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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 industry has experienced rapid growth, with an average annual growth rate of 15%. By 2005, China’s sulfuric acid production accounted for 25% of global output. Driven by the country’s fast-paced economic expansion, the sulfuric acid sector has entered one of its most dynamic development phases. However, a major challenge now facing the industry is the impact of low import prices for both sulfur and sulfuric acid, which are undermining domestic market stability and threatening long-term sustainable growth.
In 2005, the industry saw a significant increase in production, reaching 44.622 million tons—an 17.2% rise compared to 2004. Meanwhile, market prices dropped sharply, with the average price of 100% sulfuric acid falling from 620 yuan per ton at the start of the year to 530 yuan by year-end—a 14.5% decline. Despite this, China still relies on imports to meet growing demand. The drop in international sulfuric acid prices, especially from low-cost foreign suppliers, has further pressured domestic pricing, accelerating the downward trend.
Long-term, large-scale low-price imports pose a serious threat to the orderly development of China’s sulfuric acid industry, potentially destabilizing the economy. If the current import situation remains unchecked, sulfuric acid prices in 2006 are expected to continue falling. In that year, China’s total sulfur imports could reach or exceed 10 million tons, accounting for 22% of global sulfur production. Sulfuric acid production would then represent 40% of China’s total output. As China’s demand for sulfur grows rapidly, it could significantly affect global supply and pricing dynamics. When Chinese imports surpass 20% of global sulfur trade, global prices may rise, increasing risks for China’s sulfuric acid industry. Therefore, careful monitoring and moderate control are essential.
China is also the world’s largest importer of sulfur, with over 52% of its imports coming from Canada. Most imported sulfur is used in sulfuric acid production, with more than 72% of that acid going into fertilizer manufacturing. While global sulfur supply is increasing, China’s demand is rising even faster. However, sulfur prices will only fall when supply exceeds demand. Over time, prices fluctuate based on demand trends. In the late 1970s, when global sulfur was abundant and cheap, many Chinese sulfuric acid plants shifted from using sulfur to other feedstocks, leading to a sharp price increase. The import price of sulfur soared from $80 to $130 per ton. Although the government provided subsidies, high costs forced companies to revert to pyrite-based production, causing significant losses.
The current situation mirrors past patterns. Recently, numerous sulfur-burning sulfuric acid plants have been built across China, driving up sulfur demand. At the beginning of this year, several new plants were completed, creating a temporary shortage of sulfur and leading to a "no market" scenario. Now that sulfur is available, many companies can’t afford it due to high prices, forcing some to halt operations. Despite this, many more sulfur-burning plants are under construction or planned, including projects like Yunnan Phosphate Fertilizer (600,000 tons/year), Guizhou Xiyang Special Fertilizer (600,000 tons/year), and others. This means China will add over 3 million tons of sulfuric acid capacity this year, pushing total annual capacity beyond 15 million tons.
Experts note that while global sulfur production is rising, supply remains constrained. Current global production is around 40 million tons per year, expected to reach 55 million by 2011. However, storage and transportation challenges are becoming more pressing. In 2001, sulfur stockpiles reached a 20-year high. Due to factors like transportation, environmental regulations, and production costs, the ability of sulfur-producing countries to increase supply depends heavily on market prices. Thus, global sulfur is unlikely to meet rising demand indefinitely.
According to Qi Hao, Secretary-General of the China Sulfuric Acid Association, sulfur is not an infinite resource. Its production and processing volume is largely fixed, and China’s demand growth far outpaces global supply increases. Excessive imports and over-reliance on external sources make sulfur prices volatile. Although current import prices have dropped slightly—from over $90 to around $85—this trend may not last. Prices are expected to fall further to around $80 in the third quarter. Therefore, the sulfuric acid industry should develop in a balanced way, avoiding abrupt shifts. Relevant authorities should closely monitor sulfur-importing enterprises, prevent excessive imports and overbuilding, and strengthen policy guidance and macro-control across the entire pyrite-sulfuric acid-fertilizer-agriculture chain to help domestic companies adapt and mitigate international market risks.