An intensifying battle for the world’s increasingly scarce supplies of industrial sulphur is threatening to drive up food prices, with deep-pocketed miners outbidding fertiliser makers for the commodity and forcing them to scale back production. Disruption in the Strait of Hormuz has created a significant shortage of sulphur, a byproduct of the oil and gas industry that is converted into sulphuric acid and used to make both copper and phosphate fertilisers. Roughly half the world’s sulphur passed through the strait before the Iran war, but the blockage of the waterway has sent the price close to 10 times above its pre-conflict level.
Raghav Jain, at commodities price agency Argus, said the mining sector, boosted by the proceeds of higher metals prices, was “winning the bidding war” for the meagre supply over the lower-margin fertiliser industry. The effects are already being felt in agriculture, with fertiliser manufacturers having to cut back output and warning that food prices will rise. While sulphur has typically sold for $100-$200 a tonne, prices have surged close to $1,000 a tonne this year. China, a major sulphuric acid supplier, has also moved to ban exports of the commodity, further complicating the issue.
Morocco’s OCP, the world’s biggest phosphate exporter, last month warned of the effects of the soaring sulphur price, noting how it was not able to pass the costs on to hard-pressed farmers. OCP has sought to shift production towards fertilisers that require less sulphur, as well as developing alternative non-oil and gas sources. However, miners have been cushioned by the soaring prices, with copper close to its all-time high of nearly $15,000 a tonne amid booming demand for the industrial metal used in everything from consumer electronics to power grids.
Source: Financial Times Companies · Summarized by HeadlinesBriefing