By late April 2026, granular sulfur prices at Zhanjiang Port reached 6,700 RMB/ton, up 8% month-on-month and over 80% year-to-date. Sulfuric acid prices followed closely, supported by high-cost sulfur and scheduled maintenance of smelter acid units in May-June, making high prices the new normal. This is not a simple raw material hike but a fundamental reassessment of the cost logic in the phosphate chemical chain, driven by geopolitical tensions, supply tightening, and new energy demand.
Cost Pressure Cascades Through the Chain
Sulfur is a key raw material for phosphate fertilizer production, with China's high import dependency making prices vulnerable to global disruptions. The surge directly impacts acid production costs. Chuanheng Co. stated that its mainstream sulfur-burning acid process has been significantly burdened, even with some pyrite-based capacity and purchased smelter acid. Xingfa Group noted that since March 2026, rising sulfur and methanol prices have pressured several business segments.
Critically, downstream fertilizer markets are constrained by price stabilization policies, making cost pass-through difficult. Companies face the dilemma of 'production equals pressure, price hikes are hard to implement,' squeezing margins. Industry insiders predict that Middle East tensions and rising demand from new industries like hydrometallurgical nickel will keep sulfur prices high for the long term. This forces phosphate chemical firms to shift from passive response to active cost restructuring.
Leaders Diversify: Self-Sufficiency, Reserves, and Upgrades
Leading firms are building resilience through three dimensions. First, raw material self-sufficiency. Xinyangfeng has a dual 'pyrite-based + sulfur-burning' acid production setup, with 1 million tons of pyrite-based capacity completely insulated from sulfur price swings. It also secures low-cost sulfur quotas via fertilizer supply guarantees. Chuanheng Co. has postponed a 400,000-ton sulfur-burning project and is expanding pyrite-based capacity, with new plants in Guizhou and Guangxi expected by mid-2027, yielding 900,000 tons/year at a cost saving of about 500 RMB/ton.
Second, strategic reserves and procurement optimization. Yuntianhua leverages ample sulfur strategic inventories for a clear cost advantage and increases procurement of smelter acid from surrounding areas. Yuntu Holdings flexibly switches between pyrite and sulfur-burning capacity and moves toward higher-value-added thermal phosphoric acid products.
Third, product mix upgrades. Xinyangfeng continuously raises the share of new-type fertilizers, which are less sensitive to raw material costs. Xingfa Group leverages its integrated chain to pass on costs through price increases for glyphosate and silicones, partially offsetting input cost erosion. These moves show a shift from cost pass-through to value creation.
Phosphogypsum-Based Acid: From Lab to Economic Window
The sulfur price surge has opened an economic window for phosphogypsum-based acid technology. Phosphogypsum is a solid waste from phosphate production; decomposing it to produce sulfuric acid and co-produce cement can both dispose of waste and replace imported sulfur. At the 2026 H1 sulfur chain market conference, the China Phosphate and Compound Fertilizer Industry Association called for accelerating this technology to reduce sulfur import dependency to below 30%.
Guizhou Phosphate Group has already deployed the world's largest phosphogypsum decomposition project ('1468'), consuming 1.4 million tons of phosphogypsum annually and producing 600,000 tons of sulfuric acid and 800,000 tons of cementitious materials. Xingfa Group is accelerating a similar project, expected to start in 2027, consuming 2 million tons of phosphogypsum and producing 800,000 tons of sulfuric acid per year, directly offsetting sulfur price shocks.
Looking ahead, high sulfur and sulfuric acid prices are likely to persist, but this round of price spikes is forcing the industry to transition from 'import-dependent sulfur' to 'diversified, autonomous acid production.' The scaling of phosphogypsum and pyrite technologies, combined with improved strategic reserves, will significantly enhance chain resilience and anti-cyclical capability.