Huatai Securities: Decrease in oil and gas processing volume leading to sulfur supply gap, impacting the chemical and metal industries in multiple aspects.

Huatai Securities research report indicates that about 60% of global sulfuric acid comes from sulfur, 30% comes from by-products of metal smelting, and 10% comes from pyrite acid production. Crude oil refining and natural gas processing by-products are the main ways of global sulfur production. According to Kepler, by 2025, nearly half of the sulfur exported through the Hormuz Strait will account for the global sulfur supply, coupled with expectations of reduced loads in East Asian refineries due to limited crude oil supply, and the low sulfur content in North American shale oil and gas. After the reduction of sulfur supply in the Middle East, the global sulfur supply gap will become apparent. Huatai Securities believes that the sulfur supply-demand imbalance may be difficult to reverse in the medium term. According to S&P Global, about 58% of global sulfuric acid is used in phosphate fertilizers, with the rest used in processing metals such as nickel, copper, uranium, as well as the manufacturing of titanium dioxide, nylon, dyes, lithium battery cathodes, etc. With tightening sulfur supply and high prices, chemical projects utilizing different production paths such as phosphogypsum acid production, ferrous phosphate by oxalic acid, and chloride titanium dioxide production are expected to benefit.