A Hectic Start to the New Year

2026 is off to a hectic start all around the world. We spent the first days of January analysing all the macro factors that may have short- to long-term impact on the sulphur and sulphuric acid markets.

It's a long read.

In late December, China’s state-owned PetroChina and Sinopec agreed to sell sulphur to key phosphate producers at parity prices under existing long-term agreements as part of food security measures. The impact this may have on import sulphur deals into China is still unfolding, with expectations divided. What is clear is players are responding to the vocal guidance from the National Development and Reform Commission (NDRC) since November towards both the sulphur and acid industries.

As for Indonesia, the government has proposed cutting its 2026 nickel ore production target amid weak prices. How the potentially lower ore supply will impact run rates of nickel smelters (no sulphur/acid consumption) and leaching units remains to be seen. We will keep an eye on production rates of nickel plants in Indonesia, and of course the development of nickel prices.

Turning to the DRC, its 4Q25 cobalt export quotas have been extended to March 31. Impact? This will continue to upset the balance of inflow and outflow of sulphur and other commodities from the DRC and therefore transport rates. I am particularly keen to know how cobalt producers in the DRC will survive in the medium- to long-run.

In Europe, the chemical industry continues to struggle with DOMO filing for insolvency at multiple German units, including at the Leuna chemical complex. This highlights not only demand erosion in Germany but throughout Europe for the chemicals sector, which really is upsetting to see. Longer term, I am tracking how the caprolactam market will react to this—whether this offers a lifeline to other capro producers in the region and allows for more sulphur/acid consumption, or if the gap will be filled by imports from cost-competitive regions instead.

Shifting gears to the US. In the first days of January, the White House said the US will control sales of sanctioned Venezuelan oil “indefinitely”. In short, we need to keep an eye on how much Venezuelan crude is going to the US, and how that could support sulphur production, though this is widely seen as not feasible in the near term. Fiona Boyd has some excellent analysis on this in last night’s report.

So the chaos from 2025 remains, and there are a few more macro uncertainties. But when we think price trend, we must go back to supply and demand. Sulphur availability is still limited while there remains no significant demand destruction. For example, Russia’s extension of its sulphur export ban till end of 1Q26, Qatar potentially not posting a sales tender in January due to output issues that lowered its term deliveries to contract holders, while spot enquiries were still heard in various places.

I truly hope you had a nice break and are ready for an exciting 2026. Happy New Year!