Sulfur Price Retreat and Phosphate Fertilizer Off-Season: Regional Divergence Behind the Downward Shift in Sulfuric Acid Prices

Lead-in: The primary narrative in the sulfuric acid market this week is not "shortage" or "demand collapse," but rather a downward shift in price levels driven by the combination of falling costs and misaligned regional supply rhythms. This week, the Chempricehub 98% Sulfuric Acid Price Index fell to CNY 1,318/ton, a week-on-week decrease of 4.49%. Operating rates stood at 63.37%, down 0.88 percentage points from the previous week. The off-season for phosphate fertilizers weighed on baseline demand, while the retreat of sulfur prices from highs weakened cost support. Differences in restart and maintenance schedules in regions like Shandong and Jiangxi pushed "regional divergence" into a more critical position than simple "unidirectional trends." More importantly, three policy meetings are scheduled for November, and the 2027 export and pricing frameworks are entering a negotiation window. Short-term price direction is suppressed by actual supply and demand, but medium-term variables continue to accumulate on the policy side.

I. Market: Average Prices Decline, but "Broad-Based Drop" Masks Structural Divergence

Table 1: Domestic Sulfuric Acid Price Overview (Unit: CNY/ton)

Data Source: Chempricehub Information (Note: Market prices for Yunnan, Hubei, Guangxi, Guizhou, Sichuan, and Fujian regions are delivered-to-plant prices)

Domestic sulfuric acid markets declined in multiple regions this week, with the Chempricehub 98% Sulfuric Acid Price Index dropping to CNY 1,318/ton, a week-on-week decrease of 4.49%. In Hubei, the delivered price for 98% smelter acid was CNY 1,230–1,400/ton, while Yunnan’s price during the same period was CNY 1,230–1,290/ton, a drop of over 5% from last week. As shown in the table above, this represents a broad-based decline; however, when broken down by region, the drivers behind the price drops differ. The issue in Shandong lies in the impending return of supply. After earlier maintenance units resumed operations, regional supply increased. Although some acid producers in the Jiaodong area briefly held prices firm, downstream chemical industries maintained only rigid demand, and end-users focused on destocking, limiting rebound potential. Once the two major acid producers in Jiaodong fully resume production next week, supply pressure will become even more apparent. In Yunnan and Hunan, the decline was primarily driven by sluggish fertilizer demand, with major acid plants cutting prices by CNY 70–140/ton this week. Price reductions in Hunan, Jiangxi, and Fujian were passive responses to lower prices in surrounding regions. Hebei is one of the few regions with tight supply, as ore-based acid plants in Qinhuangdao and Handan remain under maintenance, leading to limited local commercial acid circulation. However, continuous inflow of low-priced acid from Hubei and Inner Mongolia has firmly suppressed local high prices. Regions with genuine supply support have not achieved corresponding premium margins.

This regional divergence stems from a shift in sulfuric acid pricing power: moving away from the "supply-side maintenance narrative" toward "downstream rigid demand absorption capacity + regional arbitrage opportunities." When low-priced supplies from outside regions can flow freely, the price support provided by local maintenance is significantly discounted. When both phosphate fertilizer and chemical rigid demands are absent, competitive price concessions among acid producers replace coordinated price holding.

II. Supply: Operating Rates Dip Slightly, but "Maintenance Bullishness" Is Offset by Inventory and Restarts

This week, sulfuric acid capacity utilization stood at 63.37%, down 0.88 percentage points week-on-week. On the surface, supply is contracting, which should provide bottom support for prices. However, the pricing impact of this round of maintenance-driven contraction is clearly weaker than in previous years for two reasons.

First, inventory buffers remain intact. Sulfuric acid inventories accumulated during the earlier phase of high sulfur prices have not been fully digested. Even if some acid producers undergo maintenance, spot availability is not tight. Major coastal acid plants in Guangxi are still in maintenance periods, but the bullish effect of maintenance is clearly offset by existing inventories and inflows from outside regions, actually fueling downstream price-suppression sentiment. Maintenance did not translate into "shortages," but rather into "inventory accumulation following failed price holds." Second, restart schedules are altering regional supply expectations. Next week, both smelter-acid and ore-based acid producers in Shandong plan to restart, creating an expectation of localized supply recovery. Although major acid plants in Jiangxi have maintenance plans, their impact on national total volume is limited. The national sulfuric acid supply pattern of "limited change in total volume, with regional offsets" means that a simple drop in operating rates is no longer sufficient to justify a bullish outlook.

