SO? Market Intelligence Report (May 27, 2026)

I. Market Price Dynamics
1. Industrial-Grade Liquid SO?
- Prices have remained stable at RMB 800/ton during April–May 2026 (reported consistently across multiple days), with no significant fluctuations.
- The low-price environment is primarily driven by balanced supply and demand: capacity control policies in the sulfuric acid industry have constrained traditional demand growth, while the relatively low technical barriers for industrial-grade products foster intense market competition.

2. Electronic-Grade Liquid SO?
- The 2025 market average price stood at RMB 35,800/ton, representing a 11.2% year-on-year increase—substantially higher than industrial-grade pricing.
- Key price drivers include surging downstream demand from the semiconductor industry and tight supply of ultra-high-purity product (≥99.9999%), resulting in gross margins of 42.3% among leading manufacturers.

II. Supply–Demand Structural Analysis
1. Supply Side
- Capacity Expansion: Domestic electronic-grade SO? production capacity reached 181,000 tons/year by end-2025; planned capacity is set to rise to 371,000 tons/year in 2026, led by expansions from Yidu Xingfa, Zhongjuxin, Zhejiang Jiahua, and others.
- Technological Upgrades: Newly commissioned production lines employ vanadium pentoxide-supported catalysts and molecular sieve dehydration systems, lifting first-pass yield to 98.6% and significantly enhancing high-end supply quality.
- Industrial-Grade Capacity: Total domestic output in 2025 was approximately 4.86 million tons, yet ultra-high-purity grade (≥99.99%) accounted for only 1.87%, indicating persistent structural shortages.

2. Demand Side
- Traditional Applications: Sulfuric acid production accounts for 52.1% of total demand, but growth has slowed to 3.2%, constrained by China’s 'Dual Carbon' policy and rising dependence on imported sulfur (64.7% import dependency).
- Fine Chemicals: Demand from sulfonation for surfactants and synthesis of lubricant additives represents 29.3% of total demand, growing 13.6% year-on-year.
- Electronic-Grade Demand:
- Consumption reached 35,800 tons in 2025, up 11.8% YoY, driven by wafer fab expansions (e.g., SMIC, Yangtze Memory Technologies) and a sharp rise in domestic substitution—from 15% to 38.6%.
- Environmental applications posted the strongest growth at 34.5%, fueled by surging demand for high-stability SO? absorbents in iron & steel sintering flue gas desulfurization processes.

III. Industry Drivers
1. Policy Support: National semiconductor localization policies actively promote expansion of electronic-grade SO? capacity; leading enterprises benefit from tax incentives and R&D subsidies.
2. Technical Barriers:
- Industrial-grade SO? must comply with GB/T 23855–2018 (SO? content ≥99.95%; moisture ≤50 mg/kg); top-tier manufacturers achieve >99% compliance rates.
- Electronic-grade SO? requires ultra-trace metal impurity control (≤10 ppt) and specialized logistics—including Hastelloy C-276-lined tankers and temperature-controlled storage/transport.
3. Downstream Integration: Electronic-grade SO? suppliers are deeply integrated into wafer fab supply chains; domestic procurement ratios at key customers such as SMIC have risen to 39.7%.

IV. Market Risk Warnings
1. Environmental Pressure: As a major precursor to acid rain and contributor to greenhouse gas formation, SO? faces tightening emissions regulations, compelling producers to upgrade tail-gas treatment systems.
2. Overcapacity Risk: Planned electronic-grade capacity growth in 2026 (+105% YoY) far outpaces demand growth (+11.8% in 2025), raising concerns over potential price wars in the premium segment.
3. Raw Material Volatility: With 64.7% sulfur import dependency, geopolitical instability could significantly elevate input costs.

V. Forward Outlook
1. Price Divergence:
- Industrial-grade SO?: Expected to remain range-bound at RMB 800–900/ton, weighed down by sluggish traditional demand and oversupply.
- Electronic-grade SO?: Average price may exceed RMB 38,000/ton in 2026, sustained by continued supply–demand tightness in high-end applications.
2. Capacity Structure Optimization:
- Ultra-high-purity (≥99.99%) output share is projected to rise from 1.87% to 5% in 2026, alleviating structural shortages.
- Industrial-grade capacity allocation toward environmental applications (e.g., flue gas desulfurization) will likely increase its share from 8.2% to 12%.
3. Technology Competition Frontiers:
- Electronic-grade: Core competitive advantages will center on ultra-low trace metal control (e.g., ≤5 ppt) and batch-to-batch consistency.
- Industrial-grade: Focus will shift toward cost-efficient synthesis (e.g., low-temperature fractional distillation) and energy-saving technologies (e.g., waste heat recovery).