Market Trend Review

This week, the sulfur market continued its upward trend from the previous period, showing a comprehensive increase across the board. As of January 8th, SunSirs' benchmark price for sulfur was 3,860.00 RMB/ton, a 5.44% increase compared to the beginning of the month (3,661.00 RMB/ton). Shandong province performed particularly strongly, leading this round of price increases. Shandong Lihua Group raised its price by 300 RMB/ton in a single day, a significant increase of 8.1%, reaching 4,000 RMB/ton, which greatly boosted market sentiment. Besides Lihua Group, major producers such as Sinopec Qingdao Refinery and Shandong Dongming Petrochemical also raised their prices, with increases ranging from 50 to 170 RMB/ton. The East China, North China, South China, Northeast China, and Northwest China regions all showed a synchronized upward trend, with the domestic benchmark price for sulfur significantly higher than last week.

Analysis of Driving Factors

The strong market rally was primarily driven by the combined effect of supply and demand fundamentals:

1. Supply continued to tighten:

On the international market, factors such as maintenance shutdowns at some facilities in the Middle East and restrictions on Russian exports have led to a reduction in global sulfur supply. The January contract prices of major exporting countries increased by approximately US$22-25 per ton compared to the previous month, pushing up the landed cost of imported sulfur in my country. The equivalent price in RMB has generally exceeded 4,300 RMB/ton, providing significant cost support. Domestically, major producers were operating steadily, but there was no significant increase in production capacity. Port inventories (for solid sulfur) remained at a relatively low level of around 1.9 million tons, and have shown a slight downward trend recently, resulting in tight supply of spot resources in the market.

2. Downstream demand enters its peak season:

Fertilizer demand surges: As of Januanry 8, it's a critical period for "winter storage of spring fertilizers" in China. To ensure agricultural production in the spring, major agricultural regions such as Northeast China have taken the lead in purchasing raw materials for phosphate fertilizers. Sulfur, as an indispensable core raw material for producing phosphate fertilizers (such as monoammonium phosphate and diammonium phosphate), has seen a significant increase in demand, constituting the most direct and powerful driving force behind price increases.

Stable demand in emerging sectors: In addition to the traditional fertilizer industry, the demand for sulfur from the new energy industry also provided continuous support.

Specifically:

Ferrous lithium phosphate cathode material: As an important cathode material for power batteries and energy storage batteries, the production of its precursor, iron phosphate, requires sulfuric acid (derived from sulfur). With the rapid development of new energy vehicles and the energy storage industry, the indirect demand for sulfur in this field is steadily increasing.

The demand for inventory replenishment in other traditional sectors such as the chemical industry also provided some support to the market before the Spring Festival..

Regional market characteristics

Shandong: As a major refining hub and important consumption area, Shandong experiences intense supply and demand dynamics, making its prices the most sensitive to change and leading the nationwide price increases. Both solid and liquid sulfur prices are among the highest in the country.

East and South China: Prices are showing steady increases, largely influenced by high import costs and changes in port inventories. Port spot prices, in particular, are affected by both international market trends and domestic demand.

North China and Northeast China: Prices mainly follow the trends of the main production areas, and the Northeast region directly benefits from the start of spring storage demand, resulting in strong price support.

Northwest China and other regions: Prices are relatively lagging behind, but are also rising in tandem due to demand transmission and cost push factors..

Market Outlook

Overall, positive factors are expected to dominate the sulfur market in the short term. The tight supply situation is unlikely to ease quickly, and high international prices will continue to be passed on to the domestic market. At the same time, demand during the peak season for spring planting fertilizers is currently being released, and purchasing activity from downstream phosphate fertilizer companies and traders is expected to remain active. Therefore, sulfur prices are expected to maintain a generally stronger and volatile trend.

However, the market also needs to be aware of potential risks. On the one hand, caution is needed regarding the potential negative impact of rapidly rising prices on downstream demand; on the other hand, close attention should be paid to whether the government will introduce specific measures regarding its policies on "stabilizing prices and ensuring supply" of fertilizers for spring planting, in order to mitigate excessive fluctuations in raw material prices. Overall, given the tight balance between supply and demand, the sulfur market is likely to remain volatile with a tendency to rise rather than fall in the short term.

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.