Gongxi Securities recently released an in-depth report on the sulfur industry: The IEA predicts that the growth rate of natural gas consumption for the whole year will be 1.3%, and the growth rate of natural gas consumption is expected to be 2% next year. The main production areas of global high-sulfur crude oil are the Middle East, and OPEC recently decided to suspend production increases in the first quarter of 2026, and some countries have submitted additional production reduction plans.

The following is an abstract of the research paper:

Core Points

Sulphur is mainly associated with oil and gas production and refining, and as oil and gas consumption growth slows in the future, and high-sulphur crude oil production is expected to decline next year, the global sulphur production growth is expected to be low. Sulphur is mainly associated with oil and gas production and refining processes, and the production of sulphur is closely related to the consumption of fossil energy. Major institutions all predict that the growth rate of oil consumption next year will be low, only about 1%. The IEA predicts that the growth rate of natural gas consumption will be 1.3% this year and 2% next year. The main production areas of high-sulphur crude oil in the world are the Middle East, and OPEC recently decided to suspend production increases in the first quarter of 2026, and some countries have submitted additional production reduction plans. Iran is under US sanctions, and its crude oil production is constantly declining. The growth rate of oil demand is low, the production of high-sulphur crude oil is expected to decline, and the global sulphur production is expected to grow at a low rate. Russia was originally the second largest sulphur producing country in the world, but its refineries have been attacked continuously this year, which directly affects the production and export of gas sulphur, and exacerbates the sulphur supply shortage.

The most important application of sulfur is the preparation of sulfuric acid, and the demand for sulfuric acid is expected to continue to grow at a moderate rate, which directly leads to the tight global supply of sulfur. In 2024, 93% of China's sulfur was used to prepare sulfuric acid. About half of the sulfuric acid in the world is used to prepare fertilizers, and titanium white, caprolactam, and iron(III) phosphate are also important consumers of sulfuric acid. The World Fertilizer Association predicts that the global phosphatic fertilizer demand will grow at a CAGR of 1-2% from 2025 to 2027. Due to the strong demand for power batteries and energy storage, the production of related products has increased significantly. In 2024, the output of iron(III) phosphate was 1.89 million tons, with a growth rate of 31%. Indonesia is rich in laterite nickel mines, and the high-pressure acid leaching process has a significant advantage. By the end of 2025 and 2026, there are still about 300,000 tons of metal nickel capacity to be released. Under the high-pressure acid leaching process, it takes about 30 tons of acid to prepare one ton of metal nickel. With the rapid release of demand for new energy, the demand for sulfuric acid continues to grow at a moderate rate, which also drives the growth of sulfur demand, leading to a tight global supply and demand of sulfur.

Sulfuric acid production from sulfur is a high proportion in China, and it is also the preferred process for downstream phosphatic fertilizer enterprises. In 2024, China's sulfuric acid production capacity was 141 million tons, the output was 120 million tons, and the average utilization rate was 85.4%. In 2024, the production of sulfuric acid from sulfur was 51.066 million tons, accounting for 42.5%, which is the most important process for sulfuric acid production in China. Phosphatic fertilizers are the largest downstream of sulfuric acid, and the domestic phosphatic fertilizers' sulfuric acid demand accounted for 50.9% in 2024. Sulfuric acid production from sulfur is the preferred process for almost all leading phosphatic fertilizer enterprises. Sulfuric acid production from sulfur is of great significance to ensure the supply of sulfuric acid.

China has a high dependence on the import of sulfur, mainly from the by-product of refining and chemical industry, with a high degree of capacity concentration. In 2024, China's sulfur production was 11.0674 million tons, and the import volume was 9.9523 million tons, with an import dependence of 47%. More than 70% of China's sulfur comes from the by-product of refining, and about 20% of it comes from natural gas associated sulfur. According to China's Petroleum and Petrochemical Data, China's current sulfur production capacity is 16.7895 million tons, of which Sinopec's sulfur production capacity is 8.34 million tons, China National Petroleum Corporation's sulfur production capacity is 3.68 million tons, and Rongsheng Petrochemical's sulfur production capacity is 1.21 million tons.

At present, the sulfuric acid-sulfur industry chain in China is highly prosperous, and the price of sulfur is expected to rise. From January to October 2025, China's sulfur output was 9.72 million tons, a year-on-year increase of 6.5%. The sulfur import volume was 8.7 million tons, a year-on-year increase of 2.2%. The apparent consumption volume was 18.41 million tons, a year-on-year increase of 4.4%. On December 4, the domestic spot price of solid sulfur was 4,100 RMB per ton, a year-on-year increase of 165.37%. Recently, the price of phosphate fertilizers has increased, and the high price of sulfur has begun to be transmitted downstream. Sulfur is a commodity priced internationally based on global supply and demand. Under the circumstances of tight global supply and demand and rising overseas contract prices, the domestic sulfur price is expected to rise further.

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