Sulfur has become an indispensable element for the modern industrial system including for agriculture. Before the outbreak of the Iran war, 24 percent of the world's supply of sulfur passed through the Strait of Hormuz. I can find no reliable information on whether sulfur is being shipped through the strait now after the Iranian government claimed control. I suspect the amount is close to zero.
The sulfur price at the start of the Iran conflict was approximately $500 per metric ton for sulfur originating from the the Middle East. It now sits above $800. Some customers paid more than $1,000 in June for Canadian-origin sulfur, a record. These high prices are threatening worldwide phosphate fertilizer supplies which depend on sulfuric acid for their production. To understand why this is happening, it's important to have some background.
In the densely interconnected web of global production, sulfur sits in the middle as the basis for sulfuric acid, a chemical that finds wide application in industry including for improving octane in gasoline; as raw material for detergents, resins, dyes, and explosives; for the "pickling" of metals, that is, the removal of oxidation from the surface; as an electrolyte in lead-acid batteries; as a laboratory reagent, that is, a chemical used for analysis and synthesis of chemicals; and for the production of phosphate fertilizer, an essential plant nutrient critical to obtaining high yields in today's industrial agricultural system. In fact, 50 percent of all sulfuric acid is used to make fertilizers, 42.5 percent to make phosphate fertilizer and 7.5 percent to make ammonium sulfate (a source of nitrogen) and sulfur fertilizer products. (Sulfur is an important soil nutrient by itself.)
I mention all these competing uses because they are implicated in the emerging world food crisis that is in large part the result of a dramatic reduction in the availability sulfur, nitrogen fertilizer and natural gas (from which most nitrogen fertilizer is derived) from Persian Gulf countries—which are, of course, currently embroiled in the Iran war. When Iran seized control of the Strait of Hormuz—the only waterway exiting the Persian Gulf to the ocean—not only were shipments of oil seriously curtailed, but also other key materials including helium, aluminum and those just mention
To understand the nexus between the Iran war and sulfur, it is important to know that sulfur used to be mined directly from underground and surface deposits, first from surface deposits in Sicily and later from underground salt domes in Texas and Louisiana and near volcanoes in Indonesia, Chile and Japan. Some sulfur is still obtained as a byproduct of mining metal sulfide ores which, of course, must have the sulfur removed to obtain the elemental metal.
By the early 1990s government policies were in place to curtail acid rain caused by the burning of fossil fuels including oil and natural gas which contain naturally occurring sulfur. The sulfur released from this combustion forms sulfuric acid which becomes dissolved in rainwater. Thus, it became a priority for the oil and natural gas industry to remove sulfur from its oil and natural gas streams. The sulfur was essentially a waste product of refining at this point.
But the industry soon realized that sulfur could be sold to other industries at a profit. Eventually, so much sulfur was being produced by the oil and gas industry worldwide that it undercut the price of sulfur from surface and underground deposits. Now 90 percent of all sulfur comes from oil and gas refineries. It would be hard to replace this with production from previously exploited deposits in the short- or even medium-term because most of them were closed down more than two decades ago.
With so much competition for a reduced supply of sulfur, producers of phosphate fertilizers are struggling to afford the sulfuric acid they need. This is because they are unable to pass the increased costs on to farmers who are already reeling from soaring prices for diesel and nitrogen fertilizers. One competitor for sulfur, however, is having no trouble getting what it needs: the mining industry. That's because the price of the two metals for which miners which use sulfuric acid to free those metals from ore, copper and uranium, are both soaring. In fact, copper has been hitting record highs.
Of course, the fertilizer and fuel price hikes are coming just as we head into what is expected to be possibly the worst El Niño ever recorded. That can mean too much moisture or not enough depending on where you are, but the unpredictability is increasingly a problem. The combination of high prices for inputs and unfriendly weather suggests that worldwide food output in the coming year will be lower. This is not certain, but the uncertainty is unnerving for those living close to the edge and for policymakers trying to figure out what to do.
Kurt Cobb is a freelance writer and communications consultant who writes frequently about energy and environment. His work has appeared in The Christian Science Monitor, Resilience, Common Dreams, Naked Capitalism, Le Monde Diplomatique, Oilprice.com, OilVoice, TalkMarkets, Investing.com, Business Insider and many other places. He is the author of an oil-themed novel entitled Prelude and has a widely followed blog called Resource Insights. He can be contacted at kurtcobb2001@yahoo.com.
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