“\"Exorbitant\" sulfur prices wreak havoc; phosphate fertilizers suffer heavy losses 　

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What is the way out for this industry? At present, the domestic fertilizer market remains generally stable, but what many people may not be aware of is that sulfur, an important raw material for fertilizers, is experiencing unprecedented volatility in the international market. Its price has soared from around 800–900 yuan per ton on a regular basis to over 7,000 yuan per ton, reaching record highs! As a key raw material for phosphate fertilizer production, the sharp rise in sulfur prices has had a significant impact on the entire fertilizer industry chain, forcing phosphate fertilizer manufacturers to face the dilemma of negative costs and losses in production. Nearly half of China’s sulfur needs are met through imports. It is understood that some domestic phosphate fertilizer producers tasked with ensuring supply have incurred losses of 200 million to 300 million yuan in the first half of the year; in major producing regions such as Hubei and Yunnan, several enterprises have been forced to halt production or cut output. The critical periods for fertilization in summer planting and autumn sowing are approaching, putting unprecedented pressure on the supply of chemical fertilizers. 　　Industry experts point out that at the current stage, China’s sulfur market is facing prominent issues such as an imbalance between supply and demand, a high degree of dependence on imports, frequent market speculation, and insufficient bargaining power on the international stage. They recommend **strengthening regulation further, establishing a long-term mechanism to ensure a stable supply of sulfur resources, strengthening the framework for ensuring the supply of fertilizers, and thus safeguarding food security**. 　　Prices have surged nearly tenfold, and the supply side is in a state of crisis. This current crisis in the sulfur market isn’t caused by a single factor; rather, it is the result of a convergence of four factors: geopolitical conflicts, a global mismatch between supply and demand, China’s heavy reliance on imports, and malicious speculation by traders. In just a few months, the market has shifted from stable operations to a state of full-blown crisis. 　　From the perspective of the global supply landscape, the Middle East is the core of the world’s sulfur supply, accounting for 41% of global production and as much as 50% of global trade volume. It is also the main source of sulfur imports for our country, accounting for 56% of its total imports. Since the end of February 2026, the situation in the Middle East has taken a dramatic turn: refineries in key exporting countries such as Iran were forced to shut down, and ports ceased operations. Shipping through the Strait of Hormuz was disrupted, and logistics routes have not yet been fully reopened, resulting in a sharp decline in the global supply of sulfur. 　　According to statistics, from January to April 2026, the number of shipments of sulfur from the Middle East to Chinese ports declined by 67% on a year-on-year basis, while the volume of shipments dropped by 75%. The inventory levels at key domestic ports such as Zhenjiang Port and Yangtze River Port were about 50% lower than those in the same period last year. The total inventory at Yangtze River Port was once less than 500,000 tons, and the vast majority of the supply had already been reserved in advance, leaving very little available in stock. 　　The diversion of international supply has further exacerbated the domestic supply gap. The current global sulfur market is a typical seller’s market, with supplies going first to those with higher bids and to certain regions. Indonesian purchasing companies are offering prices as high as 8,000 yuan, while the 7,000 yuan bid from domestic companies is not competitive at all; as a result, the gap in domestic supply continues to widen. 　　The dual drivers of traditional essential demands and emerging needs on the demand side have further intensified the supply-demand imbalance. In terms of traditional demand, the peak season for fertilizer production comes with spring plowing and summer planting, leading to an increase in the operating rate of phosphate fertilizer manufacturers, as well as a continuous rise in the steady demand for sulfur. On the side of emerging demand, the new energy industry is experiencing rapid growth, with capacity for lithium iron phosphate expanding swiftly. Additionally, the demand for acids in industries such as wet-process nickel refining and rare earth extraction is increasing sharply, thereby drawing away a large amount of global sulfur resources and further exacerbating the already tight supply situation. 　　In the long term, driven by global \"dual carbon\" policies, consumption of fossil fuels will gradually reach its peak. As a by-product of oil refining, there is less room for an increase in sulfur production; as a result, a significant shortage of sulfur exists globally, and this gap continues to widen. Data shows that from 2025 to 2026, the planned production capacity for lithium iron phosphate batteries in China will exceed 4.1 million tons, further increasing the demand for sulfuric acid and sulfur. 　　