A Supply Shock With No Response Mechanism: The Sulphur Crisis of 2026

A rare convergence of supply shocks has triggered the most acute sulphur and sulphuric acid shortage in a generation, with effects rippling across copper, nickel and fertiliser production worldwide. Three simultaneous events have collided to choke off global supply of a feedstock that has no ready substitute.

The disruption began on 28 February 2026, when the Strait of Hormuz closed to commercial dry bulk traffic. The impact on sulphur markets was immediate, as loaded vessels queued in the Middle East Gulf with no way out. According to vessel-tracking analysis from Kpler, more than 600,000 tonnes of sulphur were stranded on fertiliser-laden ships caged inside the Gulf by the first peak in April, and global sulphur exports fell roughly 45 percent below late-February levels. The UAE became the only Gulf country still able to move sulphur through the Strait, with just three confirmed transits in May.

The situation worsened on 10 April 2026, when China imposed a full export ban on sulphuric acid running through August 2026, replacing what had been a 700,000-tonne annual quota with a complete halt. As the world's largest acid exporter, China had served as a critical secondary supplier, with Chile, Indonesia and Saudi Arabia among its main destinations. Removing that backstop at the same moment the Gulf route was choked off was structurally damaging. A parallel ban on sulphur exports by Russia tightened supply still further.

The downstream fallout maps onto three industries that all depend on the same feedstock.

In copper, the SX-EW process accounts for about 15 percent of global cathode output, concentrated in the DRC, Chile and the US. Non-integrated producers such as BHP Escondida and Antofagasta, which buy acid on the seaborne market rather than generating their own, are fully exposed to the squeeze.

In nickel, Indonesia's high-pressure acid leach (HPAL) plants, which import an estimated 75 to 80 percent of their sulphur from the Gulf, have been forced to cut back sharply. These plants cannot run at partial capacity, so any supply gap is acutely damaging, and Huayou has reduced output at its Indonesian operation by roughly 50 percent. With sulphur now exceeding half of total mixed hydroxide precipitate production cost, many operations have slid into uneconomic territory.

Fertiliser producers have been hit just as hard. Morocco's OCP took its last Gulf sulphur cargo on 10 April and now leans on Russian and US supply, while Mosaic has cut US phosphate output by about 2 million tonnes on elevated costs. North American sulphur is flowing to Africa at historic premiums.

The crisis has reshaped trade routes in ways with little historical precedent. Sulphur is moving from the US Gulf and Vancouver to Africa as the only spot-available source, Indian acid from Bedi is being diverted to Indonesian nickel plants, and India has emerged as a fresh supplier of sulphuric acid to Chile and Brazil following China's ban. Saudi Arabia, struggling to navigate the Strait, has begun importing acid through Yanbu rather than its usual Gulf port.

More than three months into the disruption, no structural fix is in sight. Sulphur is a byproduct of refining, not a commodity producers can ramp up when prices rise, so the market has no short-term supply response mechanism. The only durable resolution would be a reopening of the Strait of Hormuz followed by a gradual inventory drawdown, and even then relief would be partial because much of the Gulf supply is already committed under long-term contracts to India and Morocco. The shortage remains active across all three downstream sectors.