Sulfur Shortage Hits Fertilizer and Nickel Producers Worldwide

Global sulfur prices are easing in early October 2026 after reaching all-time highs in June, but the market remains short of supply. The Chinese benchmark stood at about 7,702 yuan per tonne on October 6, down roughly 6% over the past month and about 30% below the June record of 11,084 yuan. It is still nearly three times higher than a year ago. The decline reflects buyers who can no longer afford the raw material rather than a real recovery in supply.

What caused the sulfur shortage

The shortage began in early March 2026, when the war between the United States, Israel and Iran effectively closed the Strait of Hormuz. Gulf countries account for roughly a quarter of world sulfur production and close to half of seaborne trade. Sulfur is recovered as a by-product of oil refining and natural gas processing, so output also dropped when regional producers reduced their operations. Kuwait declared force majeure on its oil exports in March, Qatar's Ras Laffan gas complex was damaged, and the Shah gas plant in the United Arab Emirates, one of the largest sulfur sources in the world, was hit by drones in March.

The Ruwais sulfur terminal in the United Arab Emirates illustrates the problem. ADNOC turns liquid sulfur into granules there and loads sulfur arriving by rail from the Habshan and Shah gas plants. Its monthly price at Ruwais is the reference for buyers in India. Most of these cargoes have been stuck behind the strait. By late April, about 1 million tonnes of sulfur was waiting on vessels inside the Gulf.

The conflict hit a market that was already tight. Consultancy CRU estimates that world demand exceeded supply by about 2 million tonnes in 2025, driven by new fertilizer capacity in Morocco and new nickel plants in Indonesia. Gulf export prices had already risen sharply through 2025.

Sulfur price trend from July to October 2026

Early July marked the peak for Gulf producers. Kuwait's KPC raised its monthly price by $145 to a record $950 per tonne at the loading port. ADNOC set its price at $1,000 per tonne at Ruwais and QatarEnergy at $890. In September 2025, the Kuwaiti price was only $284. In the United States, the contract price for sulfur delivered to Tampa, Florida, settled at a record $705 per long ton for the third quarter, up from $655 in the second quarter.

A ceasefire had allowed more than 800,000 tonnes of sulfur to leave the Gulf in June. Fighting resumed in mid-July and no sulfur cargo was confirmed leaving the strait for several weeks after July 18. In August, KPC lowered its price to $865 per tonne while ADNOC and QatarEnergy kept theirs unchanged. Freight and war insurance added as much as $200 per tonne, which kept delivered costs in Asia above $1,000 per tonne.

In September, buyers pushed back. In China's Shandong province, sulfur averaged 7,453.5 yuan per tonne in the week to September 18, a fall of 7.2% in one week. The average Middle East export price held at $855 per tonne, while delivered prices slipped to about $1,050 in South Asia and $1,005 in Indonesia.

The correction continued at the start of October. QatarEnergy cut its October price by $45 per tonne and Kuwait also lowered its benchmark. A Canadian cargo was sold to Indonesia at $950 per tonne delivered, which gave buyers a cheaper alternative to Gulf supply. Traders expect the fourth-quarter Tampa contract to settle at least $50 below the third quarter.

Is there still a shortage?

Yes. According to the International Food Policy Research Institute, world exports of elemental sulfur fell by a third in the first half of 2026, from 13.5 million tonnes to 9 million tonnes, and Gulf suppliers accounted for almost three quarters of the drop. China's sulfur imports fell 58% over the same period.

Flows through Hormuz remain a fraction of normal. Market sources quoted by ICIS on October 2 said that only one to three sulfur vessels cross the strait each week, for a monthly volume of 250,000 to 350,000 tonnes. Security deteriorated again in the first week of October, with at least seven attacks on tankers reported in the strait. On October 4, Iran's chief negotiator said the strait would not reopen until seven Iranian conditions were met.

Export bans and restrictions

Several countries have restricted exports to protect their own fertilizer industries, which removed additional supply from the market.

Russia banned exports of industrial sulfur on November 1, 2025. On June 25, 2026, the government extended the ban until December 31, 2026, with exemptions for members of the Eurasian Economic Union. On September 12, Russia also banned exports of sulfuric acid until the end of the year, a measure that mainly affects copper producers in Kazakhstan.

China moved from quotas to a full halt of sulfuric acid exports from May 2026. Turkey restricted sulfur exports from April through the third quarter. India has suspended sulfur exports since mid-July, although no official order has been published. India shipped about 800,000 tonnes in 2025, so the effect on world supply is limited. In Africa, Zambia banned sulfuric acid exports in September 2025 and partly eased the measure in May 2026.

Industries most affected

Phosphate fertilizer producers are the hardest hit. About 4 tonnes of sulfur are needed to make 10 tonnes of the main phosphate fertilizers. Mosaic, the largest US producer, announced on May 11 that it would halve output at its Faustina plant in Louisiana and its Bartow plant in Florida, and later extended the cuts to four US plants. In Brazil, Mosaic and EuroChem have curtailed production and closed some units. Producers in Egypt and India are also reducing output, and China has cut its phosphate exports. Phosphate fertilizer prices rose about 30% after the war began and have stayed high, while urea and ammonia prices have fallen back toward pre-war levels.

Governments are absorbing part of the cost. The European Commission allows member states to cover up to 70% of farmers' extra fuel and fertilizer costs. India's fertilizer subsidy bill may exceed 3 trillion rupees, against 1.71 trillion in the budget.

Nickel processing for electric vehicle batteries comes second. Indonesian plants that use sulfuric acid to extract nickel buy 75% to 80% of their sulfur from the Middle East. Several processors have trimmed output by at least 10% since March, and Huayou reduced production at its Indonesian plant by about half. Sulfur now represents 30% to 35% of operating costs at these plants, compared with 25% in normal times.

Copper and cobalt mining is also exposed. Mines in the Democratic Republic of Congo, Zambia and Chile need sulfuric acid to extract metal from ore. Chile received about a third of China's acid exports in 2025, a source that has now disappeared. Miners that own a smelter are partly protected because smelters produce acid as a by-product.

In Europe, chemical producers are running at reduced rates and some plants have closed, which weighs on regional sulfur demand.