Sulfur price up nearly 10-fold: phosphate fertilizer production at risk

According to the Financial Times, industrial sulfur now costs almost ten times more than before the supply disruptions. The cause is interrupted shipping through the Strait of Hormuz: roughly half of the world's sulfur used to move along this route. The raw material is obtained as a by-product of the oil and gas industry. It is used to make sulfuric acid, without which phosphate fertilizers cannot be produced.

Fertilizer producers are already revising their plans. Andy Jung of Mosaic explained to the FT that the full increase in costs cannot be passed on to farmers, because farmers' ability to pay is limited. One possible solution, therefore, is to cut production.

Sulfur is also needed by mining companies. Argus analyst Raghav Jain believes that with metal prices high, miners can afford to pay more for the scarce raw material. Fertilizer producers with lower profitability are losing out in this competition.

Market participants warn that phosphate fertilizers will become less affordable, which could reduce crop yields and push up food prices. For now, this is only a forecast, not consequences that have already occurred. Much will depend on how long the disruptions last and whether the market finds alternative sources of the raw material.