CRU Phosphates+Potash conference focuses on sulphur

CRU’s Phosphates+Potash Expoconference was held in Paris in mid-April, with the Iran crisis uppermost in everyone’s mind. Margins are under pressure, sulphur has become a strategic constraint, and the phosphates investment pipeline is thin. CRU Principal Consultant Humphrey Knight examined the fallout from the closure of the Strait of Hormuz, noting that fertilizers have been hit harder than most bulk commodities. A large share of exportable sulphur and traded urea normally originates in, or passes through, Gulf producers. The effective closure of the strait has squeezed the traded part of these markets, where international prices are set, and pushed benchmarks up sharply. The global phosphate market is structurally tight, and the combination of Chinese export policy and Middle East logistics has pushed the traded segment into a much more fragile state.

In the commercial stream, CRU sulphur and sulphuric acid analyst Viviana Alvarado drilled into the feedstock that now sits at the centre of the squeeze. The market has moved into a structurally tighter operating range. A decade of stricter environmental regulation on refineries, slower oil demand growth and limited new desulphurisation investments has flattened sulphur supply growth. At the same time, demand from fertilisers and metals has risen steadily.

Sulphur prices had already been climbing for more than a year before the latest Middle East escalation. In some regions, benchmarks have effectively doubled from their post 2022 lows, reaching record or near record levels. The closure of the Strait of Hormuz removed a large share of Gulf sulphur exports from the seaborne market, where price discovery takes place, pushing prices higher again.

Alvarado emphasised that a disproportionate share of “price setting” sulphur flows is Gulf linked. When those tonnes are disrupted, the impact on global benchmarks and on phosphate stripping margins is immediate. Today, sulphur can make up a larger share of DAP/MAP cash costs than at almost any point in the last two decades, particularly for net importers in Asia and Latin America.

Her conclusion was clear. Sulphur has become a bottleneck for phosphate growth. Projects based on plentiful, cheap sulphur now face much higher risk than they did a few years ago. Without a structural change in refinery behaviour or a technological step change, sulphur is likely to remain a major source of price volatility and margin pressure for fertiliser producers.