The global supply of industrial sulphur is under significant strain, raising concerns about rising food prices as mining companies outbid fertilizer producers for limited resources. The disruption in the Strait of Hormuz, a key shipping route, has sharply curtailed sulphur availability, pushing prices to nearly ten times their pre-conflict levels.

Sulphur, primarily a byproduct of oil and gas production, is critical for manufacturing sulphuric acid, which is in turn essential for producing copper and phosphate fertilizers. Before the regional conflict escalated, roughly half of the world’s sulphur shipments passed through the Strait of Hormuz. The current blockage has led to a significant supply shortage and soaring costs.

According to Raghav Jain from commodities price agency Argus, mining companies—benefiting from higher metal prices—are prevailing in the competition for sulphur supplies, while fertilizer manufacturers face higher costs and reduced access. This dynamic is forcing fertilizer producers to scale back output, a development that threatens agricultural productivity and could lead to increased food prices.

Andy Jung, chief economist at the US fertilizer company Mosaic, explained that producers are unable to pass the full extent of higher costs to farmers, many of whom are already financially constrained. As a result, companies have opted to slow fertilizer production. Jung warned that this reduction in supply would likely lead to lower global crop yields and a subsequent rise in food prices.

Sulphur prices, which historically ranged between $100 and $200 per tonne, have surged to nearly $1,000 per tonne amid the ongoing disruption. Compounding the problem, China, a major supplier of sulphuric acid, recently imposed an export ban, further tightening global availability.

Morocco’s OCP, the world’s largest phosphate exporter, noted that soaring sulphur costs are difficult to transfer to financially stressed farmers. OCP is responding by shifting production toward fertilizers that require less sulphur and exploring alternative sources outside the oil and gas sector.

Mining companies have absorbed the higher input costs due to record-high metal prices. Copper, a key industrial metal, recently approached an all-time high of nearly $15,000 per tonne. Chilean miner Antofagasta reported that despite increased expenses for sulphuric acid and diesel, its earnings for the first half of the year were nearly 30% higher than the same period in 2023. Similarly, Capstone Copper’s chief financial officer Raman Randhawa described sulphuric acid prices as “exceptional” and “extraordinary.”

Yet, the outlook remains challenging for the agricultural sector. Data from analytics firm Kpler indicates that the disruption around the Strait of Hormuz is intensifying, with vessels still unable to pass through the waterway as conflict persists. Madeleine Overgaard, Kpler’s market data manager for dry bulk, highlighted the critical role of sulphur in maintaining crop yields and cautioned that the ongoing shortage will affect food prices in the year ahead.