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Imports spoiler domestic sulfuric acid market
China is the world's largest producer and consumer of sulfuric acid. In the 21st century, the growth rate of China’s sulfuric acid industry has accelerated significantly, with an average annual growth rate of 15%. By 2005, China accounted for 25% of global sulfuric acid production. This rapid expansion was driven by the country’s booming economy, making the sulfuric acid sector one of the fastest-growing in the industrial landscape. However, the industry now faces a major challenge: the impact of low-cost imports of both sulfur and sulfuric acid on the domestic market.
In 2005, the sulfuric acid industry experienced a sharp increase in output, reaching 44.622 million tons—a 17.2% rise from 2004. At the same time, market prices fell dramatically, with the average price of 100% sulfuric acid dropping from 620 yuan per ton at the start of the year to 530 yuan by year-end, a decrease of 14.5%. Despite this, China still needs to import some sulfuric acid annually to meet rising demand. The drop in international sulfuric acid prices, especially due to low-cost exports from abroad, has further pressured domestic prices, leading to a more rapid decline.
Long-term, large-scale low-price imports could disrupt the normal development of China’s sulfuric acid industry, threatening its stability and long-term growth. If not controlled, this trend may continue into 2006, with sulfur imports expected to reach around 10 million tons—accounting for 22% of global sulfur production. Sulfuric acid production will then represent 40% of total sulfur use. As China’s demand for sulfur grows rapidly, it could cause fluctuations in global supply and pricing. When China’s sulfur imports exceed 20% of global trade, world prices are likely to rise, increasing risks for China’s sulfuric acid industry. Therefore, careful management and regulation are essential.
China is the world’s largest sulfur importer, with Canada alone supplying over 52% of the total. Most imported sulfur is used for sulfuric acid production, which in turn supports fertilizer manufacturing. Over 72% of sulfuric acid is used in fertilizer production, highlighting the close link between sulfur and agriculture.
Currently, global sulfur supply is rising, but China’s demand is growing even faster. While sulfur prices may fall when supply exceeds demand, they are also subject to fluctuations based on market conditions. In the late 1970s, when sulfur was abundant and cheap, many Chinese sulfuric acid plants switched from pyrite to sulfur-based production, leading to a surge in sulfur prices. Import costs soared from $80 to $130 per ton, prompting companies to return to pyrite production, causing significant losses. Today, the situation mirrors that period, with numerous new sulfur-burning plants being built across the country, increasing demand and creating a shortage in the sulfur market.
At the start of this year, several new sulfur-burning sulfuric acid plants were completed, leading to a surplus of sulfur and a "no-market" scenario. Many companies now struggle to afford sulfur due to high prices, forcing them to halt operations. Despite this, many more plants are under construction or planned, including facilities like Yunnan Phosphate Fertilizer (600,000 tons/year) and Guizhou Xiyang Special Fertilizer (600,000 tons/year), among others. This means China will add over 3 million tons of sulfur-based sulfuric acid capacity this year, bringing total annual capacity to 15 million tons.
Industry experts believe global sulfur production is increasing, but actual supply depends on shipment volumes from producing countries. Global sulfur output is currently around 40 million tons per year, expected to rise to 55 million by 2011. However, storage and transportation challenges remain critical. In 2001, sulfur stockpiles reached their highest level in two decades. Due to factors like transportation, environmental regulations, and production costs, sulfur supply increases will largely depend on market prices.
Qi Hao, Secretary-General of the China Sulfuric Acid Association, warned that sulfur is not an infinite resource, and global supply cannot keep up with China’s growing demand. Excessive imports and high demand are key factors driving price volatility. Although current sulfur import prices have dropped to around $85 per ton from over $90, the outlook remains uncertain. Prices are expected to fall further to about $80 in the third quarter. Therefore, the industry must develop in a balanced manner, avoiding sudden shifts. Relevant authorities should monitor sulfur-importing enterprises, prevent over-importation and over-construction, and strengthen policy guidance across the entire pyrite-sulfuric acid-fertilizer-agriculture chain to help domestic companies adapt and reduce exposure to international market risks.