Northeast: Short-term sulfur supply disruptions weaken; medium- to long-term pricing to return to resource attributes

Northeast released a research report stating that sulfur is an important basic raw material for inorganic chemicals and one of the most core inorganic chemical products. In the short term, sulfur supply remains disrupted by factors such as geopolitical conflicts. In the medium to long term, associated sulfur from non-ferrous metal mines and pyrite are unlikely to see significant increases. Due to the substitution of traditional gasoline and diesel demand by new energy, the growth rate of global refinery capacity is trending lower, and overall incremental supply is relatively limited. Overall, the supply-demand structure of sulfur resources is expected to improve, and the price center of sulfur products is expected to move upward. Northeast's main views are as follows: Sulfur is an important basic raw material for inorganic chemicals Sulfur is mainly obtained from petroleum refinery gas, natural gas, coal chemical acid gas, coke oven gas, flue gas, sulfur-containing waste gas recovery, and pyrite, and is used to produce sulfuric acid through the contact process. It is widely used in industries such as phosphate fertilizers, titanium dioxide, pesticides, dyes, metallurgy, batteries, and electronic chemicals, making it one of the most core inorganic chemical products. Supply: Highly concentrated geographic landscape, total volume fluctuating upward but growth slowing (1) From the perspective of global supply, according to USGS data, global sulfur production from 2015 to 2025 generally showed a fluctuating upward trend, rising from 77.8 million tonnes in 2015 to 84 million tonnes in 2025, with a compound growth rate of approximately 0.77%. The geographic landscape of global sulfur supply is highly concentrated, with the Middle East being the core source of supply increments; (2) From the perspective of domestic supply, since 2019, with the commissioning of large private refining and chemical integration projects, domestic sulfur capacity has seen intensive release. In 2026, domestic sulfur capacity reached 19.335 million tonnes, of which sulfur capacity from petroleum refining accounted for 74.1%, making it the absolute mainstay of domestic sulfur supply; (3) In terms of imports, domestic sulfur import volume and import dependence began to decline significantly in 2020. In 2025, domestic sulfur imports were 9.608 million tonnes, down 3.45% year-on-year, with import dependence at approximately 47%; (4) From the perspective of the supply landscape, the domestic sulfur industry has high concentration, mainly supplied by the "two barrels of oil" and large private refining and chemical enterprises, with CR3 at nearly 70%. Looking ahead, in the short term, sulfur supply remains disrupted by factors such as geopolitical conflicts. In the medium to long term, associated sulfur from non-ferrous metal mines and pyrite are unlikely to see significant increases. Due to the substitution of traditional gasoline and diesel demand by new energy, the growth rate of global refinery capacity is trending lower, and overall incremental supply is relatively limited. Demand: Phosphate fertilizers solidify the base, new energy contributes marginal increments (1) Phosphate fertilizers are the core base. In 2025, monoammonium phosphate and diammonium phosphate output were 20.543 million tonnes and 12.705 million tonnes, respectively, with combined demand accounting for 37%. Changes in export policy are the core marginal variable affecting domestic phosphate fertilizer demand; (2) The new energy sector contributes the largest marginal increment. Phosphoric acid is purified to battery-grade standards through wet-process purification, then used to synthesize iron phosphate, which is further used to produce lithium iron phosphate cathode materials, ultimately applied in areas such as new energy vehicle power batteries and energy storage batteries. Since 2019, with the successive launch of innovative lithium iron phosphate products such as blade batteries, consumer attention to safety issues of new energy vehicles, and the high cost of cobalt carbonate, a raw material for ternary lithium batteries, demand for lithium iron phosphate batteries began to grow rapidly. From January to September 2026, domestic iron phosphate output reached 3.6426 million tonnes, up 60.67% year-on-year, and lithium iron phosphate output reached 4.5191 million tonnes, up 66.44% year-on-year, driving substantial growth in sulfur demand from the new energy sector, with growth rates far exceeding traditional demand sectors. Prosperity: Sulfur product prices are currently at historically high levels In 2026, with the outbreak of the US-Iran conflict, sulfur supply in the Middle East was significantly impacted, domestic port inventories continued to destock, and high domestic phosphate fertilizer operating rates drove sulfur prices to break through historical highs. As of October 23, 2026, the domestic Zhenjiang port solid sulfur price was RMB5,200/tonne, still in the historically high range. Looking ahead, in the short term, Middle East supply disruptions are expected to gradually exit. In the long term, sulfur supply-side overall increments are relatively limited under the backdrop of continued advancement of dual-carbon policies. Meanwhile, with continued demand growth in the new energy sector on the demand side, overall the supply-demand structure of sulfur resources is expected to improve, and the price center of sulfur products is expected to move upward. Risk warnings: Downstream demand falling short of expectations; raw material and energy cost fluctuation risks