China June 2026 Sulfur Market Review and Impact on the Titanium Dioxide Industry
Created on 06.30
June Price Trend: Sharp Rally, Rapid Correction, Then Weak Consolidation
1. June 1–12: Continuous Rally to a Multi-Year High
· Domestic sulfur prices surgedrapidly throughout early June, breaking through the RMB 10,000/tonne level.
· On June 12, mainstream pricesclimbed to approximately RMB 11,750–12,000/tonne, reaching the highest level in morethan 15 years.
· Compared with the beginning of2026, when prices were around RMB 3,660–3,850/tonne, sulfur prices increased by more than200%within six months.
2. June 12–18: Rapid Correction After the Price Spike
Within only six days, sulfur prices fell sharply asgeopolitical risk premiums were quickly unwound.
Following signals of easing tensions in the Middle East andimproved expectations for navigation through the Strait of Hormuz, marketsentiment shifted rapidly. Traders accelerated profit-taking, resulting inpanic selling and a steep correction, with prices dropping by more than RMB2,000/tonne within two trading days.
3. June 19–30: Weak Sideways Trading
During the second half of June, sulfur prices stabilized atlower levels but trading activity remained subdued.
Downstream buyers maintained a cautious purchasingstrategy, while traders became increasingly conservative amid expectations ofrecovering imports, resulting in a weak and range-bound market.
II. Four Major Factors Behind the Early-June Price Surge
1. Sharp Contraction in Global Supply (The Fundamental Driver)
Disruptions to Middle Eastern Supply
China imports approximately 55% of its sulfur demand, with theMiddle East accounting for more than half of total imports.
The Strait of Hormuz is one of the world's most importantsulfur shipping routes. Escalating geopolitical tensions disrupted vesselmovements, reduced refinery operations in parts of the region, andsignificantly lowered sulfur shipments to Asia.
Longer transportation routes and sharply higher freightcosts further constrained spot supply into China.
Continued Russian Export Restrictions
Russia, one of the world's largest sulfur exporters,maintained export restrictions through June, tightening global spotavailability and reducing flexible export volumes.
Weak Import Arrivals
According to Chinese customs data, sulfur imports in Maytotaled only 268,300tonnes, down 66.4% year-on-year and marking the ninth consecutive monthof year-on-year decline.
Import arrivals remained limited throughout June, leavingthe domestic supply gap difficult to replenish in the short term.
2. Critically Low Domestic Port Inventories
Domestic sulfur inventories fell to historically lowlevels.
· At the beginning of June,inventories at China's major sulfur ports were estimated at only 900,000–1,000,000 tonnes,roughly half of the level recorded a year earlier.
· By the end of June, inventorieshad fallen further to approximately 745,600 tonnes, remaining well belowhistorical averages.
· Tight spot availabilityencouraged traders to maintain firm offers, while low-priced cargoes becameincreasingly scarce.
3. Limited Growth in Domestic Production
Sulfur is produced mainly as a by-product of oil refiningand natural gas processing, making production expansion difficult within ashort period.
During June:
· Several major Chineserefineries underwent scheduled maintenance, reducing sulfur output.
· Large state-owned refinersprioritized long-term contract customers, leaving fewer spot cargoes available.
· Additional sulfur recoverycapacity was not expected to come online until July, providing little reliefduring June.
4. Strong Underlying Demand and Rising International Costs
Stable Phosphate Fertilizer Demand
Phosphate fertilizers account for approximately 55% of China'ssulfur consumption.
June coincided with the summer fertilizer productionseason, requiring phosphate producers to maintain relatively high operatingrates despite elevated sulfur prices.
Growing New Energy Demand
Continued expansion of lithium iron phosphate (LFP) batterymaterials and Indonesia's HPAL nickel projects has increased structural sulfurdemand, providing additional long-term support for the market.
Rising International Prices
Higher international sulfur prices significantly increasedimport costs, reinforcing domestic price support throughout the first half ofJune.
III. Three Major Reasons Behind the Mid-June Price Decline
1. Geopolitical Risk Premium Rapidly Dissipated
The easing of Middle East tensions became the immediatecatalyst for the correction.
Market expectations shifted toward a gradual recovery ofshipping through the Strait of Hormuz and improved import arrivals during July.
As geopolitical concerns eased, speculative buying quicklydisappeared and traders rushed to lock in profits, accelerating the decline.
2. High Prices Suppressed Downstream Demand
Extremely high sulfur prices significantly weakeneddownstream purchasing enthusiasm.
· The summer fertilizer stockingseason was approaching its end.
· High sulfur costs squeezedmargins for phosphate fertilizer producers.
· Titanium dioxide, sulfuric acidand lithium iron phosphate producers reduced operating rates or postponed rawmaterial purchases.
· Market transactions werelargely limited to immediate production needs.
Without speculative buying, market liquidity declinedsubstantially.
3. Market Sentiment Shifted from Bullish to Cautious
After the sharp rally, the market had largely priced in theexpected supply shortage.
Although spot inventories remained low, expectations ofrecovering imports weighed heavily on sentiment.
Most traders adopted a wait-and-see approach, leading toweak and range-bound trading throughout the remainder of June.
IV. Direct Impact on the Titanium Dioxide Industry
Sulfur is the primary raw material used in sulfuric acidproduction, and sulfuric acid is an essential input for the sulfate-processtitanium dioxide industry.
During June:
1. The sharp increase in sulfur prices significantly raised sulfuricacid production costs, pushing up manufacturing costs for sulfate-route TiO₂ producers.
2. Some small and medium-sized titanium dioxide producers reducedoperating rates due to increasing cost pressure, while major producersimplemented price increases to partially offset rising raw material costs.
3. Although sulfur prices corrected during the second half of June,overall raw material costs remained historically high, and industry profitmargins continued to face considerable pressure.
V. Market Outlook
Looking ahead, the sulfur market is expected to remainsensitive to three key factors:
· The pace of sulfur importarrivals into China;
· Inventory recovery at majordomestic ports;
· The geopolitical situation inthe Middle East and shipping conditions through the Strait of Hormuz.
If import arrivals continue to improve during July, supplytightness is likely to ease further, which could put additional pressure onsulfur prices.
However, given that domestic inventories remain well belowhistorical averages and downstream demand from fertilizers and new energysectors remains relatively resilient, sulfur prices are expected to stay atcomparatively high levels, with limited room for a sharp decline in the nearterm.