China’s sulfur market suffers from prominent structural weaknesses. The degree of external dependence has remained at around 47%–50% for a long time; nearly half of the sulfur needed is imported, and these imports come mainly from the Middle East. As a result, there is only one source of supply, which results in extremely weak resilience to risks. Once geopolitical conflicts disrupt the main supply routes, and the domestic market lacks rapid alternative sources of supply, it falls directly into a critical bottleneck situation. 　　Meanwhile, domestically, sulfur mainly comes from the by-products of oil refining at three major state-owned enterprises—Sinopec, CNPC, and CNOOC—with a self-sufficiency rate of only around 50%. As the energy transition progresses and the structure of oil and gas consumption changes, the increase in domestic sulfur production is limited, and it is insufficient to cover the import gap. 　　The chaotic market order has also become a major factor contributing to price fluctuations, with traders engaging in malicious speculation from time to time. Industry experts point out that traders play a very active role in the current sulfur market; they deliberately drive up prices by making small transactions, raising prices by 50 to 200 yuan even with just 50 to 100 tons of transactions. At the same time, they hoard goods and release false market information to create a sense of scarcity, thereby encouraging a panic-driven purchasing behavior among buyers who prefer to buy when prices are high rather than low. This contributes to a vicious cycle of shortages, rising prices, and even greater shortages. 　　Furthermore, the lack of regulatory restrictions on sulfur imports and the dispersed nature of purchasing entities further weaken China’s bargaining power in the international market, preventing it from conducting centralized negotiations and setting uniform prices, as is the case with potash fertilizers. 　　Due to a combination of multiple factors, sulfur prices have deviated from their actual value as a by-product of oil refining. They have surged from the normal range of 800–900 yuan in earlier years to over 7,000 yuan at present; some spot quotes even exceed 8,000 yuan. The domestic sulfur market has thus entered the most severe period of supply shortage in its history. 　　The phosphate fertilizer industry is operating at a loss, and there is pressure on ensuring the supply of fertilizers. Sulfur is a key raw material in phosphate fertilizer production; according to standard estimates, about 0.45 tons of sulfur are required to produce 1 ton of phosphate fertilizer. The cost of sulfur accounts for around 40% of the total production costs, making it one of the most important factors affecting the price of phosphate fertilizers. The sharp rise in sulfur prices has directly affected all stages of phosphate fertilizer production, causing severe hardships for the entire phosphate fertilizer industry. Companies find themselves in a dilemma: continuing production leads to losses, while halting production jeopardizes the supply chain. 　　Currently, inverted costs have become the norm in this industry, with a growing number of companies suffering losses. Based on the current price of sulfur at 7,000 yuan per ton, the total cost of monoammonium phosphate is around 5,270 yuan, while its market price is only 3,850 yuan, resulting in a loss of over 1,400 yuan per ton. The total cost of diammonium phosphate is about 5,700 yuan, with a market price of just 4,250 yuan, meaning a loss of 1,400 to 1,500 yuan per ton. To meet the fertilizer needs of farmers during spring plowing and summer planting, companies are unable to pass on the high costs of raw materials to consumers; they must bear the losses themselves. Some of those tasked with ensuring supply have incurred losses of 200 million to 300 million yuan in the first half of the year, leaving their cash flows on the verge of collapse. 　　The industry’s operating rate has dropped significantly, with some enterprises in the main production areas shutting down or reducing production. Under the pressure of huge losses, enterprises in major domestic phosphate fertilizer-producing regions such as Hubei and Yunnan were forced to reduce their production capacity, resulting in a continuous decline in the overall industry utilization rate. The compound fertilizer industry has also suffered significant impacts, with underlying concerns emerging in the subsequent fertilizer market. If sulfur prices continue to rise, it will directly drive up the costs of raw materials such as sulfuric acid and monoammonium phosphate, putting significant pressure on the production of high-phosphorus fertilizers for wheat in July and August, as well as on the fertilizer market for wheat planted in autumn and winter. Current compound fertilizer manufacturers find it difficult to determine product prices; if they continue to purchase raw materials at high costs, future production will result in losses ； Reducing production due to lower demand will affect the supply of fertilizers during critical periods, leaving the industry in a difficult position. 　　