Huatai Securities: Decline in Oil and Gas Processing Volumes Leads to Sulfur Supply Deficit, Multiple Impacts on Chemicals and Metals

Huatai Securities report states that approximately 60% of global sulfur comes from sulfur, 30% from by-products of metal smelting, and 10% from sulfur iron ore acid production. The main sources of sulfur production are crude oil refining and natural gas processing. According to Kepler, by 2025, nearly half of the sulfur exported through the Strait of Hormuz will be from this route. Combined with limited crude oil supply leading to decreased refinery loads in East Asia, and the relatively low sulfur content in North American shale oil and gas, the supply gap in sulfur is expected to become more apparent after reductions in Middle Eastern sulfur supply. Huatai Securities believes that the mid-term supply and demand contradiction of sulfur may be difficult to reverse. According to S&P Global, about 58% of global sulfuric acid is used for phosphate fertilizers, with the rest for processing metals such as nickel, copper, uranium, and for manufacturing titanium dioxide, nylon, dyes, and lithium battery cathodes. As sulfur supply tightens and prices remain high, chemical projects with differentiated production routes such as gypsum acid, ferrous oxalate for iron phosphate, and chloride process titanium dioxide are expected to benefit.