Sulfur price surge has become the biggest shock to China’s chemical industry in 2026. Domestic sulfur spot prices have rocketed more than 210% year-to-date, hitting a peak of 11,600 yuan per tonne, marking the steepest price rally since 2008. Driven by geopolitical conflicts, shrinking imports and depleted inventories, the sky-high sulfur cost has split the whole industrial chain into two opposite sides: integrated refinery giants gain massive profits, while downstream segments including titanium dioxide and phosphorus chemicals suffer severe margin compression. This article breaks down the root causes, industry winners & losers, and long-term restructuring trends brought by the record sulfur price hike.
Historic Sulfur Price Rally: Key Market Data
As of June 12, mainstream solid sulfur trading prices at Zhenjiang Port and Dafeng Port reached 11,600 yuan/tonne. Compared with the low price in H2 2024, current sulfur cost is nearly 10 times higher, with a year-to-date growth rate exceeding 210%.
Within a single trading day, sulfur prices jumped 482 yuan/tonne, and over ten petrochemical manufacturers including Shandong Dongming Petrochemical, Jincheng Petrochemical and Jiangsu Xinhai Petrochemical issued successive price increase notices, with refinery sulfur prices rising 200 to 1,000 yuan/tonne across the board.
Four Core Drivers Behind the Sulfur Price Surge
Sharp Drop in China’s Sulfur Imports & Low Port Inventories
Customs statistics revealed China’s sulfur import volume in April 2026 only stood at 295,500 tonnes, down 72.39% year-on-year, hitting a monthly record low in recent years. Sulfur stockpiles at major coastal ports have nearly halved year-on-year, resulting in tight spot supply and panic procurement among downstream chemical buyers.
Global Geopolitical & Supply Chain Disruptions
The Middle East supplies about 45% of global sulfur trade. Shipping delays and cost spikes in the Strait of Hormuz greatly delayed overseas sulfur cargo arrivals. Meanwhile, Russia extended its sulfur export ban to the end of June, cutting off European re-export sulfur supplies and tightening global sulfur circulation entirely. Market analysts regard Strait of Hormuz shipping status and Russia’s export policy as two core uncertain variables affecting future sulfur prices.
Long-term Global Supply-Demand Mismatch
Insufficient capital expenditure on global refineries in the past two years limited new sulfur capacity expansion. In contrast, domestic demand from phosphorus chemicals, new energy lithium iron phosphate and titanium dioxide kept growing steadily. The inherent supply gap was further amplified by geopolitical risks, pushing sulfur prices to historic highs.
Domestic Agricultural Raw Material Protection Policies
To guarantee spring farming supplies, China suspended exports of industrial sulfuric acid and smelting by-product sulfuric acid till year-end, prioritizing sulfur resources for phosphate fertilizer manufacturers. While stabilizing the agricultural supply chain, this policy squeezed raw material supply for fine chemical and new energy manufacturers, forcing many factories to chase higher spot prices and amplifying market volatility.
Two Polarized Industrial Chains: Upstream Winners, Downstream Losers
Integrated Refineries: Major Beneficiaries of High Sulfur Prices
Sulfur is a low-cost byproduct of crude oil refining. When sulfur prices soar, integrated petrochemical firms directly gain incremental net profits.
China’s top three sulfur producers are Sinopec (8.34 million tonnes annual capacity), PetroChina (3.68 million tonnes annual capacity) and Rongsheng Petrochemical (1.21 million tonnes annual capacity). Rongsheng shows the strongest profit elasticity: its Q1 2026 net profit excluding non-recurring items surged 390% YoY, largely contributed by its sulfur business. The group stated it would optimize resource allocation to fully capture the cyclical dividend of high sulfur prices.
Downstream Chemical Segments Suffering Severe Cost Pressure
Titanium Dioxide Industry
The sulfuric acid route consumes 3-4 tonnes sulfuric acid to produce one tonne TiO2. Sulfuric acid costs have risen 3,000-5,000 yuan per tonne from late 2024 lows. TiO2 producers raised product prices multiple times with cumulative hikes over 3,000 yuan/tonne, a rare adjustment frequency in two decades.
Enterprises take different cost mitigation measures: Huiyun Titanium adopts pyrite-produced sulfuric acid to cut external sulfur purchase costs; LB Group mixes purchased sulfur, bulk sulfuric acid and waste acid concentration to secure stable raw material supply.
Phosphorus Chemical & Phosphate Fertilizer
The average operating rate of wet-process phosphoric acid has dropped to 50.7%, with small and medium phosphate fertilizer factories falling into negative profit territory. Leading manufacturers rely on long-term supply contracts and strategic stockpiles to maintain full production: Yuntianhua advances phosphogypsum acid production; Sichuan Chuanheng builds new pyrite acid units to hedge raw material risks. The lithium iron phosphate (LFP) segment keeps an operating rate above 80%, yet overall gross margins are continuously eroded by rising sulfur costs.
Hydrofluoric Acid Sector
Sulfuric acid accounts for over 50% of anhydrous hydrofluoric acid production costs, up from 30% previously. Product prices jumped from 8,500 yuan/tonne at the start of the year to 11,950-12,200 yuan/tonne, a 40% year-to-date increase. Electronic-grade hydrofluoric acid, critical for semiconductor etching, follows the same upward trend, with institutions predicting supply tightness lasting until late 2027.
Medium & Long-term Restructuring of the Entire Chemical Industry
Short-term Market Outlook: Sulfur Prices Stay High & Volatile
June is a critical observation window for global sulfur supply. Negotiation progress between the US and Iran will decide shipping accessibility in the Strait of Hormuz, while Russia’s export ban extension directly impacts global supply volumes. Analysts point out downstream purchasing willingness has weakened sharply at current record prices, leaving limited room for further price increases. Even if overseas cargo arrives in H2 2026, robust new energy demand will keep sulfur prices far above 2024 levels, with a full price reversal unlikely.
Long-term Industrial Transformation: Alternative Processes & Integrated Chains
Facing persistently high sulfur costs, Chinese chemical enterprises are shifting from passive cost bearing to active structural adjustment:
1. Alternative acid-making technology: Phosphogypsum-based acid production is being scaled up as a mainstream low-sulfur solution.
2. Production route optimization: LB Group expands chloride-process titanium dioxide capacity to cut sulfuric acid consumption fundamentally.
3. Full industrial chain layout: Yuntianhua and Xingfa Group build closed-loop phosphate ore-new energy material chains to lock in self-sufficient raw material costs.
Investment Guidance From Industry Brokers
Two categories of enterprises hold long-term growth value amid sulfur price fluctuations:
1. Integrated refining manufacturers with self-owned sulfur production capacity and stable resource supply;
2. Chemical companies deploying alternative acid-making processes and complete industrial chain layout.
Meanwhile, investors need to guard against downside risks including geopolitical easing, concentrated overseas sulfur cargo arrivals and faster-than-expected alternative capacity release.
Conclusion
The 210% sulfur price surge in 2026 is not a temporary market fluctuation, but a structural reshaping force for the whole chemical industry. In the short run, profit divergence between upstream refineries and downstream chemical manufacturers will keep widening. In the long term, enterprises with independent sulfur supply or low-sulfur production technology will gain lasting competitive advantages as the industry accelerates technological upgrading and chain integration.
