From Fertilizer to Chemical Industry--A "Super Sulfur Shock" Triggered by the Iran War

# Long Yue

Source: Wall Street CN

While markets fixate on oil and gas, the hidden “king of chemicals” – sulfur – is facing a **super squeeze** amid the Middle East conflict. About 80% of sulfur is used to make sulfuric acid, and 60% of sulfuric acid goes to fertilizers. Its price has surged to record highs, not only pushing up global fertilizer costs and threatening agricultural production, but also directly hitting supply chains for key battery metals such as nickel in Indonesia and cobalt in Africa.

As markets focus on crude oil and natural gas, a more “hidden” bottleneck – sulfur – is repricing supply chains for fertilizers and certain metals.

In a commodity economics report published on March 16, HSBC stated that the Middle East conflict is triggering a “super squeeze” on sulfur. Before the conflict, sulfur had already risen sharply due to constrained supply and strengthening demand. The combination of direct supply disruptions from the fighting and shipping risks in the Strait of Hormuz has pushed sulfur prices to **new record highs**.

Sulfur is often seen as a “secondary commodity” because much of its production comes as a byproduct from industrial processes, rather than being directly mined and processed like many raw materials.

Yet this “secondary commodity” is in fact a critical input across numerous industrial processes. The U.S. Geological Survey (USGS) notes that “through its primary 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 the world’s most widely used industrial chemical.

## The Middle East: the global heart of sulfur

About 90% of the world’s sulfur supply is a byproduct of fossil fuel processing – known as “recovered sulfur”. This makes the Middle East, with its massive hydrocarbon industry, the absolute center of the global sulfur trade.

Data show that in 2025, the Middle East (Saudi Arabia, UAE, Qatar, Kuwait and Iran) accounted for roughly **25% of global sulfur production** and nearly **50% of seaborne sulfur trade worldwide**.

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

The bank’s chief economist Paul Bloxham noted. Just as last year’s trade tensions exposed the world’s reliance on rare earths such as gallium and yttrium, the disruption from the current Middle East conflict has revealed another bottleneck: sulfur supply.

## “Super squeeze”: prices hit all-time highs

According to the report, sulfur prices were already elevated before the Middle East conflict and rose “markedly” in 2025, reaching their highest levels since the 2022 peak.

This was driven by multiple supply constraints: refinery shutdowns, power outages, lower production of low-sulfur crude, drone attacks on Russian refineries, and export restrictions all kept sulfur supply tight.

At the same time, demand did not cool in tandem: strong seasonal fertilizer demand and Indonesia’s growing **high-pressure acid leaching (HPAL)** nickel industry provided structural support for sulfur consumption.

Against this already tight backdrop, the Middle East conflict became the final straw. The report describes it as a **“super squeeze”**.

The risk of closure of the Strait of Hormuz and direct supply outages – such as force majeure or production halts at Bahrain’s Bapco refinery and UAE’s Ruwais refinery following attacks – have pushed sulfur prices to fresh historical peaks.

## Transmission chain: fertilizers hit first, then metals and semiconductors

The report lays out sulfur’s uses clearly:

- In fertilizers: sulfur is mainly used to produce phosphate fertilizers such as MAP (monoammonium phosphate) and DAP (diammonium phosphate), critical to global agricultural supply.

- In industry: sulfuric acid is used in copper smelting, electroplating, metal processing, rayon and film manufacturing.

- In semiconductors: sulfuric acid is used for silicon wafer cleaning.

When sulfur prices rise, **fertilizers are the first to feel the pain**. The report believes the Middle East conflict and higher sulfur prices “could push DAP prices even higher.”

It further warns that beyond sulfur-based fertilizers, nitrogen fertilizers are also at risk: Iran is the world’s third-largest urea exporter, accounting for about 11% of global urea trade, while the Strait of Hormuz carries roughly one-third of global seaborne trade.

“With tight supply, rising fertilizer prices could lead farmers to reduce application rates,” the report cautions. This typically translates into lower crop yields – a double blow for many agricultural producers already facing weak farmgate prices and high input costs. A prolonged supply disruption could profoundly shape regional supply chains and pricing.

## Most vulnerable: Asia and Africa

The “super squeeze” hits import-dependent Asian and African nations hardest.

For example, Indonesia relies on the Middle East for about **75% of its sulfur imports**. As the world’s top nickel producer (over 50% global supply), sulfur makes up roughly 50% of operating costs at its HPAL plants, which typically hold low inventories. A sulfur shortage directly threatens its critical battery metal supply chain.

In Africa, the Copperbelt region imports **90% of its sulfur** from the Middle East. Cobalt production in the DRC – which accounts for 70% of global supply – also depends on sulfur as a feedstock.

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