Huatai Securities: Decline in Oil and Gas Processing Volume Leads to Sulfur Supply Gap, Impacting Chemicals and Metals from Multiple Angles

Huatai Securities: Decline in Oil and Gas Processing Leads to Sulfur Supply Shortage, Impacting Chemicals and Metals

On March 21, Caixin reported that Huatai Securities’ research indicates approximately 60% of the world’s sulfuric acid comes from sulfur, 30% from by-products of metal smelting, and 10% from sulfuric acid production from pyrite. The main sources of global sulfur production are crude oil refining and natural gas processing. According to Kepler, nearly half of the sulfur exported through the Strait of Hormuz by 2025, combined with limited crude oil supply leading to decreased load expectations at East Asian refineries, and the low sulfur content in North American shale oil and gas, highlight a global supply gap after sulfur reduction in the Middle East. Huatai Securities believes that the sulfur supply and demand imbalance may be difficult to reverse in the medium term.

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, as well as manufacturing titanium dioxide, nylon, dyes, and lithium battery cathodes. As sulfur supply tightens and prices remain high, chemical projects utilizing differentiated production methods—such as gypsum-based acid production, ferrous oxalate for ferric phosphate, and chloride process titanium dioxide—are expected to benefit.