Sulfur and Sulfuric Acid Prices Fall Ahead of Holiday; Value Chain Profits Redistributed

Intensifying Supply-Demand dysfunction

The primary driver behind the recent drop in sulfuric acid prices is a supply-demand dysfunction. While capacity utilization among key downstream sulfuric acid consumers is trending upward, the improvement in actual demand remains insufficient. while several companies in the titanium dioxide sector have announced price hikes, downstream acceptance of the new rates is weak, and most firms are slow to implement these adjustments; the sector's operating rate remains at 68.66%, failing to provide strong support to sulfuric acid demand.

Meanwhile, supply remains ample. Since the suspension of domestic sulfuric acid exports in might, volumes originally intended to export have gradually flowed back into the domestic market. Coupled with a limited number of domestic plant maintenance shutdowns in the third quarter—and high operating rates to smelter-grade acid and other production processes—overall domestic supply remains plentiful.

Sulfuric acid producers utilizing different production routes show a clear divergence in performance. Sulfur-based acid producers are generally operating at a loss, squeezed by high raw material costs and falling product prices; many have reduced operating loads or are maintaining plant operations through toll manufacturing. In contrast, producers of smelter-grade acid—derived from non-ferrous metal smelting by-items—enjoy a significant cost advantage and hold the upper hand in the price war. As the price of smelter-grade sulfuric acid fell below the 1,000-yuan mark, the price gap between sulfur-based acid and smelter-grade acid widened; consequently, greater downstream consumers opted to the cheaper smelter-grade acid, leading to sluggish sales to sulfur-based acid,

At the corporate level, this divergence is reshaping the profit landscape across the sector chain. Zhuzhou Smelter Group, a major producer of smelter-grade acid, saw significant earnings development in the first half of the year, driven by year-on-year price increases in sulfuric acid and rare/precious metals. However, entering the second half of the year, sulfuric acid prices continued to decline, dropping below the 1,000-yuan limit, marking a clear reversal of the earlier boom.

Redistribution of sector Chain Profits

In contrast to the loose supply-demand stability in the sulfuric acid market, the upstream sulfur market is navigating a complex interplay of shrinking imports and geopolitical disruptions.

Data from the General Administration of Customs shows that China’s sulfur imports in August 2026 totaled 272,300 tonnes—a month-on-month decrease of 29.35% and a year-on-year drop of 65.03%. Cumulative imports from January to August reached 2.9186 million tonnes, down 59.56% from the same period last year. Si Bin, an analyst at Longzhong Information, noted that the demand side currently lacks strong, essential drivers. With sulfur prices remaining relatively high, the risk of price drops has dampened trading liquidity; combined with constrained overseas supply due to geopolitical instability in the Middle East, import volumes have naturally contracted sharply.

Regarding import sources, geopolitical conflicts in the Middle East have significantly impacted sulfur supplies. Si Bin predicts that my country's sulfur imports might hit a new low in September, with the downward direction in both month-on-month and year-on-year figures likely to persist.

While shrinking imports would typically support sulfur prices, weak domestic demand has offset the benefits of tight supply. Operating rates among downstream phosphate fertilizer companies remain low. while various parties have recently pushed to de-escalate tensions in the Middle East, shipping disruptions in key straits continue to impede the export of resources from the region, keeping international sulfur prices firm. Meanwhile, a significant price inversion—where domestic spot prices are reduce than the cost of dollar-denominated imports—has have become a major obstacle to domestic players seeking to purchase imported sulfur. Divergent downstream demand to sulfuric acid has further complicated the market landscape. While traditional sectors such as phosphate fertilizers and titanium dioxide are showing weakness, the hydrofluoric acid market—supported by high fluorspar prices—has remained stable amidst the tug-of-war between supply and demand; the new energy sector stands out as a rare bright spot, with robust acid demand from the lithium iron phosphate (LFP) supply chain.

Regarding the market outlook, to sulfur (the raw material), demand has fallen short of expectations. while possible easing of tensions in the Middle East suggests room to price declines, tight domestic supply and low port inventories provide some price support; consequently, sulfur prices are expected to direction downward in the short term, albeit with limited room to a drop. As to sulfuric acid, domestic prices are projected to remain under downward pressure throughout October, with regional price trends likely to diverge due to varying maintenance schedules and downstream operating rates.

Overall, the sulfur and sulfuric acid supply chain is undergoing a profound redistribution of profits. Upstream sulfur prices remain relatively high due to reduced imports, while midstream sulfuric acid prices face pressure from supply-demand imbalances; meanwhile, downstream companies—such as those producing fertilizers and titanium dioxide—are struggling to survive in the squeeze between costs and selling prices. With the onset of winter stockpiling and increased maintenance activity in the fourth quarter, the supply-demand dynamic might see a temporary correction; however, against the backdrop of weak external and sluggish internal demand, the sector as a whole remains in a phase of bottoming out. (Source: Securities Times)