From Fertilizer to Chemicals -- A "Super Sulfur Shock" Triggered by an Iran War

As the market focuses on crude oil and natural gas, a more “hidden” bottleneck—sulfur—is being repriced in the fertilizer and certain metal supply chains.

HSBC’s March 16 Commodity Economics Review pointed out that conflicts in the Middle East are triggering a “super squeeze” on sulfur. The report shows that sulfur prices had already risen significantly before the conflict due to supply constraints and strong demand; the direct supply disruptions caused by the conflict and shipping risks through the Strait of Hormuz have pushed sulfur prices to “new record highs.”

Sulfur is often considered a “secondary commodity” because its production largely depends on byproduct recovery rather than direct mining and processing like many industrial raw materials.

However, this “secondary commodity” is actually a key input for many industrial processes. The US Geological Survey (USGS) states, “Through its main derivative, sulfuric acid, sulfur is one of the most important elements used as an industrial raw material.” Sulfuric acid is even called the “king of chemicals” and is the “largest industrial chemical used worldwide.”

Middle East: The Heart of Global Sulfur Supply

About 90% of global sulfur supply is a byproduct of fossil fuel processing, known as “recovered sulfur.” This makes the Middle East, with its vast hydrocarbon industry, the absolute core of global sulfur trade.

Data shows that by 2025, the Middle East (Saudi Arabia, UAE, Qatar, Kuwait, and Iran) will account for about 25% of global sulfur production and nearly 50% of global maritime sulfur trade.

“Global supply chain shocks often reveal how interconnected and dependent economies are.”

HSBC’s Chief Economist Paul Bloxham noted. Just as last year’s trade tensions exposed the world’s reliance on rare earths like gallium and yttrium, the disruptions caused by the Middle East conflict reveal another bottleneck—sulfur supply.

“Super Squeeze”: Prices Hit Record Highs

The report indicates that sulfur prices were already high before the conflict and have “significantly risen” in 2025, reaching the highest levels since the peak in 2022.

This is driven by supply constraints from multiple factors: refinery closures, power outages, declining low-sulfur crude oil production, and attacks on Russian refineries and export bans have kept sulfur supply tight.

Meanwhile, demand has not cooled: seasonal fertilizer demand remains strong, and Indonesia’s growing high-pressure acid leaching (HPAL) operations for nickel provide structural demand support for sulfur.

Against this “tight” backdrop, the Middle East conflict has become the final straw. The report calls this a “super-squeeze.”

The risk of Strait of Hormuz closures and direct supply disruptions (such as attacks on Bahrain’s Bapco refinery and the UAE’s Ruwais refinery, causing force majeure or shutdowns) have directly pushed sulfur prices to new historic highs.

Transmission Chain: Fertilizers Feel the First Impact, Metals and Semiconductors Follow

The report clearly breaks down sulfur’s uses: Fertilizer sector—mainly for producing phosphate fertilizers like MAP (monoammonium phosphate) and DAP (diammonium phosphate), which are vital for global agriculture; Industrial sector—sulfuric acid used in copper smelting, electroplating, metal processing, synthetic fibers, and film production; in the semiconductor sector, sulfuric acid is used for cleaning silicon wafers.

Therefore, when sulfur prices rise, fertilizers are the first to be affected. The report suggests that the Middle East conflict and higher sulfur prices “may push DAP prices higher.”

The report further warns that, besides sulfur-related fertilizers, nitrogen fertilizers are also at risk—Iran is the world’s third-largest urea exporter, accounting for about 11% of global urea trade; the Strait of Hormuz carries about one-third of global trade volume.

“In a tight supply situation, rising fertilizer prices could lead farmers to reduce fertilizer use,” the report warns. This typically results in lower crop yields. For many agricultural producers, this is an additional blow—they are already facing low crop prices and high input costs. Long-term supply disruptions could profoundly impact regional supply chains and pricing.

Who is Most Vulnerable: Asia and Africa

This “super squeeze” hits heavily import-dependent countries in Asia and Africa the hardest.

For example, Indonesia relies on about 75% of its sulfur imports from the Middle East. As the world’s largest nickel producer (accounting for over 50% of global supply), sulfur makes up about 50% of its HPAL (high-pressure acid leaching) plant operating costs, with low inventory levels. Sulfur shortages directly threaten its critical battery metal supply chain.

In Africa, 90% of sulfur imports in the copper belt region come from the Middle East, and Congo (DRC), which supplies 70% of global cobalt, also requires sulfur as a raw material.

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