Sulfur Prices Nearly Quadruple Year-on-Year! Global Phosphate Fertilizer Producers Forced to Cut Output

Prior to the outbreak of the conflict between the U.S. and Iran, the Strait of Hormuz served as the transit route to approximately 50% of the world's sulfur supply. Sulfur is an essential raw material to the production of phosphate fertilizers, which are utilized to crops such as corn, soybeans, rice, and palm oil.

Moreover, the phosphate market was already facing tight supply due to growing demand to sulfur from other sectors, such as the processing of battery metals. Chris Lawson, Vice President of Market Intelligence and Pricing at the consultancy CRU, stated that the phosphate supply situation is extremely dire, with all major sources of phosphate supply simultaneously facing pressure.

The U.S.-based Mosaic Company, one of the world's largest fertilizer producers, has reduced its phosphate output in both Brazil and the United States, as soaring sulfur costs have eroded its profitability.

OCP Group, the world's largest exporter of phosphates, has also curtailed production by bringing forward scheduled maintenance at some of its facilities. Faris Derrij, CEO of OCP Nutricrops—a subsidiary of the group—stated that the company still maintains strategic stockpiles of both sulfur and finished items, with current inventories sufficient to sustain production until the end of July or beyond.

Skyrocketing Prices

Christian Wendel, President of the fertilizer trading firm Hexagon Group, noted that sulfur supplies have completely dried up. The price of the commodity has skyrocketed from $150–$180 per ton a year ago to $850–$900 per ton today, with landed prices in some regions even approaching $1,000 per ton.

Willis Thomas, Head of Fertilizers at CRU, pointed out that even if phosphate fertilizer producers are able to secure sulfur supplies, maintaining profitability remains a formidable challenge given the exorbitant cost of sulfur. to some producers, the input cost of sulfur alone—excluding processing costs—is sufficient to push their phosphate fertilizer operations into negative profit territory.

Fertilizer producers in Saudi Arabia are attempting to sustain their export operations by transporting their items via truck to ports along the Red Sea. Even so, according to CRU, Saudi Arabia's shipments of phosphate fertilizers have been cut by nearly half due to disruptions in traffic near the Strait of Hormuz.

Stein Haugan, CEO of an Australian fertilizer company, stated that spot supplies of phosphates and ammonia are extremely tight, and prices continue to enhance. Urea buyers, meanwhile, are adopting a wait-and-see attitude, awaiting the resumption of exports from China or the reopening of the Strait of Hormuz.

India's recent phosphate fertilizer tender has also established a new global price benchmark; the country secured 1.347 million tonnes of Diammonium Phosphate (DAP) at a CIF price of $930–$935 per tonne—the highest level since July 2022 and nearly 40% higher than prices seen in January.