Rising sulphur prices put fertiliser sector under pressure, threaten higher subsidy burden

The soaring cost of sulphur is putting Indian fertiliser companies under strain, potentially prompting the government to shoulder a heavier subsidy burden. Landed sulphur prices in India have soared to around $900-1,100 per tonne, up from $450-550 per tonne in January, according to industry estimates. The hike has been driven by disruptions to oil refining and natural gas processing caused by geopolitical tensions in the Middle East and Russia-Ukraine conflict, as well as heightened shipping risks.

Industry insiders say the immediate concern is rising input costs, not a shortage of fertiliser. "Availability itself is less at risk than cost pass-through and margin compression," says Rahul Mirchandani, President of the Indian Micro-Fertilizers Manufacturers Association. Companies are expected to focus on maintaining production during the critical kharif and rabi planting seasons. However, if high sulphur prices persist, fertiliser makers could curtail operations or shift to alternative products.

Sulphur is essential for making diammonium phosphate (DAP), single super phosphate (SSP) and other fertilisers. Converting rock phosphate into phosphoric acid, which is then turned into DAP and other fertilisers, requires sulphuric acid derived from sulphur. Around 0.18-0.20 tonnes of elemental sulphur is needed to produce one tonne of DAP. Any sustained supply issues or steep price hikes can raise domestic production costs, experts say.

India, a major fertiliser user and producer, imports more than half of its sulphur needs. But imports fell sharply in May-June 2026. Meanwhile, rock phosphate security is only a partial solution because sulphur security is equally important. The government may have to absorb part of the shock through higher fertiliser subsidies, since the nutrient-based subsidy system doesn't automatically adjust when market sulphur prices rise.