Sulphur, a critical input for copper mining, has seen its price jump 30% to over $150 per tonne as the escalating conflict in the Middle East disrupts a crucial global supply artery. The blockage of the Strait of Hormuz has stranded over 510,000 tonnes of sulphur, according to market analyst Kpler, squeezing supply for major copper-producing regions like South America and Africa and threatening to drive up costs for the metal, which is essential for the green energy transition.
"The correlation is quite strong," said Arthur Portier, a consultant at Argus Media France, commenting on the link between rising oil costs and the broader commodity price environment. The real threat, however, comes from direct disruptions to materials like sulphur and fertilizers.
The Middle East accounts for 40 percent of global sulphur exports, and with no cargo having left the Persian Gulf since mid-March, the impact is rippling through global supply chains. The world’s second-largest sulphur producer, China, is set to halt its exports from May to prioritize domestic fertilizer needs, according to Bloomberg, further tightening the market. This leaves Chile, the world's top copper producer, particularly exposed to the supply shock.
The disruption highlights the fragility of global supply chains and how regional conflicts can have far-reaching consequences for seemingly unrelated industries. While some producers are insulated for now, the sustained pressure on input costs could delay projects, increase the price of copper, and ultimately impact consumers.
CMOC Navigates Headwinds
Despite the market turmoil, some major producers are weathering the storm. Chinese mining giant CMOC (03993.HK), which operates major copper and cobalt mines in the Democratic Republic of Congo, reported a 97% year-over-year surge in first-quarter net profit to RMB 7.8 billion. Copper output rose 10% to 188,000 tonnes.
Company management stated that its current sulphur inventory is sufficient to support production through the third quarter of 2026, providing a significant buffer against the current supply shock. The firm's TFM mine is self-sufficient in sulphuric acid, though its KFM mine relies partially on external supply. Jefferies maintained its "Buy" rating on the company's H-shares with a price target of HKD 25, citing the strong performance and cost control measures.
Broader Commodity Shockwaves
The impact of the conflict extends beyond industrial commodities. Shipments of avocados from Kenya, the world’s third-largest exporter, were cut in half in late March as transport times to Europe ballooned from 30 to over 50 days. In Ecuador, the top banana exporter, over 2.5 million boxes of bananas have been delayed due to container shortages and higher fuel surcharges.
This article is for informational purposes only and does not constitute investment advice.
