Sulphur's Second Life: Sulphuric Acid, Batteries and the Energy Transition

Sulphur has spent most of its commercial life as a by-product: something oil, gas and oil sands producers must remove and sell, and something phosphate fertilizer makers must buy. That picture is changing. Battery metals processing is becoming a second major demand pillar, and the market is not yet pricing that shift. With prices near cyclical lows in 2023, this is the right moment for buyers and sellers to rethink how they contract.

From spike to slump

Sulphur was one of 2022's most volatile commodities. Middle East export prices were around US$475 per tonne in spring 2022, then collapsed as phosphate demand fell and new supply arrived. By April 2023, monthly averages had dropped to about US$95 per tonne FOB, more than US$380 per tonne below a year earlier. Prices have been range-bound near US$90 per tonne this autumn.

Low prices reflect a temporary imbalance, not a structural surplus. Supply is growing because new gas processing and refining capacity in the Middle East and Asia is coming online, and sulphur output follows hydrocarbon production, not sulphur prices. Demand, meanwhile, is quietly broadening.

The battery connection

Most sulphur is burned to make sulphuric acid, and sulphuric acid is the workhorse of metals processing. The fastest-growing user is high-pressure acid leaching (HPAL), the process that extracts nickel and cobalt from laterite ores to make battery feedstock.

Indonesia is the centre of that build-out. Its sulphur imports reached about 2 million tonnes in 2022 for the first time, roughly double the year before, and are rising again in 2023 as new HPAL lines ramp up. Analysts expect demand from the metals sector to add about 1.6 million tonnes of global sulphur consumption in 2023 alone. Copper leaching, lithium processing and the phosphoric acid used in lithium-iron-phosphate (LFP) battery cathodes add further demand.

The result is a market with two demand engines. Phosphate fertilizers remain the largest user and follow the agricultural cycle. Battery metals follow electric-vehicle adoption and industrial policy. That makes sulphur less of a pure fertilizer play and more of an energy-transition input.

Canada's role

Canada is one of the world's largest sulphur exporters, with much of its supply coming from oil sands upgrading and sour gas processing in Alberta, shipped through West Coast terminals. Large stockpiles give Canadian supply unusual flexibility: volumes can be drawn when demand rises, unlike sulphur that must be shipped as it is produced. Canada's proximity to Asian markets via the Pacific, and its stable regulatory environment, make it a natural long-term supplier to battery-metals projects in Indonesia and elsewhere.

What this means for clients

• Use the low-price window. Buyers with steady acid or fertilizer demand can lock in multi-quarter volumes at levels that look unlikely to persist once battery demand absorbs the current surplus.
• Contract for reliability. HPAL and acid plants cannot easily stop and restart. Supply security, consistent quality (formed granular product, low ash and acidity) and dependable shipping are worth paying for.
• Watch freight as closely as product. At sub-US$100 sulphur prices, freight can be a large share of delivered cost. Vessel size, port handling and routing decisions matter.
• Think beyond fertilizer. Producers and traders positioned only for the phosphate cycle may miss the fastest-growing segment of the market.

Aquamerge arranges sulphur supply for industrial and agricultural buyers, coordinating product, documentation and logistics through a single, compliant transaction process.

Sources: Sulphur magazine (CRU/BCInsight), "Price Trends" and "Market Outlook" (Jan–Aug 2023 issues); CRU Six-Month Price Forecast (Jan 2023); Argus Media sulphur market coverage (2023).