity utilization for monoammonium phosphate (MAP) reached 59.3% in mid-February and increased to 62.15% by the end of the month. Diammonium phosphate (DAP) utilization rose from 52.79% to 54.19% over the same period and is expected to maintain an upward trajectory. As China enters the peak spring farming season, fertilizer production is generating concentrated and rigid sulfur demand, reinforcing downstream restocking momentum.

Beyond traditional agriculture, new energy industries are emerging as additional growth drivers. Expanding demand from lithium iron phosphate (LFP) battery materials and Indonesia's wet-process nickel smelting sector is expected to add approximately 3.29 million tons of new global sulfur demand in 2026. The dual momentum of conventional chemical applications and new energy industries is accelerating sulfur's transition from a refinery by-product to a strategic chemical raw material, enhancing demand-side resilience at elevated price levels.

Risk Premium Dominates, but Rally May Be Temporary

Market analysts emphasize that the core driver of the current sulfur rebound has shifted from traditional supply-demand dynamics to geopolitical risk premium. Even buyers not directly sourcing Iranian cargoes are facing higher offers, as global traders price in uncertainty linked to regional instability.

While sulfur prices now reflect both short-term geopolitical shocks and longer-term strategic revaluation, industry experts caution that the rapid upward move may not be sustainable.

Against a complex international backdrop, downstream enterprises are advised to maintain rational procurement strategies, prioritize core production needs, and mitigate cost pressures through feedstock optimization. Traders should manage inventories prudently to hedge against volatility risks. The industry as a whole is encouraged to monitor government policies aimed at stabilizing supply and prices, diversify import sources, and strengthen supply chain resilience to ensure stable market operations.