An escalation in the cost of sulphur has underscored how the repercussions of the Iran conflict are extending well beyond energy sectors, impacting extensive supply networks. Related: Ford Pro AI: The Chatbot …
Maritime traffic has been nearly paralyzed through the Strait of Hormuz, thereby curtailing the flow of this oil and gas refining derivative. While a niche commodity, it is crucial in diverse industries ranging from fertilisers and chemicals to computer chips and metal processing. Related: OpenAI’s Algorithmi…
The ramification of the waterway’s interruption is cascading across various industries, with already strained supply routes confronting their most significant challenge since the Covid-19 pandemic, as noted by analysts.
Over 44,000 enterprises have experienced at least one shipment disruption, according to the analytics firm Dun & Bradstreet, which indicated that businesses in China and India faced the greatest exposure.
Amin Nasser, chief executive of Saudi Aramco, informed reporters on Tuesday that the predicament in the strait had unleashed “a profound chain reaction,” resulting in a “dramatic domino effect” across numerous industries.
Sulphur Shortage
The market rate for sulphur in China, the world’s primary consumer, has surged by 15 percent since the hostilities commenced, reaching an unprecedented Rmb4,650 ($672) per tonne this week, based on Argus data.
This sharp increase has unveiled the susceptibility of supply arrangements centered around the Gulf, which accounts for 45 percent of the world’s sulphur exports, as reported by the business intelligence organization CRU.
Although some refineries situated outside the Middle East possess sulphur for sale, the current challenge lies in securing vessels for its transport, according to Clive Murray, chief executive of London Commodity Brokers.
“Presently, the situation is severe. Last week, we were unable to finalize any transactions” because ships were uncertain if they could acquire the necessary fuel, making it impossible to book freight for shipments including sulphur, he explained.
“We cannot arrange shipping . . . No one understands what course of action to take,” he added.
A trader remarked that the market for sulphur and sulphuric acid was “extremely volatile” and that several firms were urgently seeking immediate deliveries of acid to “extend” their current reserves of sulphur.
An additional limiting element is that only a select number of companies are equipped to transport and store the dangerous acid.
Mining magnate Robert Friedland stated that the interruption to sulphur provisions would influence copper output in Africa, a major sulphur importer.
“The expense of leaching copper oxide ore in the central African copperbelt is set to become even more prohibitive,” he articulated in a post on X.
Microprocessors
As an industry demanding extensive energy, chip manufacturers were already experiencing adverse effects from rising oil and gas expenses. However, the world’s foremost producers, which encompass Taiwan’s TSMC and South Korea’s Samsung and SK Hynix, also depend on a variety of chemical agents transported via the strait.
Semiconductor enterprises utilize sulphuric acid to cleanse wafers and depend on helium, also substantially produced in the Gulf region, to aid in cooling them during fabrication.
The semiconductor sector accounts for approximately one-fifth of global helium requirements, according to the consultancy TechInsights.
“Roughly a third of the worldwide helium supply originates from Qatar, which finds application in aspects such as cooling and leak detection within chip fabrication facilities,” noted Mohammad Ahmad, chief executive of the supply chain intelligence platform Z2Data.
The price of semiconductor components had already been ascending in the prior year, a strain that the most recent supply constraint would “only intensify,” he elaborated.
Simultaneously, a primary global source of bromine — employed in etching designs onto silicon wafers — is the Dead Sea. A 2023 report from the Korea International Trade Association revealed that the nation procured over 99 percent of its bromine from Israel.
Crop Nutrients
The crop nutrient sector is the foremost consumer of sulphur, representing around 60 percent of demand. A prolonged scarcity will heighten anxieties regarding worldwide food shortages and escalating prices.
Sulphur prices were already approaching historical peaks prior to the conflict, partly driven by burgeoning demand in China from metals markets.
Disruption to oil and gas extraction now threatens to curtail output, while the closure of the Strait of Hormuz is impeding exports from reaching international markets.
The three largest importers — Morocco, China, and Indonesia — all acquire at least half of their consumption from the Middle East.
The crisis emerges as the peak season for crop nutrients approaches, with agriculturists in the northern hemisphere preparing for planting. Scotiabank issued a warning in a memo on Monday about mounting concerns that “imminent food security might be imperiled.”
While alternative provisions exist, users were “vying with everyone else trying to procure it,” commented Tom Price of Panmure Liberum.
While metals manufacturers might be able to obtain substitute supplies, major crop nutrient producers would encounter difficulties given the enormous quantities they require, he stated. “You might be managing 3 to 5 percent of global supply if you’re a principal producer. You simply cannot locate a replacement for that,” Price added.
Meanwhile, the market value of urea, another type of crop nutrient, reached $700 per tonne this week, a 45 percent increase from just before the war, according to Argus.
Metals Industry
Sulphuric acid is employed in “leaching,” a process to isolate and retrieve metals such as copper, nickel, and uranium. Indonesia, the leading producer of nickel, heavily relies on sulphur brought in from the Middle East.
Chris Lawson of CRU indicated that while the sulphur deficit would initially impact the crop nutrient industry, there would be an effect on “the copper and metals sector . . . a bit further down the timeline.”
An expert at a global trading firm mentioned that almost 3 million tonnes annually of copper production in the Democratic Republic of Congo utilizes sulphuric acid and is “susceptible” to the escalating disruption. That figure contrasts with a global mined output of approximately 23 million tonnes in 2025.
Brokers and analysts posited that copper refineries likely hold reserves that would sustain them for several weeks, but not beyond that. As stocks begin to diminish, “they’re going to commence a frantic search for alternative sources,” stated Murray of LCB.
Supplementary reporting by Leslie Hook