[SMM Analysis] Sulfur Special Series -- Supply: The Middle East

Currently, the global sulphur industry landscape is resource-driven, with supply highly concentrated. The Middle East has become the "heart" of global sulphur supply. This landscape is the combined result of geological endowment, market shifts, and national strategic actions.

I. Industry Foundation: Resource Supply

The foundation of the Middle Eastern sulphur industry is built upon unique geological endowment and ultra-large-scale industrial systems constructed by state capital.

1. Geological Endowment: The Tethyan Domain

Global high-sulphur oil and gas resources are concentrated in the Tethyan geological structural belt spanning the Middle East. The region's high-quality source rocks, carbonate reservoirs, and critical evaporite cap rocks combine perfectly. Through thermochemical sulphate reduction, the world's richest high-sulphur natural gas reservoirs were formed, providing the resource base for sulphur recovery.

2. Industrial Amplification: Industrialised Operations by National Giants

Resources are converted into commercial strength through national oil giants represented by Saudi Aramco and Abu Dhabi National Oil Company (ADNOC). They invested in building the world's most advanced integrated natural gas processing and refining networks, recovering sulphur on a massive scale through the Claus process (recovery rate exceeding 95%). This gives their sulphur industry typical oligopolistic characteristics, with a highly concentrated market.

• Saudi Aramco: As the world's largest supplier, its sulphur designed capacity exceeds 6 million mt/year, with production of approximately 4.5 million mt in 2024. It adopts an integrated "resource-refining-chemical" strategy, prioritising sulphur for the domestic industry chain.
• ADNOC: A core growth engine, with existing and under-construction capacity of approximately 3.5 million mt/year, and plans to add 1 million mt of capacity by 2027.
• Other major exporting countries: Qatar, Kuwait, Iran, etc., together with Saudi Arabia and the UAE, form the core cluster of Middle Eastern supply.

II. Landscape Reshaping and Pricing Power Acquisition: From "Buffer Zone" Fracture to "Unipolar System" Establishment

The Middle East's current core position and pricing power are fundamentally attributable to the fact that, after the original global supply balance was disrupted, the Middle East possesses sufficient surplus capacity and expansion potential to fill this gap. In terms of actual export volume, Middle Eastern countries exported 4–5 million mt of sulphur in 2024, accounting for approximately 20–25% of global trade by market size.

1 The Global Supply Balance Was Disrupted, While the Middle East Still Has Surplus Capacity and Potential

Before 2025, the Russia-Kazakhstan-Turkmenistan export belt served as an important "buffer valve" and stable supply source. In terms of global sulphur export volume, Kazakhstan exported over 5 million mt of sulphur in 2024, making it the single largest sulphur exporting country globally, accounting for over 20% of global sulphur trade. In addition, before 2021, Russia exported 3–4 million mt of sulphur annually, accounting for 15%–20% of global sulphur trade.

However, affected by the Russia-Ukraine war, Russia shifted from a net exporter to a net importer. In October 2025, Russia imported for the first time, purchasing 35,000 mt of sulphur from abroad at $390/mt. This was Russia's first large-scale sulphur import in many years, marking the end of its sulphur self-sufficiency era and causing the collapse of its traditional supply chains in Europe and the Black Sea. It is estimated that Russia needs to import an additional approximately 1 million mt of sulphur annually to bridge its domestic supply gap.

Kazakhstan's main export destinations include Morocco, Israel, Egypt, Tunisia, South Africa, Argentina, China, Brazil, and Russia. Over the past decade, Kazakhstan's average annual exports reached 3.8 million mt. However, due to inventory depletion, geopolitical factors, and changes in global demand, the China Sulphuric Acid Association forecasts that Kazakhstan's sulphur exports will decline over the next three years, with shifts in market flow directions.

Currently, given the fundamental gap in the global supply-demand structure, the Middle East possesses sufficient surplus capacity and expansion potential to fill this void. The Middle East has become the only region capable of large-scale, stable output. The Middle East has transformed from a "supplier" to a "price setter".

2 Core Pricing Platform

Qatar Energy's monthly spot tender price has become the price bellwether for the global spot market. Saudi Aramco's Official Selling Price (OSP) serves as the benchmark for long-term contracts. Middle Eastern producers directly guide global market expectations by controlling the pace and magnitude of these key price releases.

Strategic sales and regional allocation: Trade strategies are deeply embedded in national strategy: (1) Locking in strategic customers such as Morocco's OCP and India through long-term contracts to secure base demand; (2) Flexibly and dynamically allocating surplus spot cargo between Asia (China, India, Indonesia) and the Mediterranean/South America (Morocco, Brazil) to maximise profits.

3 Under the New Unipolar System, the Global Sulphur Market Has Formed a Clear Division of Roles

Heart (pricing and supply centre): The Middle East.

Gravitational binary stars (consumption and price validation centres): Morocco (OCP) as the "floor price band", absorbing large volumes of cargo to support its phosphate fertiliser empire; Brazil as the "high price band", supporting the market top with high-price purchases.

Digestion and circulation: China, India, and Indonesia. Among them, the rigid demand and high-price absorption capacity generated by Indonesia's High Pressure Acid Leach (HPAL) nickel smelting projects have become the "rigid floor" supporting high prices. In the first 11 months of 2025, Indonesia's sulphur imports surged over 40% YoY to 4.7926 million mt, primarily sourced from Saudi Arabia, Qatar, and the UAE.

III. Current Challenges and Future Outlook

1 Current Market Characteristics: High Prices and Standoff

Under oligopolistic pricing, the current market exhibits a standoff characterised by "prices holding firm at highs, but sluggish spot transactions". In Q1 2026, Middle Eastern FOB spot quotes reached the $516–525/mt range. However, major consuming countries such as China purchased cautiously due to unbearable cost pressure, with high port inventory, displaying a "passive follow-the-rise" pattern. This indicates that while pricing power resides in the Middle East, high prices have begun to suppress demand and trigger market resistance.

2 Short-Term Outlook: Tight Balance to Continue, Fluctuating at Highs

In H1 2026, the sulphur market is expected to maintain a supply-demand tight balance with prices fluctuating at highs, as Russian supply is unlikely to recover while demand from Indonesia and other regions remains supported. New Middle Eastern capacity (such as Kuwait and Saudi projects) will be gradually released from 2026, but the peak of large-scale volume release is expected in 2027.

3 Long-Term Trend: Industry Chain Pressure

In the medium and long-term, the Middle East is expected to further consolidate its supply share and pricing power through continued capacity expansion. This will impose long-term strategic cost pressure on the global downstream phosphate fertiliser and new energy industries, compelling consuming countries to seek supply chain diversification (such as developing smelting acid, phosphogypsum-based acid production, etc.). Sulphur has become a key strategic commodity influencing global agriculture and energy transition.

Related Content

https://t.smm.cn/FQ301Bl2

https://t.smm.cn/dZMjiG4G

https://t.smm.cn/70mA2hj7