Sulphur Is Still Scarce. Buyers Have Stopped Paying for Scarcity.

On 23 September, a cargo ship was hit in the Strait of Hormuz. UKMTO reported that the vessel was on fire and adrift after being struck by an unknown projectile, and that all crew had been evacuated.

In the same week, sulphur prices in Indonesia fell by almost $90/t.

Six months ago, those two facts would not have fit in the same week. A strike in the Strait would have added money to every cargo east of Suez. Now the market barely reacts. That tells us something, and I don’t think the answer is “oversupply.”

The correction is wide, not local

According to Argus, the week to 24 September took Indonesia to $960-970/t cfr, India down $80 to $960-980/t cfr, Brazil down to $985-1,000/t cfr, and southern Africa down $100. Vancouver fob lost $90. Chinese domestic sulphur is now trading around 21% below its July average.

The size of the move matters less than its breadth. Asia, South America, Africa, the Mediterranean and the US Gulf Coast all moved in the same direction in the same week. That is not one market clearing a local surplus.

Two details stand out.

US Gulf Coast sulphur fell to a $970/t fob spot sale during the heaviest refinery maintenance month of the year so far. Supply dropped and the price still fell.

That is also a reminder of where US sulphur comes from. Nobody produces refinery sulphur because they want sulphur. It is recovered because refineries have to take it out of crude. So what US refineries run matters upstream, and their crude slate is changing. US imports of Venezuelan crude have reached roughly 600,000 b/d, the highest since sanctions were imposed in 2019, which makes Venezuela the second-largest source of US crude imports after Canada. Heavy sour barrels carry more sulphur than shale crude, but they also displace other heavy feed. Earlier this year, US Gulf Coast refiners said Venezuelan crude was reducing their need for Mexican fuel oil. Whether this adds measurable recovered sulphur is not visible in the data yet. It is a supply variable worth watching, not a cause of this week’s price.

In the Mediterranean, Argus reports that domestic contract customers are rejecting shipments, which sends those tonnes into export markets. When a buyer refuses tonnes it has already contracted, it is not negotiating. It no longer needs the sulphur.

Vancouver changed the conversation

The freight numbers explain a lot. Argus assesses Vancouver to China at $34-38/t for 50-60kt cargoes. Middle East to South China for 50-55kt is $145-148/t. That is a gap of roughly $110/t before anyone discusses fob.

At $870-950/t fob, Vancouver can land in Asia around $950/t. Middle East material at $875/t fob plus war-level freight lands above $1,000/t. Argus reports at least three Vancouver cargoes placed with end users in recent weeks, and describes the Indonesian business as repeatable.

Repeatable is the important word. One cheap cargo is a distressed seller. Three at the same level becomes a reference price.

It is also worth noting who bought them. The Indonesian cargoes that reset Asian expectations went to nickel producers, not fertilizer plants.

You can see the price moving through the chain. Argus reports Chinese bids dropped to $900-960/t cfr after the Vancouver sales into Indonesia. So a Canadian price in Indonesia repriced Chinese bids.

This was not sudden. In the first half of 2026, Canada supplied about 17.7% of China’s sulphur imports, while the Persian Gulf share of those imports roughly halved. Buyers have spent months learning to live with reduced supply from the Persian Gulf. Vancouver is now where they get their benchmark.

What interests me most is the Middle East netback. The assessed Middle East fob is unchanged at $860-890/t. But Argus puts the netback from a 50-55kt delivered sale at about $819/t. The assessed level and what the delivered market supports are now roughly $55 apart. Gaps like that rarely stay open for long.

China is more interesting than the headline price

Chinese port inventories stood at 917,000t on 18 September, against 2.43mn t a year earlier. Stocks are down more than 60%.

Normally that would be a restocking signal. It isn’t one.

Chinese imports in August were about 272,000t, down 29% from July and 65% from a year earlier. The value of those shipments still rose year on year, so the average import price came in almost 3.5 times higher than in August 2025. China paid a great deal for a small volume, and then stopped.

Argus explains why. Fertilizer producers are getting domestic sulphur at heavy discounts and drawing on river-port stocks. The domestic ex-works price works out to about $918/t cfr, below imported granular. SMM notes that fertilizer demand has shown no clear improvement and that there are no signs sulphuric acid and phosphate exports will restart.

So low Chinese stocks are not a shortage signal. They reflect a smaller operating base. I would not call China oversupplied. It is a market that has shrunk itself to fit the price.

There is one more layer in China. Phosphate there is no longer only a fertilizer story. China makes around 80% of the world’s LFP batteries, which gives its phosphate chain a second, industrial end market through battery-grade phosphate. Nothing in this week’s data suggests batteries are moving sulphur prices. Whether that second market grows large enough to matter for sulphur is a question that needs proper numbers.

India, Brazil and the price ceiling

India shows a similar pattern. Refinery-posted domestic sulphur is at Rs111,300/t ex-works, about $1,163/t before discounts. Imports are now well below that. But Argus says fertilizer producers still prefer domestic cargoes, and a Middle East cargo offered at $1,040-1,050/t cfr found no buyer.

We don’t know the size of the domestic discounts. The direction is clear, though. Indian buyers are not short of sulphur at the margin. They are short of reasons to take on import, freight and war risk. With Indian DAP in the $890s-900s/t cfr and a lower Q4 phosphoric acid settlement expected, the margin to support high sulphur prices is not there.

