In late April 2026, the price of granular sulfur at Zhanjiang Port surpassed 6,700 RMB per ton, marking an 8% monthly increase and over 80% year-to-date. Sulfuric acid prices followed suit, driven by rigid sulfur cost support and concentrated maintenance of smelting acid units, making a near-term decline unlikely. This raw material price surge is reshaping the cost structure and competitive landscape of the phosphate chemical industry chain.
Full-Chain Cost Pressure Transmission
The direct consequence of soaring sulfur prices is a sharp rise in production costs for phosphate chemical companies. Sichuan Hengchuang Co., Ltd. publicly stated that despite having pyrite-based acid production capacity and purchasing smelting by-product sulfuric acid, the surge in sulfur prices still significantly dragged down overall costs. Xingfa Group also confirmed that since March 2026, bulk raw materials like sulfur and methanol have seen notable price increases, pressuring costs in some business segments. Industry insiders predict that ongoing geopolitical tensions in the Middle East and rising demand from emerging industries like nickel hydrometallurgy will keep sulfur prices elevated for the long term, making cost pressure persistent.
For the phosphate fertilizer chain, the shockwave of raw material price increases has fully permeated. Companies face a dilemma where raising product prices is difficult, yet production continues to squeeze margins. Gross profit margins are generally shrinking. Under the constraints of price stabilization policies, downstream end-product prices have limited room for adjustment, making the midstream processing segment the primary bearer of cost pressure.
Leading Firms Build Cost Moats from Multiple Dimensions
Faced with persistently high raw material prices, industry leaders are no longer passively bearing the pressure. Instead, they are proactively addressing it through raw material self-sufficiency, procurement channel optimization, product mix adjustment, and inventory strategies.
Xinyangfeng has established a dual-track supply structure of "pyrite-based acid + sulfur-based acid." Its 1-million-ton pyrite-based acid capacity completely avoids sulfur price fluctuations, while its 3-million-ton sulfur-based acid capacity secures low-cost sulfur quotas through fertilizer supply guarantee qualifications. Meanwhile, the company is increasing the share of new-type fertilizers, which are less sensitive to raw material prices and can smooth out cyclical fluctuations. Once sulfur prices fall, its gross margin recovery potential is significant.
Yuntianhua has built a cost moat with ample strategic sulfur inventories, offering a clear price advantage over market procurement. The company has also optimized its international procurement layout and increased the proportion of smelting acid sourced from surrounding areas in Yunnan, ensuring stable acid supply through multiple channels. This full-capacity operation strategy effectively offsets high raw material costs.
Xingfa Group leverages its full-industry-chain synergy to push up prices of main products like glyphosate and silicone, smoothly passing on cost pressures. Additionally, the company is accelerating a phosphogypsum calcination project to produce sulfuric acid and cement, expected to be operational by 2027. Once completed, it will consume 2 million tons of phosphogypsum and produce 800,000 tons of sulfuric acid annually, directly mitigating the impact of sulfur price hikes. Both Chuanfa Longmang and Yuntian Holdings are enhancing self-sufficiency and competitiveness through lean cost management and integrated phosphorus-nitrogen chains.
Diversified Acid Production Technologies Key to Industry Breakthrough
China's high dependence on imported sulfur makes prices vulnerable to international disruptions. At the first half of 2026 Sulfur Industry Chain Market Exchange Conference, the China Phosphate and Compound Fertilizer Industry Association explicitly called for accelerating the promotion of phosphogypsum-to-acid technology and improving strategic sulfur reserves, aiming to reduce sulfur import dependence to below 30%. The current high sulfur prices have opened an economic window for the industrialization of phosphogypsum-to-acid processes.
Guizhou Phosphate Group's world's largest phosphogypsum decomposition project for acid and cement co-production, known as "1468," is operating stably, consuming 1.4 million tons of phosphogypsum and producing 600,000 tons of sulfuric acid and 800,000 tons of cementitious materials annually, leading the industry in sulfur recovery. Sichuan Hengchuang has postponed its 400,000-ton sulfur-based acid project and is accelerating feasibility studies for phosphogypsum-to-acid technology, while also ramping up pyrite-based acid capacity. New units in Guizhou and Guangxi are expected to start production by mid-2027, adding 900,000 tons of annual capacity, covering nearly 40% of its acid needs and saving about 500 RMB per ton.
In the medium to long term, high sulfur and sulfuric acid prices are likely to persist, but building strategic reserves and reducing import dependence have become industry consensus. This round of raw material price surges is driving the phosphate chemical industry to accelerate technological iteration and build a self-reliant supply chain.