Whalesbook
China Halts Sulphuric Acid Exports
China plans to stop exporting sulphuric acid from May, prioritizing domestic needs ahead of its peak planting season. Companies and buyers have reportedly been informally notified of the shift, intended to secure supply for China's own agricultural and industrial needs. This restriction will tighten the global supply of this vital industrial chemical.
Geopolitical Disruptions Worsen Supply
This situation is made worse by ongoing disruptions to sulphur supply – a key ingredient for sulphuric acid – caused by the Iran conflict. The closure of the Strait of Hormuz has severely hampered shipments from the Middle East, which accounts for nearly a third of global sulphur production. This dual supply shock challenges industries that rely on these raw materials.
Impact on Indian Companies
Sulphuric acid is indispensable for phosphate fertiliser production and metal refining. For Indian companies like Coromandel International, Paradeep Phosphates, Chambal Fertilisers, Gujarat State Fertilizers & Chemicals (GSFC), Rashtriya Chemicals & Fertilisers (RCF), and Fertilisers and Chemicals Travancore (FACT), rising input costs directly threaten margins. Price increases may be hard to pass on to farmers due to subsidy structures and regulations. This could lead to higher working capital needs and pressure on earnings. India imported approximately $118 million worth of sulphuric acid in 2024, highlighting its import dependency.
Global Ramifications Beyond Fertilizers
Beyond fertilisers, the supply squeeze will likely impact global copper producers, especially in regions like Chile, the Democratic Republic of Congo, and Zambia, where sulphuric acid is crucial for metal extraction. Global prices for sulphuric acid have already been trending upward since the conflicts began.