Divergence in the sulfuric acid market intensifies; scheduled maintenance provides limited support against sluggish demand

Lead-in: This period, the domestic sulfuric acid market exhibited regional divergence with mixed price trends. The Chempricehub index for 98% sulfuric acid stood at 1,380 yuan/ton, a quarter-on-quarter increase of 2.60%. Market dynamics varied significantly by production process and region: smelter-grade acid prices in Jiangxi, Anhui, Hunan, Fujian, and Guangdong rose by 50–200 yuan/ton due to plant maintenance and tightened supply. Conversely, sulfur-based acid prices in Shandong, Jiangsu, and Hebei faced downward pressure due to a sharp drop in raw material sulfur prices and the influx of low-priced smelter-grade acid from other regions.

I. Supply Side: Concentrated Maintenance Leads to Localized Tightening; National Operating Rates Dip Slightly

National sulfuric acid capacity utilization stood at 61.87%, down 0.12 percentage points month-on-month and 1.69 percentage points year-on-year, indicating a slight overall decline in operating rates. Mid-to-late October marked the peak maintenance season, with several large-scale units—including Luxi and Jiaodong in Shandong, Jinxin in Anhui, Jinchuan in Guangxi, Huludao Zinc Industry in Liaoning, and Liangshan Mining in Sichuan—shutting down for maintenance. These shutdowns affected millions of tons of capacity, tightening locally available supplies and keeping inventory levels low among acid producers, which provided support for local prices. However, these regional supply constraints failed to impact the national market broadly. Low-priced smelter-grade acid from Inner Mongolia and Henan continued to flow into Shandong, Hebei, and Jiangsu. Despite local maintenance in Shandong, the persistent inflow of cheaper external supplies offset the benefits of reduced local output, leading to an increase in implicit price reductions for sulfur-based acid transactions in the region.

Outlook: Next week, ore-based acid producers in Qinhuangdao, Hebei, will enter maintenance, while some units in Zhejiang are scheduled to restart. Consequently, national capacity utilization is expected to fluctuate within a narrow range, maintaining existing disparities in regional supply tightness.

II. Demand Side: Sharp Decline in Fertilizer Production; Chemical Sector Provides Minimal Support via Essential Demand

The downstream demand for sulfuric acid showed a divergent pattern, with fertilizer sectors weakening while chemical sectors remained stable. Overall purchasing was driven by essential needs, with no significant restocking observed.

• Fertilizers: Demand weakened notably as the autumn fertilizer season concluded. Compound fertilizer enterprises focused on depleting inventories, resulting in sluggish procurement willingness. Capacity utilization for monoammonium phosphate (MAP) fell to 37.50% (down 3.86 percentage points), and diammonium phosphate (DAP) dropped to 39.89% (down 3.44 percentage points). With widespread losses among phosphate fertilizer producers, sulfuric acid procurement remained limited to small, on-demand orders, lacking incremental volume.
• Chemicals: The chemical sector maintained baseline demand support. Titanium dioxide capacity utilization held steady at 73.38%, while caprolactam utilization slipped slightly to 70.03% (down 0.75 percentage points). Although new order growth was limited and enterprises primarily delivered existing contracts, consistent essential purchasing from titanium dioxide and caprolactam producers served as a key stabilizing force for sulfuric acid demand.

Overall, declining fertilizer operations dragged down total demand, while the chemical sector only met minimum requirements. Downstream sentiment remained cautious, adhering to the "buy high, not low" mentality. Traders adopted a wait-and-see approach without engaging in concentrated restocking, leaving the demand side unable to provide upward momentum for sulfuric acid prices.

III. Cost and Profit: Sulfur Prices Plunge, Widening Profit Gap Between Acid Production Routes

Port granular sulfur prices (Zhenjiang Port) closed at 5,550 yuan/ton, a substantial weekly drop of 1,050 yuan/ton (-15.91%). Total national port inventory decreased slightly by 1.81% to 1.1029 million tons. Internationally, sulfur demand also softened as fertilizer production declined in North Africa, Brazil, and China, and Indonesian nickel smelting operated below historical levels. Falling overseas transaction prices further pressured the domestic market.

The rapid decline in sulfur prices directly eroded cost support for sulfur-based acid. In contrast, smelter-grade acid, as a by-product of non-ferrous metal smelting, remains largely unaffected by sulfur price fluctuations, widening the cost disparity between the two production routes.

• Sulfur-based Acid: Theoretical gross margin reached -2.3 yuan/ton, hovering near the break-even point.
• Ore-based Acid: Profits remained negative at -42 yuan/ton.
• Smelter-grade Acid: Profits surged to 1,050 yuan/ton, highlighting its strong cost advantage and competitiveness. This has led to significant cross-regional flows that continue to disrupt the sulfur-based acid market.

Downstream industries remain deeply loss-making despite some recovery following raw material price drops: MAP gross margin was -1,328 yuan/ton, DAP was -853 yuan/ton, titanium dioxide was -3,126 yuan/ton, and caprolactam was -1,313 yuan/ton. These deep losses continue to suppress proactive purchasing intent among downstream enterprises.

IV. Market Outlook: Continued Regional Divergence; Watch Three Key Variables

Based on supply, cost, and demand analysis, the domestic sulfuric acid market is expected to maintain regional divergence in the short term. Regions with active maintenance and low inventories may see firm or slightly rising prices, while areas dominated by sulfur-based acid and facing influxes of cheap smelter-grade acid will experience downward pressure due to shifting cost bases. A unilateral sharp rise or fall across the entire market is unlikely.

Key variables to monitor include:

1. Maintenance and Restart Pace: Multiple smelter-grade and sulfur-based acid units are scheduled for maintenance in October and November, while others plan to restart. These changes will directly alter regional supply tightness.
2. Sulfur Price Trends: If sulfur prices continue to fall, they will persistently weigh on the costs and quoted prices of sulfur-based acid.
3. Winter Stockpiling Progress: The timing of winter stockpiling initiation for phosphate fertilizers and the intensity of compound fertilizer restocking will determine incremental demand from the fertilizer sector, representing the largest demand variable for Q4.

Currently, the overall market appears likely to stabilize. Prices in already high regions may retreat, while those in lower regions are expected to rise toward mid-level benchmarks.