SunSirs: Sulfur Prices Surged 18% in March! Tight Supply, Strong Demand, and Geopolitical Tensions Fuelled the Price Surge

Price data

As of March 11, the benchmark price of sulfur from SunSirs was 4,616.67 RMB/ton, an increase of 18.07% compared with the beginning of the month (3,910.00 RMB/ton).

Upstream:

International crude oil (Brent): Since March, prices have risen by about 5%-7%, pushing up sulfur production and processing costs; Natural gas (European TTF): Prices rose by about 8%-10% in March, further increasing energy costs.

Downstream:

Since March, sulfuric acid prices have risen by approximately 12%-15%, monoammonium phosphate by approximately 6%-8%, and diammonium phosphate by approximately 5%-7%.

Market analysis

1. Supply and Demand:

Supply side: Domestic sulfur plants were entering their peak spring maintenance period, leading to a temporary decrease in output and a reduction in market supply. Logistics disruptions in some regions and delays in port and inland arrivals further exacerbated the tight spot supply situation.

On the demand side: With the arrival of the peak season for spring plowing and fertilizer preparation, the operating rate of downstream industries such as phosphate fertilizer and sulfuric acid increased, and the demand for sulfur increased significantly. In the early stage, the inventory of downstream enterprises was at a low level, and they concentrated on replenishing their inventory under the expectation of price increases, resulting in high purchasing enthusiasm and further pushing up market demand.

2. Market Sentiment:

Traders and downstream enterprises were generally bullish on the market outlook, actively stockpiling and purchasing at higher prices, resulting in a significant increase in market activity. Tight spot supply coupled with a recovery in demand had strengthened market expectations for price increases, driving prices up rapidly.

3. Middle East Geopolitical Risks:

Cost side: Tensions in the Middle East were pushing up international crude oil and natural gas prices. Sulfur is a byproduct of oil refining and natural gas processing. Rising energy prices directly increased the production and transportation costs of sulfur, providing cost support for domestic prices.

Geopolitical conflicts have exacerbated global commodity risk aversion, leading to capital inflows into the energy and chemical sector and driving up expectations for prices of basic chemicals such as sulfur. As a major global oil and gas producing region and sulfur exporter, the Middle East has already reflected market concerns about "future supply disruptions" in current prices, further reinforcing expectations of price increases.

Market Outlook

In the short term, domestic plant maintenance will continue, and the tight spot market is unlikely to ease quickly. Coupled with cost and sentiment support from geopolitical risks, sulfur prices are expected to remain high and strong.

In the medium term, attention should be paid to the release of production capacity after the completion of plant maintenance, changes in downstream demand after the spring planting season, and the actual impact of the evolution of the situation in the Middle East on the global supply chain, while being wary of the risk of a pullback from high levels.

In summary, the core logic behind this week's sulfur price increase was the mismatch between domestic supply and demand, coupled with traders' bullish sentiment. Middle East geopolitical risks, through increased costs, supply concerns, and sentiment transmission, acted as a catalyst to amplify the price increase and strengthen the upward trend, but were not the fundamental reason for this round of price increases.

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