The conflict between the US and Iran and the blockage of the Strait of Hormuz have led to a significant increase in the price of sulfuric acid, which has significantly increased the production costs of lithium, nickel, and other critical minerals essential for the energy transition.

Benchmark Mineral Intelligence said that since the outbreak of the US-Iran conflict, sulfur prices have increased by more than 50 percent, and in some regions, sulfuric acid prices have doubled, leading to disruptions in the battery metal supply chain and forcing some refiners to reduce production due to a shortage of spot sulfur supplies.

Will Talbot, benchmark's raw materials research manager, pointed out that sulfuric acid is an important input for many key minerals. Currently, the impact of the US-Iran conflict on the sulfur market has set off a chain reaction in the global key market. More key mineral producers may be forced to reduce production or even shut down completely.

The lithium industry is under pressure.

This supply shock is reshaping the economics of battery materials production. sulfuric acid previously accounted for about 3% of the production costs of hard rock lithium chemicals, but that has now risen to 11%, surpassing energy costs to become the largest single component of cash costs, Benchmark said in a special report. sulfuric acid currently accounts for 22% of the total cost of hard rock lithium conversion, becoming the "most volatile and important input variable" in the lithium processing stage, the consultancy said.

The production of nickel using the high-pressure acid leaching (HPAL) process also exposes it to a high degree of risk related to the sulfur market. According to Benchmark, sulfur now accounts for 42% of the production cost of HPAL nickel, significantly higher than the 26% before the conflict. Indonesia, the world's largest nickel producer, relied on the Middle East for 76% of its sulfur imports last year. Additionally, more than 10 tons of sulfur are consumed to produce 1 ton of HPAL nickel.

Supply risk

The report warns that the biggest risk facing the industry today is no longer price, but physical availability — at least half of global seaborne sulfur trade needs to pass through the Strait of Hormuz. Benchmark expects that more than half of global lithium, cobalt, rare earth and purified phosphoric acid production will face the threat of sulfur and sulfuric acid supply chain disruptions in 2026. High-purity manganese sulfate used in electric vehicle batteries is completely dependent on sulfuric acid supply.

Global refiners are facing supply pressure. Benchmark data shows that the spot price of sulfuric acid in Indonesia and Chile has climbed to over $380/ton and $440/ton, respectively, as downstream processors are rushing to find alternative sources. In US dollars, the price of battery-grade lithium carbonate in China has increased by about 65% this year.

More widespread impact

The impact on copper producers is mixed. While the solvent extraction-electrowinning process, which accounts for 22% of global mine copper production, requires a significant amount of sulfuric acid, copper smelters have benefited from it, as sulfuric acid is a profitable byproduct of the copper smelting process. Benchmark notes that the handling and refining fees for copper concentrate have fallen significantly since the outbreak of the US-Iran conflict, mainly due to the significant increase in sulfuric acid prices, which has greatly improved the economic efficiency of smelters.

The current supply shortage highlights the growing collision between geopolitical conflicts and the energy transition supply chain. Benchmark notes that countries with sulfur and sulfuric acid production capabilities (such as the United States) may be more resilient to risks than those relying on imports (such as Australia).

The agency warned that even if the Strait of Hormuz can quickly resume shipping, the damaged refining infrastructure in the Gulf region will still require a significant amount of time and capital to repair, which will extend the period of supply pressure on the global critical mineral markets.

Note:

The sulfur market is facing a tight supply, and some downstream users are facing a "supply gap", with the transaction price expected to exceed 10,000 RMB/ton.

Industry sources revealed that at present, the China port sulfur inventory is approaching 900,000 tons, while it was around 2 million tons last year at this time.

Reporters learned from the industrial chain that due to blocked import channels and limited domestic production, the price of sulfur has been soaring. On June 7, the bottom price of solid sulfur bidding in Shandong refinery enterprises reached 9800 RMB/ton, and the actual transaction price is highly likely to exceed 10,000 RMB/ton, an increase of more than 2000 RMB/ton from the beginning of the month. In early 2026, the price was only 3850 RMB/ton, and the current supply is extremely tight. Industry insiders revealed that at present, the sulfur inventory at domestic ports is close to 900,000 tons, while it was about 2 million tons last year.

"Phosphorus fertilizer enterprises downstream have been relatively stable in terms of production capacity because they have sulfur supply guaranteed. The production capacity of small and medium-sized enterprises has increased from a low level; other fine chemical enterprises that need sulfur (raw material) are facing the risk of supply interruption, such as the titanium white powder enterprises using the sulfuric acid method, whose production capacity has dropped sharply, and the product price has increased accordingly. The production capacity of titanium white powder enterprises using the chlorination method, which basically does not need sulfur, is higher, and the product is in short supply," said several people in the industry chain.

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