From Fertilizer to Chemicals—A “Super Sulfur Shock” Triggered by the Iran War
While the market is focused on crude oil and natural gas, a more “hidden” bottleneck—sulfur—is repricing fertilizer and part of the metal supply chain.
In a commodities economic review published by HSBC Bank on March 16, it was pointed out that the Middle East conflict is triggering a “super squeeze” on sulfur. The report showed that before the conflict, sulfur prices had already risen significantly due to restricted supply and strong demand; direct supply disruptions caused by the conflict, coupled with shipping risks in the Strait of Hormuz, pushed sulfur prices to “new record highs.”
Sulfur is often regarded as a “secondary commodity,” because its production largely depends on by-product recovery rather than direct mining and processing like many other industrial raw materials.
But this “secondary commodity” is actually a crucial input for many industrial processes. The United States Geological Survey (USGS) points out that “through its main derivative, sulfuric acid, sulfur is one of the most important elements used as an industrial raw material.” Sulfuric acid is even known as the “king of chemicals,” and is also the “largest-volume industrial chemical used worldwide.”
Middle East: The “heartland” of global sulfur
About 90% of global sulfur supply is a by-product of fossil fuel processing, that is, “recovered sulfur.” This makes the Middle East, with its massive hydrocarbon industry, the absolute core of global sulfur trade.
Data shows that in 2025, the Middle East (Saudi Arabia, UAE, Qatar, Kuwait, and Iran) will account for about 25% of global sulfur production, and nearly 50% of global seaborne sulfur trade.
“Global supply chain shocks often reveal how economies are interconnected and dependent on each other.”
Paul Bloxham, the bank’s Chief Economist, points out. Just as last year's trade tensions exposed the world’s reliance on rare earths like gallium and yttrium, the disruptions caused by the Middle East conflict now reveal another bottleneck—sulfur supply.
“Super squeeze”: Prices hit historical highs
The report notes that sulfur prices were already high before the Middle East conflict, and in 2025 “rose significantly,” reaching “the highest level since the peak in 2022.”
Behind this lies supply squeezed by multiple factors: refinery closures, power outages, decreased output of low-sulfur crude oil, as well as Russian refineries being hit by drone attacks and export bans, continually limit sulfur supply.
Meanwhile, demand has not cooled off: strong seasonal fertilizer demand and Indonesia’s growing nickel High Pressure Acid Leach (HPAL) business provide structural support for sulfur demand.
Against this “tight baseline,” the Middle East conflict became the final straw. The report calls this a “super-squeeze.”
The threat of a closure of the Strait of Hormuz and direct supply disruptions (such as force majeure or shutdowns at Bahrain’s Bapco and UAE’s Ruwais refineries due to attacks) pushed sulfur prices to new historical highs.
Transmission chain: Fertilizer feels it first, metals and semiconductors follow
The report breaks down sulfur’s uses plainly: For fertilizer, sulfur is mainly used to produce phosphate fertilizers such as MAP (monoammonium phosphate) and DAP (diammonium phosphate), which are related to global agricultural supply; industrially, sulfuric acid is used for copper smelting, electroplating, metal processing, rayon and film production; in the semiconductor industry, sulfuric acid is used to clean silicon wafers.
Therefore, when sulfur prices rise, fertilizers are the first to be “called out.” The report believes that Middle East conflict and higher sulfur prices “may push DAP (diammonium phosphate) prices even higher.”
The report further notes: Besides sulfur-related fertilizers, nitrogen fertilizers are also at risk—Iran is the world’s third-largest urea exporter, accounting for about 11% of global urea trade; the Strait of Hormuz carries about one-third of global trade volume.
“In a supply squeeze, rising fertilizer prices may lead farmers to reduce fertilizer usage.” The report warns. This usually means lower crop yields. For many agricultural producers, this is undoubtedly adding insult to injury—they are facing both depressed agricultural prices and high input costs. Long-term supply disruptions could deeply affect the region’s supply chain and pricing.
Who is most vulnerable: Asia and Africa
This “super squeeze” hits highly import-dependent Asian and African countries first.
For example, Indonesia relies on the Middle East for about 75% of its sulfur imports. As the world’s largest nickel producer (accounting for over 50% of supply), sulfur makes up about 50% of HPAL plant operating costs, and inventories are usually low. Sulfur shortages directly threaten its crucial battery metals supply chain.
In Africa, 90% of the copper belt’s sulfur imports come from the Middle East, and cobalt production in Congo (DRC), which accounts for 70% of global supply, also requires sulfur as a raw material.
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