Brazil is harder still. Argus reports that offers around $1,000/t cfr are still unworkable for consumers, who are drawing down stocks and cutting rates. EuroChem’s layoff programme at Serra do Salitre begins on 1 October and covers around 450 workers, for at least three months and possibly up to five.

The most telling phrase this week comes from the US. Argus reports that many participants think the US reached the maximum price its industry could operate at in the third quarter. Early Tampa Q4 expectations point to a $30-50/lt drop.

That is what demand destruction looks like in practice. It is not a mood. It is a ceiling that consumers found by shutting capacity.

Scarcity has not disappeared, though. Argus reports OCP running at around 50-60% because of sulphur supply constraints. Small, prompt, well-located parcels still get strong prices: Uruguay paid $1,230/t cfr and Vietnamese product sold into China above $1,000/t cfr. Scarcity is still there. It has shrunk into specific ports and small lots.

Morocco is also why I don’t find it useful to look at sulphur without looking one step downstream. OCP’s own expansion plan had sulphur imports rising from 6.5mn t in 2023 to 9.9mn t by 2028 as new acid capacity comes on line. This month, OCP and CHS announced a Louisiana phosphate plant that will run on OCP phosphoric acid instead of local rock and sulphuric acid. So while Brazilian plants idle, Moroccan acid is moving into US production. Where phosphate capacity is built, and who secures the sulphur behind it, may shape the sulphur balance more than a few spot cargoes do.

The Middle East paradox

The constraints in the Persian Gulf are real. Jubail loaded nothing in August and one vessel in September, and Argus expects sulphur blocking. Qatar has outages. Kuwaiti cargoes are slipping into October.

Yet the Middle East fob is flat, and Oman’s tender reportedly cleared around $150/t above Middle East monthly pricing, because it loads outside the Strait.

That spread tells the story. The scarcity premium has not gone away. It has moved from the molecule to the loading port. Buyers will pay for sulphur they can actually lift. They are no longer paying for sulphur in general.

Sulphur being blocked in Saudi Arabia is not lost supply. It is stored supply. On 22 September, a senior Iranian official told Reuters that Iran could reopen the Strait within seven days if the US eased military pressure and lifted its blockade of Iranian ports. Two days later, Argus reported an adviser to Iran’s supreme leader warning the conflict could expand to the Indian Ocean.

For a buyer, this is uneven risk. Escalation mostly repeats what they have already adjusted to. Reopening releases stock that has been building for months. When one scenario is priced in and the other is bearish, waiting is rational. Add rising financing costs, and suppliers accepting lower prices to protect cash flow, both reported by Argus, and buyer patience makes sense.

So yes, I think demand destruction has overwhelmed part of the scarcity premium. But it is price-driven destruction. Capacity was shut because sulphur was too expensive, not because nobody needs phosphate. That makes it reversible, and at some point it should start to set a floor.

What I’m watching over the next 30-60 days

Vancouver volume at around $950/t cfr. As long as Canadian offers keep repeating, the Asian benchmark has an anchor there. If they thin out, Persian Gulf suppliers may find it easier to hold their levels.

Q4 contract settlements. This covers Middle East monthly prices, North Africa, Tampa and Benelux. Spot moves reflect sentiment. Contracts set budgets.

Restart economics. The floor is likely to be found where idled phosphate and acid capacity comes back: Brazil, Italy, the US, and India’s Q4 phosphoric acid price. When curtailed plants start buying again, one of the strongest sources of downward pressure begins to weaken.

Hormuz in both directions. For price direction, a credible reopening may matter more than further escalation, because it would release months of blocked Persian Gulf sulphur into a market that has already learned to buy less.

Today the market is destroying demand. Over a longer horizon the question may run the other way. Fertilizer plants, nickel and copper leaching, chemicals and possibly battery materials all draw on the same sulphur-derived acid. How hard they end up competing for it is a question this correction will not answer. It only shows who leaves first when the price gets too high.

For most of this year, the question in sulphur was who could load. September suggests the question has become who can afford to consume. Scarcity still decides where sulphur comes from. It no longer sets the price on its own.

Sources

Primary market source

Argus Sulphur Issue 26-187 24 September 2026

Additional sources

• UK Maritime Trade Operations (UKMTO). “UKMTO Warning 142/26: Incident within the Strait of Hormuz.” 23 September 2026.
• Reuters (via U.S. News & World Report). “Iran Ready to Reopen Strait of Hormuz if US Eases Military Pressure and Lifts Blockade.” 22 September 2026.
• Shanghai Metals Market (SMM). “SMM Analysis: China Sulphur and Sulphuric Acid Import and Export Data for August.” c. 20 September 2026.
• South China Morning Post. “China’s sulphur imports dive 65% as prices surge 3.5 times amid Middle East disruption.” 24 September 2026.
• Shanghai Metals Market (SMM). “Three Charts Illustrating China’s Sulphur and Sulphuric Acid Customs Import and Export in H1 2026.” 20 July 2026.
• Mercado Hoje. “EuroChem vai adotar layoff em Serra do Salitre.” 22 September 2026.
• CNN Business. “Trump’s unusual deal could benefit Venezuela and the US. But it will take time.” 29 August 2026.
• S&P Global Commodity Insights. “Increased Venezuelan crude imports displace Mexican HSFO refinery demand in USGC.” 19 February 2026.
• Fastmarkets. “Don’t forget phosphate when securing critical raw materials for electrification.” 10 November 2025.
• BC Insight (CRU). “Morocco’s new acid capacity.” 31 May 2024.
• BC Insight (CRU). “OCP and CHS plan to build Louisiana phosphate plant.” 2 September 2026.