By late April 2026, granular sulfur prices at Zhanjiang port hit 6,700 yuan/ton, up 8% month-on-month and over 80% year-to-date. Sulfuric acid prices followed, supported by high raw material costs and scheduled maintenance of smelting acid units. This surge is not an isolated event—geopolitical disruptions, rising demand from new energy sectors, and global refining capacity adjustments have jointly pushed sulfur prices upward, directly squeezing the cost baseline of the phosphorus chemical industry.
Cost Pressure Across the Chain
Sulfur is a key raw material for phosphate fertilizers, and its price volatility directly impacts company margins. Under the mainstream sulfur-burning acid process, raw material costs can account for over 40% of total costs. Sichuan Hengtong Co. stated that despite having pyrite-based acid capacity and purchasing smelting by-product sulfuric acid, the surge in sulfur prices still significantly dragged down production costs. Xingfa Group also confirmed that since March 2026, prices of bulk raw materials like sulfur and methanol have risen sharply, pressuring some business segments.
The critical issue is whether costs can be passed downstream. The phosphate fertilizer industry is constrained by price stabilization policies, limiting the room for price hikes, trapping companies in a "produce and lose" dilemma. Industry forecasts suggest that continued Middle East instability and rising sulfur demand from emerging sectors like nickel hydrometallurgy will keep sulfur prices elevated, making cost pressure persistent.
Leading Firms Diversify Strategies
Facing persistently high raw material costs, leading companies are building resilience through raw material self-sufficiency, procurement channels, and product mix adjustments.
Xinyangfeng adopts a dual-track supply strategy: its 1 million-ton pyrite-based acid capacity completely avoids sulfur price fluctuations, while its 3 million-ton sulfur-burning acid capacity leverages fertilizer supply guarantees to secure low-cost sulfur quotas. The company also increases the share of new-type fertilizers, which are less sensitive to raw material prices.
Yuntianhua relies on ample strategic sulfur inventories for a clear cost advantage over market purchases. It also optimizes international procurement and increases purchases of smelting acid from Yunnan to ensure stable supply.
Xingfa Group leverages its integrated chain to pass costs through price increases for glyphosate, silicone, and yellow phosphorus. It is accelerating a phosphogypsum calcination project to produce sulfuric acid and cement, expected to start in 2027, consuming 2 million tons of phosphogypsum and producing 800,000 tons of sulfuric acid annually.
Technology Breakthrough: Phosphogypsum-to-Acid Gains Traction
China's high dependence on imported sulfur makes prices vulnerable to international shocks, a widely recognized pain point. At a 2026 sulfur chain market meeting, the China Phosphate Fertilizer Industry Association called for accelerating phosphogypsum-to-acid technology and improving sulfur strategic reserves, aiming to cut import dependence to below 30%.
Current high sulfur prices have opened an economic window for phosphogypsum-to-acid industrialization. Guizhou Phosphate Group's world's largest phosphogypsum decomposition project is running stably, consuming 1.4 million tons of phosphogypsum and producing 600,000 tons of sulfuric acid annually. Sichuan Hengtong has postponed a 400,000-ton sulfur-burning acid project and is evaluating phosphogypsum-to-acid feasibility, while expanding pyrite-based acid capacity in Guizhou and Guangxi, expected to add 900,000 tons of capacity by mid-2027, covering nearly 40% of its acid needs with a cost saving of about 500 yuan per ton.