Metals & Critical Minerals

The Hormuz disruption has revealed that sulfur, which is used to produce sulfuric acid — the most heavily consumed chemical in the world — is a critical and underappreciated linchpin in the global clean energy and electrification supply chain. 

The Middle East produces almost a quarter of the world’s sulfur, and roughly half of the world’s seaborne-traded sulfur transits the Strait. Prior to the conflict, sulfur was already trading at elevated prices due in part to growing battery and clean energy demand — creating conditions for an acute supply shock that, unlike for certain petrochemicals and other commodities that were in oversupply before the Strait closure, has led to sharp and sustained price increases. Since the conflict began, sulfur prices have surged over 100 percent. 

Even though sulfur is a plentiful natural resource, it is primarily produced for commercial use as a byproduct of oil refining and gas processing — so global supply is a function of those processes and does not respond rapidly to higher prices or demand for sulfur itself. There are alternatives to Gulf sulfur, but none can fill a large gap quickly: other suppliers are already locked into existing contracts or cannot readily produce more on demand.

Elemental sulfur’s overwhelming end use is conversion into sulfuric acid, used to process and refine the metals and minerals that underpin clean energy and electricity systems, from copper and nickel to lithium, cobalt, and rare earths. Disruptions to sulfur supply and transit through the Gulf are thus being felt downstream as shortages and cost increases for the essential chemical — sulfuric acid — in the metals and minerals supply chains that underpin the global energy transition and energy-intensive industries such as data centers. 

Copper is the irreplaceable conductor in power grids, EV motors, batteries, solar installations, and data centers, and has been acutely affected, with some 15-20 percent of copper production dependent on sulfuric acid. Chile, the world’s largest copper producer and a buyer of over one million tonnes of Chinese sulfuric acid, has seen those prices roughly double. The picture for copper producers is mixed, however: sulfuric acid is also a profitable byproduct of copper smelting, and some operators are increasing production as prices rise.

The battery supply chain is also directly exposed, as sulfuric acid is required for many types of lithium, cobalt, and rare earths production and processing. There is no practical substitute for sulfuric acid in the acid-leaching process used to produce nickel, an essential component of high-energy-density EV batteries. Indonesia’s nickel sector is under severe strain as a result of limited supply of both elemental sulfur and sulfuric acid, with leading producers cutting output. Rare earth processing also requires sulfuric acid, so shortages could threaten the permanent magnets essential for EV motors and wind turbines. 

The sulfur shock thus hits the entire clean energy stack — copper wire, battery cell, and motor magnet — simultaneously. If the disruption persists, delayed copper, lithium, and battery material output could slow grid expansion, EV production, and renewable energy deployment at precisely the moment demand is accelerating. Cost pressures in the mining and refining sectors could push back final investment decisions on critical mineral projects already strained by capital costs, compressing future supply pipelines for years. Data centers, already straining power grids, depend on copper-intensive infrastructure that becomes costlier to build. The result is a compounding feedback loop: energy transition bottlenecks slow the very infrastructure expansion needed to meet surging electricity demand.

The crisis also further reinforces China’s leverage over a key node in the energy supply chain as the world’s largest producer of sulfuric acid. In April, China announced a full export ban on sulfuric acid through August 2026 — replacing a previous quota with a complete halt. Shipments to Chile collapsed from 151,000 tonnes in March 2025 to zero by March 2026. Russia and Turkey have similarly restricted sulfur exports. 

Three simultaneous points of pressure — the Hormuz closure, export restrictions by major producing countries, and a structural supply deficit amid accelerating electrification — have converged to produce an acute disruption to sulfuric acid supply chains. Until global flows resume, China can withhold supply and position itself as the indispensable backstop when it chooses to resume exports — deepening a stranglehold over copper, battery metals, and rare earths that rivals its leverage over finished clean energy hardware. 

Countries with domestic sulfur and sulfuric acid production, like the United States, are relatively insulated. For most of the world, the only real resolution will come as the Strait reopens — and even then, recovery will be slow, partial, and unevenly distributed across buyers and sectors, as the contracted nature of Middle East Gulf supply means spot market relief will be partial.