SunSirs: How the U.S.-Iran Conflict Impacts China's Sulfuric Acid Market

On February 28, 2026, as the United States and Israel launched military strikes against Iran, the Islamic Revolutionary Guard Corps announced a ban on any ships passing through the Strait of Hormuz, bringing this global energy and chemical transportation route to a virtual standstill. For China's domestic sulfuric acid market, this geopolitical conflict far away in the Middle East is not a distant spectacle; instead, its impact has quickly spread to the domestic market through a clear chain of raw material supply disruptions, cost increases, and downstream transmission.

Raw material side: High dependence on Middle East for sulfur imports

Domestic sulfuric acid production is highly dependent on sulfur, and China is the world's largest importer of sulfur, with its dependence on imported sulfur remaining above 50% for a long time. The Middle East is the core supply region for the global sulfur trade. According to statistics from JLC, about half of the world's seaborne sulfur trade volume comes from the Middle East Gulf region. In 2025, sulfur imported by China from the Middle East accounted for more than half of its total sulfur imports. As an important sulfur-producing country in the region, Iran contributes about 30% of the world's sulfur exports.

The closure of the Strait of Hormuz has directly cut off the lifeline for sulfur exports from the Middle East. Key sulfur export ports in the Middle East, including Jubail in Saudi Arabia, Ruwais in the United Arab Emirates, and Imam Khomeini Port in Iran, are all located in the Persian Gulf. All exported goods must pass through the Strait of Hormuz to enter the Indian Ocean. The closure of the strait means that more than half of China's imported sulfur logistics will be affected.

Cost Transmission: A Chain Reaction from Sulfur to Sulfuric Acid

Sulfur is the main raw material for sulfuric acid production, and its price fluctuations directly affect the production cost of sulfuric acid. After the escalation of the situation in the Middle East, the domestic price of sulfur has soared rapidly, exceeding 4,400 yuan per ton. The skyrocketing price of sulfur has directly driven up the production cost of sulfuric acid, which has then been transmitted to the sulfuric acid market. Driven by the rising price of sulfur, the price of sulfuric acid has increased simultaneously.

Spring plowing rigid demand superimposed: market supply and demand contradictions intensify

It is currently a critical period for spring plowing and fertilizer preparation, and the phosphate fertilizer industry has a rigid demand for sulfuric acid. According to statistics from Jinyuanchuang, the output of phosphate fertilizers during the spring plowing period accounts for 45%-50% of the annual output, and 1.8 tons of sulfuric acid are consumed for every 1 ton of diammonium phosphate produced. After the holiday, the resumption of work in the domestic downstream compound fertilizer industry has accelerated, and the capacity utilization rate has rebounded to about 40%.

Under the dual impact of disrupted supply at the raw material end and concentrated release of demand, the contradiction between market supply and demand has become prominent. As of February 28, the total inventory of sulfur at Chinese ports was approximately 1.8 million tons. Based on the average monthly consumption of 1.4-1.5 million tons during the spring plowing period, the current inventory can only last for 1.2-1.5 months. If the strait blockade continues, the inventory will be quickly depleted during the peak spring plowing period in March-April.

Policy Buffers and Market Outlook

Although the import side faces significant uncertainties, the domestic sulfuric acid market is not without buffer room. On one hand, the current policy focus is on "ensuring domestic food security and domestic fertilizer supply", and during the spring plowing period, domestic demand will be prioritized through means such as export controls. On the other hand, China's import sources are diversified, and the resource gap in the Middle East can be partially compensated by increasing purchases from regions such as North America and East Asia.

Overall, the impact of the current Israel-Iran conflict on China's sulfuric acid market depends on three key variables: the duration of the strait closure, the supplementary capacity of alternative channels, and the evolution of the geopolitical situation. If the blockade lasts for a short period, the impact will mainly be on price fluctuations, and enterprises can respond through inventory adjustments. If it remains closed for a long time, the supply gap will continue to widen, the price of sulfuric acid may exceed the previous high, the production cost of downstream phosphate fertilizers will further rise, and this will eventually be transmitted to the agricultural production sector. It is recommended to pay close attention to the situation in the Middle East and changes in the price of raw material sulfur in the follow-up.

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