6,700 yuan per ton. That was the price of granular sulfur at Zhanjiang Port at the end of April 2026, up 8% month-on-month and over 80% year-to-date. Compared to the same period last year, the price has nearly doubled. Sulfuric acid followed suit, with concentrated maintenance of smelting acid units and rigid support from high-priced sulfur keeping prices elevated.
This raw material surge is transmitting from the cost side to the entire phosphorus chemical supply chain. It is not a short-term spike but a structural energy shock driven by geopolitical conflicts, supply tightening, and surging demand from new energy sectors. The industry is undergoing a cost-driven restructuring.
Cost Transmission: Breakage and Restructuring
In the phosphate fertilizer supply chain, sulfur is a core raw material with a significant share of production costs. When sulfur prices soared from below 4,000 yuan to 6,700 yuan, corporate cost pressures amplified almost linearly. Sichuan Hengtong Phosphate Chemical publicly stated that despite supporting pyrite-based acid production and purchasing smelting by-product sulfuric acid, the surge in sulfur prices still heavily weighed on production costs.
A more thorny issue is that under the policy constraints of stabilizing supply and prices, the room for end-product price increases is limited. Cost increases cannot be smoothly passed on, squeezing gross margins from both sides. This is the core dilemma of the current round: price increases are easy, but transmission is difficult.
However, not all companies are passive. Xingfa Group, leveraging its full-industry-chain synergy, pushed up prices of its main products such as glyphosate, silicones, and yellow phosphorus, achieving smooth cost transmission. This means the completeness of the industrial chain determines a company's ability to withstand raw material volatility.
Three Lines of Defense for Leading Companies
Leading companies are building cost moats from three dimensions.
The first line is raw material self-sufficiency. Xinyangfeng has built a dual-track supply pattern of 'pyrite-based acid + sulfur-based acid,' with a 1-million-ton pyrite-based acid capacity completely avoiding sulfur price fluctuations. Meanwhile, relying on fertilizer supply guarantee qualifications, its 3-million-ton sulfur-based acid capacity can stably obtain low-price sulfur quotas, effectively smoothing procurement costs.
The second line is inventory and procurement strategy. Yuntianhua, with ample strategic sulfur inventory, has a clear cost advantage over market procurement. It also optimizes international procurement layout and increases the proportion of smelting acid procurement from surrounding Yunnan, diversifying channels to share high-price raw material pressure.
The third line is product structure upgrade. Xinyangfeng continues to increase the proportion of new-type fertilizers, which are less sensitive to raw material prices and can smooth cyclical fluctuations. When sulfur prices fall, its gross margin recovery space will be broader.
Diversified Acid-Making Technology: From Optional to Mandatory
China's high dependence on imported sulfur has long made prices vulnerable to international disturbances. At the sulfur industry chain market exchange meeting in the first half of 2026, the China Phosphate and Compound Fertilizer Industry Association clearly proposed striving to reduce sulfur import dependence to below 30%.
Phosphogypsum-based acid-making technology is moving from demonstration to scale. Guizhou Phosphate Group's '1468' project is operating stably, consuming 1.4 million tons of phosphogypsum annually and producing 600,000 tons of sulfuric acid, leading the industry in sulfur resource recovery. Xingfa Group is accelerating its phosphogypsum calcination project for sulfuric acid and cement co-production, expected to be operational by 2027, consuming 2 million tons of phosphogypsum and producing 800,000 tons of sulfuric acid annually.
Sichuan Hengtong has postponed its 400,000-ton sulfur-based acid project, stepping up feasibility studies for phosphogypsum-based acid technology while expanding pyrite-based acid capacity. New units in Guizhou and Guangxi are expected to be operational by mid-2027, forming 900,000 tons of annual capacity, covering nearly 40% of its acid demand, with a cost saving of about 500 yuan per ton.
These moves send a clear signal: diversified acid-making technology is shifting from optional to mandatory, and the industry is accelerating its decoupling from imported sulfur.