The Sulfuric Acid Market Saw a Sharp Decline in August

Supply side: Maintenance had concluded, supply had increased, and inventories were accumulating.

Units that underwent maintenance earlier in the year resumed production en masse in August, driving up overall operating rates. Meanwhile, the continued discharge of byproduct acid from non-ferrous metal smelting—available at low prices—has flooded the market, displacing higher-priced acid produced from sulfur. Amid sluggish sales, inventories at acid vegetation nationwide have gradually accumulated; consequently, companies have actively lowered prices to clear stock, making price concessions a common practice to facilitate shipments.

Demand side: The launch of the autumn fertilizer season fell short of expectations, and downstream essential demand remained weak.

Phosphate fertilizers (the largest downstream sector): Stocking to autumn fertilizers was slow to start in August; manufacturers of ammonium phosphates face significant pressure from losses and have limited scope to ramp up operating rates; purchasing is restricted to immediate needs, with no extensive restocking.

Titanium dioxide, chemicals, and metallurgy: Operating rates across these industries are lackluster; end-consumers are resistant to high prices—adopting a "buy-on-the-rise, not on-the-fall" mentality—and a wait-and-see attitude prevails.

New energy sectors (hydrometallurgy and lithium iron phosphate) provide only localized support, insufficient to reverse the overall weakness.

Cost and transmission tearing: high sulfur level, however price transmission failure

Raw material sulfur prices remain high, theoretically providing cost support to sulfuric acid; however, severe losses in downstream sectors prevent the pass-through of high acid prices, rendering this cost support ineffective. Market dynamics have shifted from "cost-based pricing" to supply-demand pricing, forcing producers to reduce prices to move inventory.

Circulation level: regional arbitrage, price spread elimination.

Low-priced supplies from Shandong are flowing into high-price regions such as Henan, Hubei, and the Southwest; this inter-regional flow is undercutting regional high-priced companies, driving down the national price level and rapidly narrowing regional price differentials.

Market Outlook:

The prevailing pattern of loose supply and demand in the short term is unlikely to reverse rapidly:

If orders to autumn phosphate fertilizers continue to materialize and downstream buyers engage in concentrated restocking, there is possible to a temporary market stabilization and recovery;

In the absence of significant demand development, high inventory pressure at acid vegetation persists, making prices greater likely to fall than rise;

Fluctuations in sulfur prices remain the key variable determining the cost floor to sulfuric acid, while the volume of smelter acid entering the market dictates the reduce bound of the price range.

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