In late April 2026, granular sulfur prices at Zhanjiang Port hit 6,700 yuan per ton, an 8% month-on-month increase and over 80% year-to-date. This is no short-term spike but the result of geopolitical tensions tightening upstream supply and rising demand from new energy sectors like nickel hydrometallurgy. When a basic raw material doubles in half a year, the cost baseline for the entire phosphorus chemical industry is shattered.
The Fault in Cost Transmission
The immediate impact falls on phosphate fertilizer producers. Sichuan Hengtong publicly stated that despite having pyrite-based acid capacity and purchasing smelter by-product sulfuric acid, soaring sulfur prices still severely drag down production costs. The core issue: sulfur-based acid making is the mainstream process, and China's high dependence on imported sulfur means any international fluctuation directly hits domestic production.
Compounding this, downstream fertilizer prices are constrained by stable supply policies, leaving limited room for price hikes. Companies face a "produce and lose" dilemma—costs rise but product prices can't keep pace. Gross margins shrink across the board. Xingfa Group partially offsets pressure by leveraging its integrated chain to push up prices for glyphosate and silicones, but not every company can do this.
Divergent Strategies by Leading Firms
Under the same cost pressure, different strategies are widening competitive gaps. Xinyangfeng adopts a dual-track system: 1 million tons of pyrite-based acid capacity completely avoids sulfur price volatility, while 3 million tons of sulfur-based capacity secures low-cost quotas via fertilizer supply guarantees. By raising the share of new-type fertilizers, it reduces sensitivity to raw material costs.
Yuntianhua plays the inventory card. Ample strategic sulfur stocks give it a clear cost advantage over market purchases. It also optimizes international sourcing and increases procurement of smelter acid from Yunnan's periphery, ensuring stable supply at lower costs. Running at full capacity spreads fixed costs, buffering price swings.
Xingfa's technical pathway is more long-term. Its phosphogypsum calcination project, producing sulfuric acid and cement, is set to start in 2027, consuming 2 million tons of phosphogypsum and yielding 800,000 tons of sulfuric acid annually. This fundamentally restructures sulfur sourcing.
Diversified Acid Making: From Lab to Economic Viability
At the 2026 sulfur industry conference, the China Phosphate Fertilizer Industry Association set a target to reduce sulfur import dependence below 30%. Current high sulfur prices open an economic window for alternative technologies like phosphogypsum-based acid.
Guizhou Phosphate Group's globally largest phosphogypsum decomposition project is running stably, processing 1.4 million tons of phosphogypsum and producing 600,000 tons of sulfuric acid annually. Hengtong postponed its 400,000-ton sulfur-based acid project but is accelerating pyrite-based acid capacity in Guizhou and Guangxi, expected to add 900,000 tons per year by mid-2027, saving about 500 yuan per ton.
These data show alternative technologies have moved from labs to scale, and high sulfur prices accelerate this shift. When prices fall, these diversified routes become profit moats; if they stay high, they become survival lifelines.
Deeper Industry Implications
This cost crisis is a stress test for supply chain security. Previously, companies prioritized low-cost imported sulfur. Now, supply chain fragility is fully exposed.
For buyers, it's crucial to reassess suppliers' cost structures and technology reserves. Firms with pyrite-based capacity, phosphogypsum projects, or strategic inventories are more resilient. Small and medium players relying solely on market sulfur may be eliminated in the next price wave.
For exporters, high domestic sulfur costs may reduce pricing competitiveness for conventional fertilizers, but it also pushes them toward high-value products like new-type fertilizers and fine chemicals, which are less sensitive to raw material costs.