米国-イラン停戦: 硫黄は逆転したか?

The sulfur market saw a major adjustment this week. After prices broke above RMB 10,000/mt and surged aggressively, the market posted a sizeable correction following news that the U.S. and Iran had signed a memorandum of understanding. However, given that China’s tight supply situation cannot be reversed in the short term, near-month spot cargoes remain relatively strong. Compared with the previous rally, the correction is still not substantial, and downside support remains. Most participants are now adopting a cautious wait-and-see stance. So, has the sulfur market peaked and entered a reversal?

From a fundamental perspective, global supply has already suffered multiple shocks. Several refineries in the Middle East have suspended operations due to war-related damage, with the annual sulfur impact estimated to account for around 40% of global supply. Recovery timelines also vary, creating an irreversible tight-supply expectation at the underlying supply-demand level. Middle Eastern cargoes account for 40%-60% of China’s sulfur imports, and from January to May 2026, sulfur arrivals from the Middle East fell by more than 75% year on year.Russia has extended its sulfur export ban to the end of June, further tightening global sulfur circulation. Customs data show that China imported only 295,500 mt of sulfur in April 2026, down 72.39% year on year, marking a recent low for monthly imports. Cumulative sulfur imports in 2026 stood at 1.8456 million mt, down 48.12% year on year. Total imports in May are expected to be around 350,000-400,000 mt, still far below normal levels.China’s sulfur port inventories have also continued to decline, falling from 1.91 million mt at the beginning of the year to around 750,000 mt as of June 18, down more than 65% from the same period last year. Inventories remain at historical lows and continue to be drawn down. With relatively few vessels scheduled to arrive later, tradable supply may tighten further.Domestic supply is also declining. As previously noted, some domestic refineries have received approval for maintenance. Current national weekly sulfur output is around 184,000 mt, down 40,000 mt from the beginning of the month, while capacity utilization has dropped from 50% to 43%. In addition, much of the supply still needs to be reserved for phosphate fertilizer production. The sharp decline in tradable supply has not changed. Therefore, the recent price pullback is mainly the result of sentiment-driven price cuts and panic selling. The supply-side bullish logic has not yet reversed.

Turning back to geopolitics, although the U.S. and Iran have signed a memorandum of understanding, whether a full ceasefire can be achieved still depends on the 60-day negotiation period. During this period, further conflict cannot be ruled out. Israel remains an uncertain factor and may intermittently strike Lebanon, potentially disrupting the negotiation process. Whether the issue of tolls and management over the Strait of Hormuz will be raised again is also difficult to determine.In addition, shipping companies’ concerns about the region are unlikely to fully ease in the near term. Targeted mine clearance, vessel movement within the Gulf, and shipping route scheduling and operations will all take time. A rapid return of Strait of Hormuz traffic to pre-war levels is almost impossible, and even after the 60-day negotiation period, full recovery may still not be guaranteed, even assuming negotiations proceed smoothly.

On the demand side, the phosphate fertilizer policy guidance that previously ignited the market remains in place. This week, the industry association raised phosphate fertilizer guidance prices again. The core logic remains the same as previously discussed: repairing producer margins to improve operating rates and prepare for autumn fertilizer demand. So far, this has had some effect. Ammonium phosphate operating rates have indeed started to recover slightly. MAP operating rates have risen from a low of around 43% to 48%. DAP has not changed much, but signs of stabilization have emerged.

Overall, the recovery path for acid demand in phosphate fertilizer appears relatively clear for now. Whether sulfur-based sulfuric acid, pyrite acid or smelter acid is used, all provide broad support. Other chemical sectors may still face negative feedback if margins do not improve significantly. However, as the international situation eases and sulfur now carries expectations of future price declines, downstream sectors may gain more confidence to hold their ground, which could in turn support demand.The new energy sector needs little further explanation. It has been the core growth driver during this period, and overall demand is expected to continue increasing month on month.

Looking ahead, sulfur prices still face downside risk if geopolitical tensions continue to ease, but the pressure is mainly sentiment-driven. Fundamental support has not loosened significantly and may even accelerate the widening of the supply-demand gap in the short term. The spread between near-term and forward prices is likely to widen further. In the short term, attention should be paid to when demand restarts after market sentiment stabilizes. Expectations for the scale of the price correction should not be overly optimistic.Returning to the initial question of whether the sulfur market has reversed: a phased peak is relatively clear. After all, the move above RMB 10,000/mt was driven by the combined release of all domestic and overseas bullish factors. From this perspective, if one of the bullish drivers has weakened or may even reverse, the market can indeed be considered to have peaked.However, from a fundamental perspective, sulfur has been following an irreversible logic of shrinking supply and rising demand since the second half of last year. In essence, the long-term development path of new energy replacing traditional energy still requires extracting new energy materials from traditional energy sources. This means sulfur’s by-product nature has already set it on a path of widening supply-demand imbalance, at least based on the current market structure. Whether alternative new energy materials emerge in the future remains beyond the current discussion.In other words, the long-term logic supporting higher sulfur prices has not changed. The war merely accelerated the contradiction and brought forward a future market response. As the conflict comes to an end, the prematurely intensified supply-demand tension may ease, but it may still not change the eventual arrival of that longer-term structural inflection point.