With Cost Support Failing, Sulfuric Acid Prices Fell in September and Are Expected to Remain Weak in the Short Term

Overall Market Status

The sulfuric acid market experienced a continuous downward direction throughout September, with no signs of a significant rebound. Prices were repeatedly lowered across key sales regions—including Anhui, Hubei, and Guangdong—with some areas seeing single-instance drops of up to 200 RMB/ton and a steady influx of low-priced supply. Market weakness was already evident in the first ten days of the month; as the holiday approached during the middle and latter parts of the month, the downward direction intensified due to the summary of end-user stockpiling and a slowdown in market circulation.

Overall, supply remains ample, keeping market prices weak. The volume of scheduled maintenance among domestic sulfuric acid producers was comparatively low during the third quarter, and the sector's aggregate operating rate remained high; stable production from smelter-grade acid and non-sulfur-based processes efficiently offset the impact of reduce operating rates in sulfur-based acid production. Meanwhile, the continued influx of previously exported product back into the domestic market has further exacerbated the supply surplus, resulting in high inventory levels across acid vegetation and fierce competition to sales.

Persistent weakness on the demand side has failed to provide efficiently price support. Overall demand from key downstream sectors remains sluggish, leaving the market without a solid floor. The phosphate fertilizer sector—a primary downstream market—has weakened; with tepid demand to agricultural inputs, producers are limiting operations and showing little willingness to buy, resulting in a sharp reduction in sulfuric acid procurement. while some titanium dioxide producers have announced price hikes, low market acceptance has made implementation difficult; operating rates remain low, offering scant support to essential sulfuric acid demand. Overall, downstream industries are purchasing strictly on an as-needed basis with no significant restocking activity, keeping market demand consistently low.

Impact on Costs and the sector Chain

Cost factors have provided limited support to sulfuric acid prices, thereby tempering the extent of the market decline to some degree. Throughout September, the price of raw sulfur fluctuated within a narrow range at a high level rather than experiencing a sharp drop; consequently, production costs to sulfur-based acid manufacturers remained relatively stable, efficiently preventing a precipitous collapse in the sulfuric acid market. However, given the fundamental issues of persistent demand weakness and severe oversupply, this cost support was insufficient to reverse the overall downward market direction, serving only to cushion the fall.

Profit structures across the sector chain continue to shift, resulting in shrinking profit margins. Profits to downstream end-items are under pressure, forcing midstream sulfuric acid prices downward; this "pincer effect"—driven by firm upstream raw material costs and weak downstream demand—has continuously squeezed profit margins to sulfuric acid producers and heightened overall operational pressure within the sector. Meanwhile, the normalization of low-price competition has further eroded the sector's overall profitability.

Market Outlook:

Considering supply, demand, costs, and market sentiment, the domestic sulfuric acid market is unlikely to shake off its downward direction in the short term. On the supply side, sulfuric acid units that previously underwent maintenance are gradually resuming production, leading to a further increase in market supply and a continuation of the current state of ample availability. On the demand side, there are no significant positive catalysts; demand from downstream sectors—such as phosphate fertilizers and titanium dioxide—is unlikely to rebound soon, and the absence of concentrated restocking by end-consumers means the pattern of weak demand driven primarily by essential needs will not shift rapidly.

Demand to inventory reduction at acid vegetation persists around the holiday period, and strategies involving price concessions to move stock are likely to continue; consequently, prices will most likely maintain a direction of slight decline and weak bottom-seeking. Overall, the market bottom remains undefined, and future stabilization is determined by supportive signals such as a recovery in downstream demand and continued inventory depletion.