Introduction: Late 2026 has entered a critical observation window before the year-end close. As of early November, the domestic sulfur spot market at ports has generally exhibited a trend of initial decline followed by recovery, characterized by wide-range oscillations and an upward trajectory. The annual low of 4,050 yuan/ton occurred in late February, while the annual high of 11,750 yuan/ton was recorded in mid-to-early June. The reason sulfur spot prices repeatedly hit new highs this year, crossing into the "five-digit" range, is primarily supported by factors such as ongoing geopolitical conflicts in the Middle East disrupting supply chains.
In 2026, internal and external sulfur prices influenced each other, with the impact flowing from outside to inside being relatively stronger in terms of magnitude and result. This is mainly due to a significant supply gap in domestic sulfur; imported resources are an indispensable part of filling this gap. Even during the second half of the year, when domestic resources were prioritized for supply security, trends in international markets remained one of the key influencing factors for the domestic spot market. The Middle East, as the world’s primary source of sulfur exports, saw a notable reduction in resource outflows compared to previous years in 2026 due to geopolitical conflicts. However, its influence on the international sulfur market has not been completely lost, and it remains a region of major focus for the global sulfur market.
Resource deliveries from the Middle East to China decreased significantly year-on-year in 2026, dropping by 70.55% through September compared to the same period last year. There are two main reasons for this sharp decline: First, following the outbreak of geopolitical conflicts in the Middle East at the end of February and beginning of March, navigation through the Strait of Hormuz was obstructed, causing delays in large volumes of resource exports and naturally leading to a marked decrease in Chinese imports from the region. Additionally, high USD-denominated resource prices later in the year, combined with overall weak domestic demand, suppressed merchants' interest in pursuing resources from this area. Second, regarding domestic policy, restrictions on phosphatic fertilizer and sulfuric acid exports were implemented, and the three major state-owned oil companies ("Three Barrels of Oil") provided targeted sulfur supplies to phosphatic fertilizer enterprises. Against this backdrop, actual domestic demand for sulfur resources weakened significantly, indirectly reducing reliance on Middle Eastern resources.
It is well known that domestic sulfur is primarily produced as a byproduct by refining and chemical enterprises and natural gas fields. Its downstream products are numerous, with the main ones including monoammonium phosphate (MAP), diammonium phosphate (DAP), caprolactam derived from sulfuric acid, and titanium dioxide. These products involve different sectors, and their industry development has its own specific characteristics.
In 2026, the price correlation between sulfur and its downstream product DAP gradually weakened over time, while maintaining a higher positive correlation with the other two downstream products. Industry insiders know that phosphatic fertilizers are the most important downstream sector for sulfur. Typically, MAP and DAP combined account for approximately 50% of total annual domestic sulfur consumption. However, the reason their market prices do not strongly correlate with sulfur is that their production raw materials include not only sulfur but also phosphate ore and synthetic ammonia, with sulfur generally representing a smaller proportion of their production costs. Furthermore, phosphatic fertilizer enterprises have flexible procurement strategies for sulfur; they do not necessarily purchase only when needed for immediate production, and some enterprises directly procure sulfuric acid instead. In contrast, sulfuric acid uses sulfur as its primary raw material, so its price shows a very obvious correlation with sulfur.
From January to the end of February, the initial sulfur market showed a strong upward trend, stimulated by firm performance in overseas markets. It easily broke through the 2022 high point (4,100 yuan/ton) and rapidly surged to 4,370 yuan/ton within just a few working days. However, after the market advanced quickly, the relatively high price levels triggered cautious wait-and-see attitudes among most traders. Lacking substantial positive catalysts subsequently, and as the atmosphere of waiting eroded market sentiment, the sulfur market shifted into a downward consolidation trend. During this period, MAP and DAP prices remained stable due to spring supply guarantee policies, showing no obvious correlation with sulfur price fluctuations. Meanwhile, the sulfuric acid market slowly rose due to cost pressures, resulting in an unreasonable negative correlation with the sulfur market.
From late February to early June, the escalation of geopolitical conflicts in the Middle East caused obstructions in the Strait of Hormuz shipping lanes, restricting resource outflows from the region. Consequently, the international sulfur supply situation became tight. Against this background, international sulfur prices continued to strengthen, driving domestic spot prices steadily higher. Affected by accumulating production costs, the market prices of downstream products—MAP, DAP, and sulfuric acid—naturally followed suit, creating a strong data correlation between these three products and sulfur prices.
From mid-June to the end of October, the domestic sulfur spot market experienced a process ranging from stalemate at high levels to accelerated decline. At the beginning of mid-June, market prices briefly spiked to 11,750 yuan/ton. However, these high prices strongly triggered risk awareness among merchants. Coupled with the expectation that major domestic phosphatic fertilizer producers could secure guaranteed domestic supplies, leading to softer demand release expectations, market sentiment came under pressure and was continuously eroded, forcing sulfur prices to adjust downward repeatedly. During this period, limited trading interactions were mostly confined between long-term contract suppliers and buyers. This closed "internal circulation" did not truly drive the flow of spot resources but rather sustained the market's pressured situation. Subsequently, the international sulfur market also had to decline continuously due to weak demand. Simultaneously, individual domestic producers faced inventory clearance needs. The continuous drop in the market failed to stimulate merchants to enter and replenish stocks; instead, it fueled the persistent "buy on rises, avoid on falls" sentiment, making the downtrend in sulfur spot prices difficult to stop. Throughout this process, the DAP market showed an upward trend boosted by adjustments in guidance prices, presenting an unreasonable negative correlation with the sulfur market. Both MAP and sulfuric acid declined without setting fixed prices due to the dual pressure of sluggish new orders and weakening raw material prices, continuing to show a strong data correlation with the sulfur market.
Considering supply-demand fundamentals, overseas market trends, and other influencing factors, domestic sulfur prices in 2027 are expected to exhibit an oscillating downward trend. The drivers behind this trend include potential shifts in policy windows triggering cyclical fluctuations in supply-demand tightness, immediate interventions by overseas market performance on the domestic market, and uncertainties arising from innovations in market systems and trading tools. Specifically, the low point for domestic sulfur spot prices in 2027 is predicted to occur in the fourth quarter, while the high point will likely be located in the mid-to-late first quarter. With gradual easing on the supply side, more flexible raw material selection operations on the demand side, and diminishing external support, the market may see phase inflection points around mid-year and in the fourth quarter. Notably, if sulfur futures are officially launched, their price discovery and risk management functions will further enhance the price linkage between sulfur, fertilizers, and related products, thereby bringing structural impacts to the operational logic and volatility characteristics of the spot market.
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