Driven by rising sulfur prices, the sulfuric acid market recently experienced a sharp surge, accumulating a 63.9% increase. Entering late December, sulfur prices began to decline, with smelting acid prices in Shandong and Yunnan leading the downward adjustment. On December 26, sulfuric acid prices in Shandong's main production area retreated to CNY960, marking an 8.13% decline. Although prices in parts of East and Central China remain elevated, transaction levels have shifted downward.

01 Multi-Factor Synergy Drives Price Surge

The sharp surge in sulfuric acid prices during Q4 2025 resulted from the combined impact of multiple factors including costs, supply, and market sentiment, with significant divergence observed across different production processes and regional markets.

From the cost perspective, soaring sulfur prices were the primary driver. As the core raw material for sulfuric acid production, sulfur relies on imports for nearly 50% of its supply. Geopolitical factors led to a sharp decline in Russian sulfur exports, while Middle Eastern supply shifted toward emerging markets like Indonesia. This, coupled with persistently low domestic port inventories, intensified supply constraints. Domestic sulfur prices began rising in November, breaking through the CNY4,200 mark in mid-December to hit a record high—a 130% increase from the start of the year. This cost escalation drove up sulfuric acid prices, while concurrently high pyrite ore prices further bolstered cost support for ore-based acid production.

On the supply side, maintenance shutdowns at domestic sulfuric acid plants in November affected annual processing capacity of approximately 21.38 million tons. Maintenance was particularly concentrated in core production areas of Central and East China, with plants in Shandong and Liaoning halting operations, leading to significant regional supply contraction. Maintenance plans for sulfuric acid plants in multiple domestic locations continued into December, resulting in a slight decline in sulfuric acid supply.

On the demand side, ample export orders from coastal factories diverted some sulfuric acid resources to international markets, further squeezing domestic supply. Customs data shows sulfuric acid imports totaled 118,400 metric tons in the first 11 months, down 23.21% year-on-year, while exports reached 4.1247 million metric tons, up 90.69% year-on-year.

Amid rising sulfur prices and tight sulfuric acid supply, bullish sentiment intensified in the sulfuric acid market. Major producers in multiple regions coordinated price hikes. Following initial increases in core areas like Central and East China, other regions followed suit, driving nationwide sulfuric acid prices higher. Prices for key downstream products—phosphate fertilizers, titanium dioxide, and caprolactam—also rose.

02 Supply Assurance and Price Stabilization Efforts Gain Momentum

Soaring sulfur prices have intensified pressure on sulfuric acid producers. Elevated sulfur prices in East China have forced acid manufacturers to raise prices, significantly compressing profit margins for downstream phosphate fertilizer enterprises, with some facing losses.

To address supply chain pressures from soaring global sulfur resource prices and ensure stable fertilizer supply during the critical spring planting season, a special meeting was convened on December 18 under the guidance of the National Development and Reform Commission. Jointly organized by the China Sulfuric Acid Industry Association and the China Phosphate Fertilizer Industry Association, the meeting required smelting acid enterprises to stabilize sulfuric acid sales prices at December 11 levels and called for reduced exports to prioritize domestic supply.

This meeting served not only as an emergency measure but also propelled the sulfuric acid industry's transformation from passively responding to cost increases to proactively building resilient supply chains. Sulfuric acid producers took the lead in lowering their quotations, alleviating cost pressures for the downstream phosphate fertilizer sector and laying the groundwork for the “no price increase” commitment for spring fertilizer.

With domestic prices exceeding export rates, sulfuric acid exports have sharply contracted over the past two months, redirecting supply toward the domestic market. November's net exports fell 47.81% year-on-year, with growth slowing 43.71 percentage points month-on-month. In December, domestic producers responded to the meeting's call, with net exports projected to drop to 190,000 tons—a roughly 10% month-on-month decline.

This transformation in the sulfuric acid market represents a pivotal shift from isolated operations to coordinated supply assurance across the industrial chain. On one hand, it safeguards domestic sulfuric acid supply, mitigating risks of fertilizer shortages during spring plowing caused by export diversion. On the other hand, it encourages smelting acid producers to establish long-term purchase agreements with phosphate fertilizer manufacturers, fostering stable upstream-downstream relationships.

Under the guidance of supply-stabilization policies, market fervor has gradually cooled. Influenced by weakening demand, policy direction, and diverging costs, the sulfuric acid market will likely see localized price adjustments in the short term, with regional price trends further diverging.

03 High-Level Consolidation and Dynamic Equilibrium

Although sulfuric acid prices have retreated from their peak, plant operating rates remain unchanged, with the industry's operating rate at 67.21% during the third week of December. Considering factors such as costs, supply, and policies, the sulfuric acid market is expected to maintain a high-level consolidation trend in the short term, seeking a new equilibrium amid dynamic shifts in supply and demand dynamics.

Although sulfur prices have slightly retreated, raw material costs like pyrite remain stubbornly high, providing strong bottom support for sulfuric acid prices. Most acid plants maintain elevated pricing due to low inventory levels. However, growing resistance from downstream buyers suggests future price increases will likely moderate. As the largest downstream consumer, the phosphate fertilizer industry is currently purchasing primarily based on essential demand. With winter fertilizer stockpiling nearing completion, demand support is expected to decline. Meanwhile, increased maintenance activities in industries like titanium dioxide have led to lower operating rates and reduced purchasing enthusiasm for sulfuric acid.

Looking ahead, SunSirs believes the sulfuric acid market will enter a short-term adjustment phase characterized by price stabilization and supply prioritization. On one hand, clear policy guidance toward ensuring supply and stabilizing prices suggests earlier elevated acid prices will gradually return to reasonable levels. On the other hand, cost support will persist, limiting downward price pressure. In the short term, with phosphate fertilizer enterprises pledging to halt exports, sulfuric acid export volumes are expected to shrink, bringing domestic supply and demand closer to equilibrium. Long-term, the sulfuric acid industry must explore diversified feedstock pathways to hedge against sulfur price volatility risks.

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