Industry News

Recently, the ongoing conflict in the Middle East has not only impacted oil and gas supply, but also disrupted key shipping channels. This has led to a tightening of global sulfur supply and rapid price increases.

 

CNBC's Jiang Yu: This week, two commodity economists from HSBC released their latest report, reminding investors to pay attention to a risk currently overlooked by the market, which is the global sulfur shortage. Sulfur is already a byproduct of oil and gas production, and the Middle East conflict not only affects oil and gas supply, but also disrupts transportation, compressing the supply of sulfur from the source to logistics, thereby pushing up market prices.

 

 

 

By 2025, the Middle East region will account for approximately 25% of global sulfur production and nearly half of global seaborne sulfur trade. According to HSBC's report, international sulfur prices have risen by about 40% since mid February this year, to approximately $600 per ton.

 

 

 

Approximately 80% of global sulfur is converted into sulfuric acid, so to analyze the impact of rising sulfur prices, we can first take a look at the uses of sulfuric acid: according to HSBC's report, about 60% of sulfuric acid is used for fertilizers, 19% for industry, and 14% for chemicals. Analysis indicates that supply constraints will impact multiple downstream industries.

 

 

 

Morgan Bazlian, Director of the Payne Institute for Public Policy Research in the United States: Sulfuric acid is an important raw material for fertilizer production and a key front-end input for the mining industry, especially copper mining. Copper itself is one of the fundamental materials of the entire economic system, and it is widely used in AI data centers, power equipment, and various machinery.

 

 

 

In copper production, approximately 20% of the global output is achieved through solvent extraction and electrolytic deposition processes, which heavily rely on sulfur. Economists estimate that for every $100 increase in sulfur prices per ton, the operating costs of producing copper will increase by approximately 4%. This means that the production cost of copper has increased by about 8% since mid February. The high-pressure acid leaching process for producing nickel and cobalt also relies on sulfur. HSBC estimates that for every 10% increase in sulfur prices, the production cost of using high-pressure acid leaching process will increase by about 6%.

 

 

 

Analysis suggests that in terms of regions, Indonesia, Chile, and some African economies may be the most affected.

 

 

 

As the world's largest nickel producer, Indonesia relies on imports from the Middle East for about three-quarters of its sulfur; Chile, the world's largest copper producer and also the largest importer of sulfuric acid, will also be affected. In addition, the Democratic Republic of Congo is also an important copper supplier, with approximately 90% of its sulfur coming from the Middle East, and local copper and cobalt production is expected to be impacted.

 

 

 

Finally, industry insiders also remind that in situations where supply is limited and resources need to be balanced and allocated, it is expected that governments around the world will prioritize food security and use sulfur resources for fertilizer production, rather than the metal industry. This may lead to related manufacturers reducing production or arranging shutdowns for maintenance in the coming months.

 

Source: CCTV Finance (ID: cctvyscj)

 

Producer: Ke Chengyun

 

Editor in Chief: Wu Yang

 

Editor: Zhang Yafang

 

(Editor in charge: Shan Xiaobing)