Sulfur prices demonstrated remarkable upward momentum in 2026. By the end of April, granular sulfur at Zhanjiang Port reached 6,700 RMB per ton, an 8% monthly increase and over 80% year-to-date gain. Sulfuric acid prices followed closely, constrained by the rigid cost support of high-priced sulfur and concentrated maintenance shutdowns of smelter acid units in May and June, leaving little room for near-term declines.
The immediate triggers for this surge are escalating global geopolitical conflicts and tightening upstream supply. At the same time, emerging industries such as nickel hydrometallurgy are driving new demand for sulfur. The convergence of these factors has pushed sulfur prices to historic highs. For the phosphorus chemical industry, this means a sharp upward shift in production cost curves, with gross margins under widespread pressure.
Leading Enterprises' Responses
Cost pressure has fully permeated the phosphorus compound fertilizer chain. Chuanheng Co., despite having pyrite-based acid capacity and purchasing smelter byproduct sulfuric acid, still relies primarily on sulfur-burning acid production. The soaring sulfur price has significantly dragged down production costs. Industry insiders predict that ongoing Middle East turmoil and rising demand from new industries will keep sulfur prices elevated for an extended period.
In response, leading companies are not waiting passively. Xin Yangfeng has built a dual-track supply pattern of "pyrite-based acid + sulfur-burning acid." Its 1 million ton pyrite-based acid capacity completely avoids sulfur price fluctuations, while its 3 million ton sulfur-burning capacity, backed by fertilizer supply guarantee qualifications, secures low-cost sulfur quotas. The company is also increasing the share of new-type fertilizers, which are less sensitive to raw material price volatility.
Yuntianhua leverages ample strategic sulfur inventories to gain a clear cost advantage over market purchases. Additionally, it has increased the proportion of smelter acid sourced from surrounding areas in Yunnan, ensuring stable supply through diversified channels and operating at full capacity to spread high raw material costs.
Xingfa Group relies on its integrated industrial chain to pass through cost increases by raising prices of glyphosate, silicones, and yellow phosphorus. More strategically, it is accelerating a phosphogypsum calcination project to produce sulfuric acid and cement, expected to come online in 2027. Once operational, the facility will consume 2 million tons of phosphogypsum and produce 800,000 tons of sulfuric acid annually, directly offsetting the impact of sulfur price hikes.
Diversified Acid-Making Technologies Accelerate
China's high dependence on imported sulfur leaves the industry vulnerable to international disruptions. At a sulfur industry chain conference in the first half of 2026, the China Phosphate and Compound Fertilizer Industry Association called for accelerating the promotion of phosphogypsum-based acid technology and improving strategic sulfur reserves, aiming to reduce sulfur import dependency to below 30%. The current high sulfur price has created an economic window for the industrialization of phosphogypsum-based acid production.
Guizhou Phosphate Group has already launched the world's largest phosphogypsum decomposition acid-cement co-production project ("1468"), which processes 1.4 million tons of phosphogypsum annually, yielding 600,000 tons of sulfuric acid and 800,000 tons of cementitious materials. This achievement leads the industry in sulfur resource recovery.
Chuanheng has adopted a more flexible approach. It has postponed a 400,000-ton sulfur-burning acid project until prices become reasonable, while intensifying feasibility studies for phosphogypsum-based acid technology. More importantly, Chuanheng is expanding pyrite-based acid capacity, with new plants in Guizhou and Guangxi expected to begin production in mid-2027. These will add 900,000 tons of annual capacity, covering nearly 40% of the company's acid needs, with a cost saving of approximately 500 RMB per ton.
Practical Recommendations
For Procurement Departments - Monitor the commissioning timelines of phosphogypsum-based and pyrite-based acid projects, and sign long-term contracts with diversified acid producers to lock in relatively low-cost sulfuric acid supply. - Increase the proportion of pyrite-based or smelter byproduct sulfuric acid procurement during periods of high sulfur prices to diversify single raw material price risk. - Closely track Middle East geopolitical developments and sulfur demand from new energy industries, and build strategic sulfur inventories by purchasing during price dips.
For Export Enterprises - Incorporate raw material price linkage clauses into export contracts for phosphate fertilizers, linking pricing to sulfur and sulfuric acid fluctuations to avoid negative margins. - Monitor shifts in global sulfur supply patterns, particularly export policies of major sulfur-producing countries in the Middle East and North America, and adjust procurement country structures proactively. - Leverage RMB exchange rate fluctuations to optimize settlement currencies and payment cycles for imported sulfur, reducing forex losses.
In the medium to long term, high sulfur and sulfuric acid prices are expected to persist, but the industry has reached a consensus: building strategic sulfur reserves and reducing import dependency are the fundamental solutions. This round of raw material price surges is forcing the phosphorus chemical industry to accelerate technological iteration and achieve supply chain autonomy. As phosphogypsum-based and pyrite-based acid production paths scale up, China's phosphorus chemical sector will gradually establish a secure, green, and stable sulfur resource guarantee system, enhancing overall industry resilience and anti-cyclical capabilities.