Section: Comment

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 start of May saw urea prices start to decline from the yearly highs seen in mid-April, as buyers from India, the US, and Europe stayed away from the markets. India is not expected to return with another tender before late May or early June at the earliest, after booking 2.5 million tonnes for shipment through mid-June, covering immediate requirements, and with domestic production having improved and stocks at a healthy level of over 7 million tonnes. In the US, earlier concerns over May shipments have eased, with net import figures not as low as initially feared, and even some re-export of cargoes to Latin America where higher prices can be earned. With the potential for China to return to export sales towards the end of May and start of June, there was at least a hope that the worst of the current price spike may be over.

The effective closure of the Straits of Hormuz by Iran in the wake of US and Israeli attacks has sent shockwaves through all markets, but sulphur has been particularly badly affected. While the Straits carry 22% of global phosphate exports and 35% of urea, for sulphur around 45% of the 39 million tonnes transported internationally every year must traverse the narrow waterway, with major suppliers like Abu Dhabi and Saudi Arabia relying upon it for their export cargoes.

CRU’s Alexander Chreky, provides a potash market overview ahead of CRU's Phosphates+Potash Expoconference in Paris in April.

In just its first two months, 2026 had already managed to be a rollercoaster of a year, but at the start of March, the onset of hostilities against Iran by the US and Israel has managed to deliver another huge shock to markets, particularly commodities. Iran’s strategy of widening the conflict to neighbouring states, including by attacking Qatar’s massive LNG facility at Ras Laffan, effectively shutting it down, has sent the LNG market into chaos, and attacks on several tankers and other ships have paralysed maritime insurance markets and by default achieved the long-feared closure of the Straits of Hormuz.

The deficit in the sulphur market has led to a new focus on melting down and selling stockpiles of sulphur around the world. From Kazakhstan to Canada, stocks of sulphur have been shrinking.

The start of the new year has shown that 2026 is already proving to be a very eventful one, beginning with the US abduction of Venezuela’s president Nicolas Maduro, which has prompted questions over production at the country’s ailing nitrogen assets, as well as the potential for a future boost to gas supplies to Trinidad. Meanwhile the Iranian government faces its most sustained public challenge since the 1979 revolution, and possible US military intervention, threatening continued exports from the country. In Europe, the future of fertilizers’ inclusion in the Carbon Border Adjustment Mechanism (CBAM) has been thrown into doubt barely a week after the new regulations came into force, as France and Italy pushed for an exemption for crop nutrient imports.

CRU's fertilizer team provides their top calls for 2026

Could demand mandates help the build the market for green fertilizers – by placing mandatory purchasing requirements on large-scale end users?

Prices in sulphur markets have been climbing rapidly for several weeks now due to short supply, reaching their highest levels for early two and a half years, since July 2022. A major cause has been widening Ukrainian drone and missile strikes against Russian oil and gas facilities. In particular, drone strikes in September on the Astrakhan and Orenburg natural gas plants led to Russian sulphur exports being cut drastically, first from around 400,000 tonnes per month to only 100,000 tonnes in October, and then to zero from the 1st of November, as Russia implemented a ban on exports of sulphur used in fertilizer production which was projected to last at least until December 31st. “This decision will stabilise shipments of raw materials to the domestic market to maintain current mineral fertilizer production volumes and ensure the country’s food security,” the government’s press service reported. The restriction applies to the export of liquid, granulated, and lump sulphur. It remains to be seen whether exports of Kazakh material from Ust Luga will be affected, but some Kazakh sulphur is now being sold via Iran.