Supply crisis worsens

“The impact has begun to spread to other commodities …”

It is two months on from our previous issue, and almost none of the news has been good from sulphur and downstream markets. Only three sulphur cargoes are confirmed to have transited the Strait of Hormuz since the US and Israeli strikes on Iran began, all loaded at Ruwais, with destinations in India, Tanzania and Morocco, carrying a total of 160,000 tonnes. It is believed that a couple of Iranian vessels with a total of 75,000 tonnes may also have left covertly. But in spite of some Middle Eastern sulphur making its way to Saudi Red Sea ports or Duqm on Oman’s Indian Ocean coast, around 700,000 tonnes is still trapped on ships stranded in the Gulf, and coupled with production cuts in the region, it is estimated that over 1.2 million tonnes has so far been removed from the market.

The knock-on effects keep on coming. Russia has extended its export ban to preserve domestic supply, with other countries like India and Turkey now moving in the same direction. The reduction in sulphur supply – Indonesia’s imports were down 30% just for Q1 2026 – at first led to some substitution with sulphuric acid – Indonesia’s acid imports were likewise up 20% in Q1 – until China announced that it was also banning exports of acid to protect domestic smelter feed economics. The move takes 2.8 million t/a out of a traded acid market of 16 million t/a. Demand destruction from the supply crunch can already be seen across phosphate markets. Morocco has reduced output by 30% over Q2, while Mosaic has announced the idling of its Araxá and Patrocínio facilities in Brazil.

Last issue, we wrote: “The impact on prices at time of writing has been significant but not yet critical.” Well, now it’s critical. Brazilian imported sulphur prices have reached $1,150/t c.fr, the highest price ever seen for sulphur anywhere, and are pushing to $1,200/t – the main reason for Mosaic’s shutdowns. At current MAP prices, anything above $1,100/t sulphur is reckoned to be loss making. Indonesian delivered sulphur prices are over $1,000/t, and nickel producers are starting to look at production cutbacks. Chinese acid prices are at record levels and stocks of sulphur at Chinese ports are dwindling rapidly.

The impact has also begun to spread to other commodities which rely upon sulphuric acid. The African copper belt takes 90% of its sulphur from the Arab Gulf, while Chile sources much of its acid imports from China. Copper prices were consequently at a record $13,000/t at time of writing. Thanks to the Indonesian sulphur price, nickel prices are up to $19,000/t, though still at just about manageable levels for the time being.

At present there seems no early solution to the Strait of Hormuz situation. Even an immediate relaxation of restrictions would likely see sulphur prices continuing to rise for another month until cargoes started reaching users again. While demand destruction continues to accelerate, it looks as though we may not have seen the worst of things yet.

Richard Hands, Editor