III. Demand: Phosphate Fertilizer Off-Season Acts as "Ballast," Chemical Rigid Demand Cannot Fill the Gap

Table 2: Capacity Utilization of Key Downstream Products for Sulfuric Acid

Data Source: Chempricehub Information

The structural composition of sulfuric acid demand determines the weak baseline of the current phase. Direct consumption by phosphate fertilizers and compound fertilizers accounts for 52%–55% of total sulfuric acid demand, forming the absolute base. Combined chemical demand from titanium dioxide, caprolactam, hydrofluoric acid, etc., accounts for approximately 28%–31%. Neither of these directions offered incremental growth this week.

On the phosphate fertilizer side, MAP capacity utilization was 34.68%, and DAP was 37.03%. Although there was a slight week-on-week rebound, absolute levels remain in historical low ranges. With the autumn application season ending and winter stockpiling not yet fully launched, phosphate fertilizer enterprises are maintaining purchases based solely on rigid needs, lacking willingness for large-scale restocking. On the chemical side, titanium dioxide operating rates were 73.64%, showing a marginal rebound, but the terminal coatings and real estate chains remain weak, and cost support is also fading, resulting in only rigid consumption. Caprolactam operating rates were 68.99%, down 1.80 percentage points week-on-week, meaning its marginal pull on sulfuric acid demand continues to weaken.

The issue on the demand side is not a "cliff-edge collapse," but a "lack of relay." The void left by the phosphate fertilizer off-season cannot be filled by the chemical sector; meanwhile, the limited rigid demand from the chemical sector is insufficient to reverse the shipping pressure on acid producers. This is the fundamental reason why sulfuric acid prices lack resistance during their downtrend.

IV. Cost: Sulfur's "Cooling Off" Is the Most Direct Catalyst for This Decline

The downward shift in sulfuric acid price levels is more directly influenced by changes on the cost side than on the demand side. In the sulfur-based acid route, sulfur costs constitute a very high proportion. After experiencing extreme volatility within the year, sulfur prices have entered a phase of adjustment. Granular sulfur prices at Zhenjiang Port dropped significantly from highs. By late October, national port inventories rose to 1.133 million tons, a month-on-month increase of 20.09%, cooling expectations of supply tightness. Domestic sulfur production in October was approximately 962,000 tons, a month-on-month increase of 7.87%, indicating simultaneous release of domestic supply.

The transmission of cost collapse to sulfuric acid is dual-faceted: First, the theoretical cost line for sulfur-based acid shifts downward, giving acid producers room to cut prices. Second, the weakening of cost support itself undermines the market's "floor expectations." Under a "buy up, don't buy down" mentality, downstream buyers tend to delay procurement, further amplifying the downward slope of prices.

V. Outlook: Weak Consolidation in the Short Term

Combining supply and demand factors, the sulfuric acid market is expected to continue its trend of shifting price centers downward and consolidating weakly next week. The weakness in the phosphate fertilizer off-season is unlikely to change soon. Chemical demand remains divergent with an overall slight decline. Sulfuric acid procurement is dominated by rigid demand, with weak restocking intent. On the cost side, sulfur and pyrite continue to consolidate but are unlikely to return to highs. Copper, lead, and zinc ore prices remain stuck at high levels, offering limited cost floor support. On the supply side, restarts in Shandong and maintenance in Jiangxi offset each other, leaving total volume changes limited and providing no tightening driver for now.

Price stabilization or rebound requires at least one prerequisite to materialize: First, phosphate fertilizer operating rates show a counter-seasonal rebound, driving sulfuric acid procurement from "small rigid orders" to "volume restocking." Second, sulfur prices stop falling and return to an upward trend, forming a new cost platform and rebuilding market floor expectations. If neither occurs, regional divergence will persist—regions supported by maintenance and low inventories will see narrower declines, while regions reliant on external inflows and facing weak downstream rigid demand will face continued pressure to widen negotiation spreads.