Huatai Securities: The expected widening of the supply-demand scissors gap may lead to a relatively high price cycle for sulfur/sulfuric acid in the future. Sulfur-producing companies and alternative products/processes for sulfur/sulfuric acid are expected to benefit.

According to a research report by Huatai Securities, Bai Chuan Ying Fu reported that on June 12th, the domestic reference prices for sulfur/sulfuric acid were 9823/1838 yuan per ton, with an increase of 169% and 91% compared to the beginning of the year, reaching a historical high. This was mainly due to steady growth in demand from downstream sectors such as phosphate fertilizer/phosphoric acid iron lithium/chemical fiber/nickel smelting, as well as factors such as the global decline in by-product output of refineries and disruptions in sulfur production/trade in the Middle East. Huatai believes that in the short term, due to factors such as geopolitical conflicts affecting global refinery operations, coupled with the fact that domestic sulfur enterprises and port inventories are at a five-year low, high sulfur/sulfuric acid prices may be difficult to resolve in the short term. In the medium term, as global development of new energy sources gradually reduces the demand for traditional energy sources, the quantity of sulfur by-products from refineries may face long-term pressure reductions, while downstream demand for phosphate fertilizer, new energy, etc. is expected to continue to grow. The expected widening of the supply-demand gap suggests that sulfur/sulfuric acid may remain in a relatively high-price cycle for a long time, benefiting sulfur-producing enterprises as well as alternative products/technologies for sulfur/sulfuric acid.