Just as June begins, the domestic sulfur market has once again shown strong performance. By June 3, the mainstream granular price at Zhenjiang Port had risen to 8,400 yuan/ton, an increase of 13.21% from the end of May. Attentive market participants will notice that this month's strong start closely mirrors the trend at the beginning of May, which also saw a sharp price rise at the start of the month. However, the main drivers behind these two increases are not entirely the same, with both similarities and differences. A closer look reveals that the May price hike was largely supported by the tight global sulfur supply and continued destocking in ports. This month's start, while still benefiting from the original supply-demand logic, also features two additional boosters: substantial spot purchases by some end users and follow-up replenishment by long-term agreement traders.

From the perspective of shared influencing factors, the strengthening of the domestic sulfur market at the beginning of June still relies on one of the core supports of previous rounds of price hikes: tight global supply. The geopolitical situation in the Middle East remains uncertain, and shipping through relevant straits is still hampered, limiting resource outflows. Russia's sulfur export ban continues, and neighboring companies in Japan and South Korea have also delayed some contracted resource shipments due to crude oil shortages. These factors collectively have not only pushed international sulfur prices to high levels and continuously suppressed domestic traders' interest in imported resources but also created a scarcity of imported cargo arrivals. Second, domestic port inventories have continued to destock at low levels. With fewer previous imported cargoes and sustained consumption from essential demand, solid sulfur inventory at major domestic ports has remained at near five-year lows. As time progresses, the available spot resources at ports are likely to become even scarcer, with ownership becoming more concentrated.

Building on the original bullish fundamentals, the June sulfur market also features new differentiated bullish factors that have become key drivers of the recent price surge. First, starting in early June, major domestic refineries adjusted their supply rules and no longer supply resources to non-phosphate fertilizer producers. As a result, end users in the chemical and new energy sectors that previously obtained sulfur from major refineries must now turn their procurement focus to the already tight port spot market to maintain normal operations, further tightening tradable resources at ports. Second, traders with long-term agreements need to fulfill contract deliveries with downstream enterprises and must prepare subsequent monthly replenishment plans in advance. Against the backdrop of increasingly scarce resources, they have no choice but to initiate phased market replenishment operations, pushing prices higher.

Based on the current market fundamentals, regarding the June sulfur market trend, I believe: The overall market will continue to oscillate at high levels with a strong tendency, but the upward pace may shift from a one-sided rapid rise to a supply-demand game-driven fluctuation.

On the geopolitical front in the Middle East: At present, the overall situation in the Middle East is full of uncertainty, and future developments involve uncontrollable unknowns. The direction of the situation will affect the international sulfur market in two ways: If shipping lanes remain blocked, the current difficulty in exporting resources from the Middle East will persist, the global sulfur supply gap will be hard to fill, international sulfur prices will likely remain firm, continuously raising domestic import costs and keeping port resources tight and prices high. If shipping resumes later, previously stranded cargoes will be shipped in a concentrated manner, gradually leading to an increase in future arrivals, which will inevitably bearish domestic and international markets.

On the demand side, divergence may emerge. Phosphate fertilizer enterprises, which have guaranteed resource access, will arrange subsequent production in an orderly manner based on the raw materials they receive, likely adopting a just-in-time procurement model for the port spot sulfur market. However, non-phosphate fertilizer producers, affected by the cutoff of domestic supply, will have to shift their essential demand procurement to the spot market, and their phased replenishment needs will partially offset the bearish impact from declining fertilizer enterprise demand.

On the supply side, low port inventory levels remain a fundamental support for the market in the short term. Even if the relevant straits see some recovery, it will still take time for cargoes to arrive, and there is unlikely to be a large batch of resources arriving in a concentrated manner to replenish inventories. Of course, market participants need to continuously monitor this aspect and avoid overinterpreting related news.

In summary, the bullish factors for the domestic sulfur spot market in June are concentrated in the following: hindered export of Middle East resources, persistently low port inventory, domestic sulfur being directed to fertilizer enterprises, prompting both chemical end users and long-term agreement traders to replenish. The potential bearish factors are the uncertainty of strait navigation, the flexibility of phosphate fertilizer enterprises in procurement, and high prices suppressing end-user plant operating rates. As such, spot prices may still have room to rise in the short term, but the space for one-sided upward movement is likely to gradually narrow. It is recommended that market participants take a rational view of high prices, strictly control the risk of blind chasing, continuously track Middle East geopolitical developments, port arrival data and inventory changes, and operating rate changes across downstream categories, and flexibly adjust procurement, sales, and inventory strategies.

Top 5 sulfur production capacity of representative enterprises:

| Enterprise Name | Capacity (10,000 tons/year) |
| --- | --- |
| Puguang Gas Field | 240 |
| Zhejiang Petrochemical | 130 |
| Zhenhai Refining & Chemical | 109 |
| Chuandongbei Gas Field | 100 |
| Guangdong Petrochemical | 78 |