Four measures are recommended to help the industry overcome its current difficulties in the short term. Faced with the exorbitant price of sulfur and the severe situation of losses faced by the industry, industry experts have put forward a series of suggestions. 　　First, standardize import management to regain the initiative in international bargaining. The current fragmentation of sulfur importers and chaotic bidding are the core reasons behind passive bargaining power on the international stage. It is recommended to establish criteria for qualifying sulfur importers in order to reduce internal conflicts resulting from fragmented procurement ； By drawing on the experiences of joint negotiations and import mechanisms for potassium fertilizers, industry enterprises can be organized to conduct unified negotiations and establish long-term pricing agreements. This will put an end to the situation in which each enterprise acts independently and purchases goods at high prices overseas, thereby significantly enhancing China’s bargaining power in the global sulfur market and stabilizing import prices and supply sources from the source. 　　Second, it is to rectify market order and curb malicious speculation. Traders hoarding inventory, driving up prices, and spreading false information are among the main factors contributing to the artificially high price of sulfur. Relevant authorities should step up market supervision, crack down severely on traders’ practices of deliberately inflating prices and manipulating market prices, and restrict excessive involvement by intermediaries in the circulation of sulfur ； Facilitate direct connections between sulfur suppliers and phosphate fertilizer producers, reduce the number of distribution layers, break the chain through which traders manipulate prices, restore rational market operations, and bring prices back to a reasonable range. 　　Third, strengthen supply guarantee and safety nets to expand the coverage of affordable sulfur. It is recommended to significantly increase the supply of affordable sulfur in order to raise the proportion of enterprises that can ensure supply ； It strengthens the responsibility of central state-owned enterprises to ensure a stable supply of sulfur, gives priority to direct supply to enterprises that need phosphatic fertilizers, and at the same time ensures smooth long-distance transportation of sulfur, addressing the challenges faced by enterprises in terms of raw material receipt and transportation so as to maintain uninterrupted production. 　　Fourth, provide fiscal and tax support to alleviate corporate operating losses. It is recommended to restore the tax-free policy for sulfur imports. Historical experience has shown that such a policy can effectively reduce the landed costs, stabilize prices of sulfur and sulfuric acid in the domestic market, and help lower production costs across the entire industry. At the same time, it is recommended to study and introduce supporting policies such as financial subsidies, export quota controls, and tax exemptions, in order to specifically compensate phosphatic fertilizer manufacturers that undertake supply guarantee tasks for their losses, help them overcome difficulties, and maintain the industry’s basic production capacity. 　　In addition, industry experts recommend strengthening the coordinated management of sulfuric acid produced as a by-product of smelting and of pyrite resources, restricting the export of smelting acid, and giving priority to meeting the domestic demand for phosphate fertilizers ； Increase policy support for logistics and transportation to alleviate the pressure on raw material unloading at key routes such as those along the Yangtze River, thereby ensuring efficient transport of raw materials. 　　Establish a long-term mechanism to overcome the reliance on raw materials. Some of the enterprises surveyed believe that short-term policy measures can only alleviate the current crisis and stop the bleeding; to fundamentally address the issues of unstable sulfur supply and sharp price fluctuations and to ensure the long-term healthy development of the fertilizer industry, it is necessary to accelerate the creation of a sulfur resource security system based on diversified supply sources, industrial collaboration, and strategic reserves. This will enable the industry to reduce its dependence on external sources and achieve self-sufficiency in sulfur resources. 　　