High sulfur prices squeeze fertilizer margins, spur production cutbacks

Persistent global sulfur price hikes have led to widespread issues across the fertilizer sector, including reduced operating margins and production interruptions, companies and traders said.

Sulfur prices have climbed since the Feb. 28 start of the Middle East war, which trapped about half of all global seaborne exports behind the Strait of Hormuz, according to S&P Global CERA data.

The supply shortage lifted sulfur prices to all-time highs of $815-$820/mt FOB Middle East and $1,200/mt CFR Brazil on May 28, according to assessments by Platts, part of S&P Global Energy.

End-users, particularly in fertilizer markets, have seen their margins squeezed by these higher costs.

Egyptian Financial & Industrial Co. began maintenance at all three of its granular single superphosphate plants on May 21, a source close to the company said May 23. A source at the company said this move was triggered by high sulfur costs and that producers in the region were waiting for sulfur prices to come down before resuming operations.

Market sources expect sulfur supply to remain extremely tight. A distributor said they see "no price reduction in sight."

In the Americas, the impacts are now extending beyond margin compression and into physical production curtailments.

Mosaic temporarily halted phosphate rock production at its Catalão mine and chemical complex in Goiás state for 45 days and at its Tapira mine complex in Minas Gerais state for 30 days, effective June 1, citing sulfur supply challenges and rising raw material costs.

"Geopolitical instability and restrictions on maritime routes have drastically worsened the global supply of sulfur, which was already being heavily impacted, making phosphate production challenging with the current sulfur supply dynamics and raw material price," the company said in a note sent to commercial partners May 26.

The company said sulfur costs have risen nearly 1,100% from around $100/mt to more than $1,200/mt, describing the situation as the most severe sulfur supply crisis experienced by the industry since 2008.

"A stable supply of sulfur is critical to our operations," Mosaic said. "For every 10 metric tons of diammonium phosphate or monoammonium phosphate fertilizer produced, 4 mt of sulfur are required."

The temporary shutdown follows earlier actions by Mosaic to reduce phosphate production rates at facilities in Louisiana and Bartow, Florida, to limit incremental sulfur purchases amid elevated prices.

On May 11, the company previously withdrew its 2026 phosphate production guidance and announced it was reassessing its operating rates for the second half of the year, following a spike in sulfur costs that made much of the global phosphate cost structure unprofitable.

Supply crisis

The closure of the Strait of Hormuz had transformed an already tight sulfur market into a full-scale supply crisis, removing a trade lane that normally moves 40,000-50,000 mt/day of sulfur and disrupting nearly 47% of global seaborne sulfur exports, said CERA analysts.

The supply shock has also triggered concerns across the broader fertilizer sector.

Itafos CEO David Delaney said during the company's May 4 earnings call for Q1 results that sulfur prices and sulfur-to-phosphate ratios had reached unprecedented levels.

"Historically, sulfur trades at 30%-35% of the price of DAP," Delaney said. "Last week, we saw some quotes for sulfur in Abu Dhabi at $1,000/mt,and the sulfur-to-DAP ratio was over 130%."

Nutrien also warned that higher sulfur and input costs had pressured producer margins and lowered global phosphate operating rates.

The disruption has been particularly acute in Brazil, since the market is heavily dependent on imported sulfur and sulfuric acid.

According to S&P Global CERA analysts, Middle Eastern sulfur accounted for 42% of Brazil's sulfur imports in 2025, while replacement supply from Canada has become increasingly constrained as available volumes are booked forward.

The tightening sulfur market has forced buyers to prioritize supply security over economics, while fertilizer producers increasingly face decisions between purchasing sulfur at record prices or reducing production.