Tohoku Securities: Short-term sulfur supply disturbances weaken medium- to long-term return to resource attribute pricing

The Zhitong Finance App learned that Northeast Securities released a research report stating that sulfur is an important basic raw material for inorganic chemicals and is one of the core inorganic chemical products. In the short term, sulfur supply is still disrupted by factors such as geographical conflicts. In the medium to long term, it is difficult for sulfur and pyrite associated with non-ferrous metal mines to increase significantly. As new energy sources replace traditional gasoline and diesel demand, the global refinery capacity growth trend is slowing down, and the overall increase is relatively limited. Overall, the supply and demand pattern for sulfur resources is expected to improve, and the price center for sulfur products is expected to rise.

The main views of Northeast Securities are as follows:

Sulfur is an important basic raw material for inorganic chemicals

Sulfur is mainly produced from petroleum refinery gas, natural gas, coal chemical acid gas, coke oven gas, flue gas, sulfur-containing waste gas, and pyrite. Sulfuric acid is prepared through a contact process. It is widely used in phosphate fertilizer, titanium dioxide, pesticides, dyes, metallurgy, batteries and electronic chemicals, etc., and is one of the core inorganic chemical products.

Supply: The geographical pattern is highly concentrated, and the total volume fluctuates and rises, but the growth rate is slowing down

(1) Looking at global supply, according to USGS data, global sulfur production from 2015 to 2025 showed a fluctuating upward trend, rising from 77.8 million tons in 2015 to 84 million tons in 2025, with a compound growth rate of about 0.77%. The geographical pattern of global sulfur supply is highly concentrated, and the Middle East region is the core source of supply growth; (2) Looking at domestic supply, with large-scale private integrated refining and chemical projects being put into operation since 2019, domestic sulfur production capacity ushered in intensive release. Domestic sulfur production capacity reached 19.335,000 tons in 2026, of which Sulphur production capacity in petroleum refining reached 74.1%, which is the absolute main force on the domestic sulfur supply side; (3) On the import side, domestic sulfur imports and import dependence began to decline markedly in 2020. In 2025, domestic sulfur imports were 9.608 million tons, down 3.45% year on year, and import dependency was about 47%; (4) Judging from the supply pattern, the domestic sulfur industry is highly concentrated, mainly supplied by “two barrels of oil” and large private refining and chemical enterprises, CR3 is nearly 70%. Looking forward to the future, sulfur supply will still be disrupted by factors such as geographical conflicts in the short term. In the medium to long term, it is difficult for sulfur and pyrite associated with non-ferrous metal mines to increase significantly. As new energy sources replace traditional gasoline and diesel demand, the global refinery capacity growth trend is slowing down, and the overall increase is relatively limited.

Demand: phosphate fertilizer stabilizes the basic market, and the contribution of new energy sources increases marginally

(1) Phosphate fertilizer is the core basic market. In 2025, the production of monoammonium phosphate and diammonium phosphate was 205.43 million tons and 12.755 million tons respectively, accounting for 37% of total demand. Among them, changes in export policies are the core marginal variables affecting domestic phosphate demand; (2) The new energy sector contributes the largest marginal increase. After phosphoric acid is purified to battery grade standards through a wet purification process, it is used to synthesize iron phosphate cathode materials, which are eventually used in fields such as NEV power batteries and energy storage batteries. Since 2019, with the successive introduction of innovative lithium iron phosphate products such as blade batteries, consumer concerns about NEV safety issues, and the high cost of cobalt carbonate as a raw material for ternary lithium batteries, demand for lithium iron phosphate batteries began to grow rapidly. From January to September 2026, domestic iron phosphate production reached 3.6426 million tons, an increase of 60.67% year on year, and lithium iron phosphate production reached 4.5191,000 tons, an increase of 66.44% year on year, driving a sharp increase in sulfur demand in the new energy sector.

Sentiment: Currently, the price of sulfur products is at a historically high level

With the outbreak of the US-Iran conflict in 2026, sulfur supply in the Middle East region was clearly impacted, and domestic port stocks continued to be depleted. At the same time, high domestic phosphate fertilizer production led sulfur prices to break through record highs, as of October 23, 2026. The domestic price of sulphur fixation at Zhenjiang Port is 5,200 yuan/ton, which is still in the historically high range. Looking forward to the future, supply disturbances in the Middle East are expected to gradually recede in the short term. In the long run, the overall increase on the supply side of sulfur will be limited in the context of the continuous promotion of dual-carbon policies. At the same time, as demand in the demand-side energy sector continues to grow, the overall supply and demand pattern for sulfur resources is expected to improve, and the price center of sulfur products is expected to rise.

Risk warning: downstream demand falls short of expectations; risk of fluctuations in raw materials and energy costs