Strait of Hormuz Blockade, Sulfur Prices Surge Nearly Tenfold! Risks to Global Fertilizer and Food Prices Loom

Sulfur: An Underrated Strategic Resource

Sulfur may seem insignificant, yet it is an irreplaceable basic raw material in the modern industrial and agricultural system. It is a by-product of petroleum and natural gas processing, and after further processing, it can be converted into sulfuric acid, which in turn serves two key industries: first, copper smelting, and second, the manufacture of phosphate fertilizers. For this reason, fluctuations in sulfur supply not only affect the non-ferrous metal smelting sector, but also directly impact the fundamental input for global food production — fertilizers.

Data indicate that before the war, about half of the world’s sulfur needed to be transported through the Strait of Hormuz. Once this waterway is obstructed, the global sulfur supply pattern shifts rapidly from ample to tight, with supply-demand mismatches directly reflected in prices — an increase of nearly tenfold, which clearly illustrates the current tension in the supply chain.

Fertilizer Giant Issues Warning: Costs Soar, But Difficult to Pass On

The sharp fluctuations in prices first impact fertilizer manufacturing companies situated in the midstream of the industry chain. The world’s largest phosphate fertilizer exporter, Moroccan fertilizer giant OCP, had previously issued a warning, explicitly stating that the significant rise in sulfur prices has already created tangible operational pressure for the company.

Raw material costs have surged, yet companies find it difficult to pass these increased costs down the chain. Farmers are the ultimate consumers of fertilizers, and the assessment that “farmers, who are already in a difficult position, cannot bear further increases in fertilizer prices” directly hits at the transmission dilemma within the industry chain. When upstream price hikes cannot be smoothly transferred downstream, the pressure concentrates on the production side, leading to a substantial erosion of fertilizer production profits and even affecting companies’ willingness to operate. Once phosphate fertilizer production is constrained, the impact will eventually reach the planting sector, posing a potential risk of global food price increases.

A rare window of benefit for domestic refineries

In stark contrast to the overseas fertilizer giants under pressure, some domestic refining companies have reaped profit dividends in the current market cycle.

Geopolitical disruptions dominate the future market trend

Overall, this round of the sulfur crisis is essentially a concentrated shock to the commodity supply chain caused by geopolitical conflicts. The pace of the resumption of shipping through the Strait of Hormuz will dominate the global sulfur supply pattern and price trends for a considerable period in the future.

For industry participants, this crisis represents both a risk and an opportunity. Phosphate fertilizer companies need to be vigilant about operational pressures caused by high raw material costs and the difficulty of passing them on, while continuously tracking changes in the geopolitical situation; the non-ferrous metal smelting sector similarly faces the impact of sulfuric acid price fluctuations; domestic refining enterprises with by-product sulfur production capacity can focus on and seize this temporary window of opportunity.

Every fluctuation in geopolitics can trigger a chain reaction in the commodity markets. The nearly tenfold surge in sulfur prices is a reminder to the market that the more fundamental a resource is, the more its supply chain fragility deserves serious attention.