First, strengthen domestic supply and broaden independent channels for sulfur resources. Vigorously promoting the technology of producing acid from phosphogypsum is the key approach to addressing the shortage of sulfur resources and achieving their resource utilization. Phosphogypsum is a by-product of phosphate fertilizer production; its large-scale accumulation over time has posed environmental challenges. However, using phosphogypsum to produce acid not only converts waste into a useful resource but also significantly expands the sources of sulfur available. **Comprehensive support should be provided for phosphogypsum-based acid production projects, including industrial policy incentives, tax reductions, subsidies for technological upgrades, and green credit. This will facilitate the large-scale implementation of such projects, with the goal of raising the utilization rate of phosphogypsum to over 50%, thereby fundamentally bolstering the domestic supply of sulfur resources. At the same time, accelerate the development and expansion of pyrite resources to increase the capacity for producing acid from pyrite ； It supports the recovery and utilization of sulfur dioxide from industrial exhaust gases, converting it into sulfuric acid to supplement sulfur sources, thereby increasing the self-sufficiency rate of domestic sulfur resources through multiple channels. 　　Second, it is to facilitate coordination within the industrial chain and establish a stable supply-demand mechanism. Promote deep coordination across the entire \"sulfur-sulfuric acid-phosphate fertilizer\" industry chain, and break down barriers to interests among upstream and downstream entities. Refineries, sulfuric acid plants, and phosphate fertilizer plants are encouraged to enter into annual long-term agreements that include price linkage provisions, in order to prevent raw material costs from being passed on unilaterally to downstream parties and to ensure a fair distribution of profits across the industry chain ； It supports leading integrated enterprises to expand into the upstream sulfur resource sector, thereby creating a complete industrial chain covering \"sulfur – sulfuric acid – phosphate fertilizers\", and enhancing the companies’ ability to withstand risks ； Establish cross-industry coordination mechanisms to coordinate the demand for sulfur used in traditional fertilizers and acids used in new energy sources, prevent disorderly allocation of resources, and ensure the basic needs of fertilizer production. 　　Third, optimize the import structure to diversify geopolitical risks. Change the current situation in which imports are highly concentrated in the Middle East, actively explore other sources of imports, achieve diversification of import sources, and reduce the supply risks associated with geopolitical conflicts ； Explore cooperation models such as jointly establishing sulfur reserve bases and setting up refineries in partnership with overseas resource-rich countries. Through “exchanging resources for security guarantees”, we aim to secure a stable long-term supply of resources and build a reliable overseas supply network. 　　Fourth, establish strategic reserves to give play to the role of market regulation. Drawing on the systems for commercial reserves of chemical fertilizers and potassium fertilizers, a **strategic sulfur reserve system will be piloted to create a market ‘reservoir’**. Sulfur resources are purchased and stored when prices are low and supplies are abundant, and then released into the market when prices soar and supplies become scarce. This helps to stabilize market fluctuations, enhance control over the sulfur market, and prevent risks to the supply chain resulting from sharp price swings. 　　Fifth, adjust the product structure to reduce sulfur resource consumption. Guide fertilizer companies to optimize their product mix; in the second half of the year, reduce the production of high-phosphorus fertilizers and shift to the production of high-nitrogen, low-phosphorus fertilizers, thereby alleviating the pressure on sulfur consumption on the demand side ； Promote scientific fertilization techniques to guide farmers in applying fertilizers precisely, so as to reasonably reduce the use of phosphorus fertilizers while ensuring grain yields and achieving efficient use of resources. 　　Although sulfur is a niche chemical product, it is closely linked to the “matter of great national importance” that is food security. At present, critical periods in agricultural production such as summer planting and autumn sowing have arrived. Phosphate fertilizer manufacturers, despite facing huge losses, remain at the forefront to ensure supply, meeting farmers’ needs for fertilizers and safeguarding the foundation of food production. 　　Industry insiders believe that this sulfur crisis presents both a challenge and an opportunity for industrial upgrading. The crisis has compelled China’s fertilizer industry chain to reevaluate the issue of raw material security, prompting the industry to shift from passively relying on imports to proactively establishing a self-reliant supply system. 　　It is believed that with policy guidance, collaboration between the government and enterprises, and joint efforts from upstream and downstream sectors, China will be able to swiftly resolve the crisis in the sulfur market, strengthen the supply guarantee for fertilizers, and achieve a win-win situation characterized by stable prices for agricultural inputs, preserved profits for enterprises, and enhanced food security, thereby providing a solid foundation for **food security.