The Acid Test
The Hoot this Week - 27th April - 1st May 2026
The Strait of Hormuz disruption is an oil story, but it is also a sulphur story. Sulphur is a byproduct of Gulf oil and gas refining, transits the same chokepoint, and is the feedstock for sulphuric acid, the critical process input for both high-pressure acid leach nickel refining and acid in-situ recovery uranium extraction.
Huayou’s decision to cut Indonesian nickel output is the first major production casualty of that transmission, and CRU Group’s assessment that it will not be the last is, in our view, correct.
Over 50% of global uranium production relies on acid-ISR methodology, and Kazatomprom (KAP), which controls roughly 40% of global supply, runs 100% of its output through that process, making the read-through to uranium production economics direct and material.
KAP does not source sulphur from the Middle East, drawing instead on domestic supply derived principally from the Tengiz and Kashagan fields. This does not insulate the company from the current pricing dynamic. Sulphur is a globally traded commodity, and when Middle East supply is disrupted, the reallocation of global flows tightens availability across all regions and reprices the benchmark accordingly.
Cost Escalation
The data illustrates a cost environment that was already deteriorating before the current conflict introduced further upward pressure. Sulphuric acid as a share of KAP’s production costs has risen in a consistent staircase pattern, from 10% in 2023 to 13% in 2024 to 15% in 2025, with KAP’s own reported weighted average cost of sulphuric acid having troughed at $53/t in 2021 before climbing sharply to $89/t in 2023 and remaining elevated at $86/t through 2024. All of this predates the current conflict.
Sulphur (not sulphuric acid) was trading at approximately $170-200/t FOB Middle East when the 2025 cost figures were established. By January 2026, prices had already risen in excess of 200% to $530/t, before hostilities commenced. S&P Global has warned that a sustained Strait of Hormuz blockage extending into late April or beyond could push sulphur above $800/t, a threshold at which the input becomes operationally uneconomical for certain consumer categories, including HPAL nickel producers. Uranium ISR sits within exactly the same supply chain and faces the same input cost dynamic.