Last week, as buying sentiment continued to be released in the market, the domestic spot sulfur price surged to 11,750 yuan per ton. However, following the initial signing of a ceasefire memorandum of understanding between the US and Iran, market concerns over supply disruptions caused by shipping blockages in the Strait of Hormuz significantly eased. Consequently, the trading sentiment quickly shifted to a wait-and-see approach, willingness to accept high-priced goods declined markedly, and prices began to fluctuate downward. Nevertheless, looking at the actual circulation pace in the spot market, distant water cannot quench an immediate thirst—the fundamental shortage of spot supply in the domestic market has not substantially changed. The industry has long heard rumors about the possibility of Kazakhstan's sulfur resources being marketed to China. Regarding this, the author advises industry participants to rationally evaluate such supply information and objectively assess Kazakhstan's actual capacity to supply sulfur to China.

The period when China imported large volumes of sulfur from Kazakhstan dates back to 2010–2015. During that time, China's annual import volume of sulfur from Kazakhstan stabilized between 1.22 million and 1.75 million tons. Notably, in 2013, Kazakhstan ranked first among trading partners by import volume. The large-scale trade between China and Kazakhstan for sulfur resources during 2010–2015 was supported by multiple conditions of that era: First, Kazakhstan had accumulated considerable stockpiles of solid sulfur, providing stable export capability. Second, the global sulfur consumption pattern was relatively simple at the time—overseas markets besides China had limited absorption capacity, leaving Kazakhstan with fewer export options. Third, domestic environmental regulations were relatively lax, with no significant restrictions on the trade and circulation of sulfur in block or powder form. This allowed Kazakh sulfur to flow smoothly into downstream domestic enterprises with minimal trade barriers. However, these supporting conditions have largely ceased to exist today.

Looking at a longer time frame, China's total sulfur imports in recent years have declined significantly compared to the period before 2019. Against this backdrop, Kazakhstan's share of China's annual sulfur imports has remained at a relatively low level, making it difficult to serve as an effective supply supplement. On one hand, although the General Administration of Customs does not publish detailed data, it can be inferred from actual circumstances that even if the China-Europe Railway Express could transport Kazakh resources via the Alataw Pass rail route to China, the volume per single shipment and the stable annual flow capacity have natural upper limits. Overland transport capacity and costs cannot match the vast import demand of China, let alone replace the mainstream supply route of Middle Eastern seaborne cargo. On the other hand, China's standardized warehousing and distribution hubs for solid sulfur are concentrated in the three major river-sea ports in East China and three key hub ports under the Beibu Gulf management system. Other ports rumored to be capable of receiving Kazakh sulfur generally face restrictions related to hazardous goods storage and handling permits, dedicated sulfur loading/unloading and yard facilities, and environmental and safety operating procedures. Given the combined constraints of transport capacity, warehousing, and permits, it is unlikely that Kazakh sulfur can effectively alleviate the domestic supply gap. Industry participants should maintain prudent judgment regarding such supply information.

Currently, the US-Iran ceasefire memorandum is awaiting formal signing, but the Strait of Hormuz remains caught between optimistic expectations of the agreement and the reality of localized blockade. Going forward, the domestic spot sulfur market could follow two scenarios:

The first scenario is optimistic: The Strait resumes orderly navigation. The market's first priority would be to fix the tight global crude oil supply situation. However, sulfur shipments—whether via dedicated vessels or as byproducts from increased crude processing—will see a time lag. Additionally, given the current historically high domestic spot sulfur prices, domestic buyers naturally show inertia in purchasing U.S. dollar-denominated resources, resulting in slow replenishment. Therefore, the room for a sharp and rapid decline in domestic sulfur prices is limited.

The second scenario is pessimistic: A memorandum is not a peace agreement; further negotiations are needed, and the ultimate binding force of the memorandum remains questionable. Geopolitical frictions could continue to disrupt Strait navigation intermittently. In that case, the recovery of sulfur outflows from the Middle East would certainly fall short of optimistic market expectations, and the current shortage in domestic spot supply would persist. It is worth noting that national sulfur port inventories have already fallen to multi-year historical lows. Moreover, major refinery-produced sulfur is mostly allocated through directed supply channels, continuously tightening the availability of spot trade cargo and exacerbating supply-demand imbalances in certain regions.

Overall, the tight domestic sulfur supply situation can only ease gradually—there is no quick-fix channel for supply improvement. In the short term, the spot market lacks a fundamental basis for sustained and substantial declines. It is expected that domestic spot sulfur will maintain a high-level fluctuating trend for some time.