China’s Zhejiang Huayou Cobalt Co. announced on April 29th that due to soaring sulfur prices pushing up production costs for its core battery nickel project, its Indonesian subsidiary, Huafeng Nickel & Cobalt, will suspend some production lines starting May 1st, reducing plant capacity by approximately 50%.

Huayou Cobalt is a major nickel and cobalt producer in China. Due to the impact of the Middle East conflict on sulfur production and shipping in the Gulf region, the spot price of imported sulfur in Indonesia has exceeded US$800/ton, setting a new historical high.

Moreover, the Middle East contributes about a quarter of the global sulfur supply and is also the source of 75% of Indonesia's sulfur imports. This production cut at the Huafeng plant makes it one of the companies most clearly impacted by the global sulfur supply shortage on Indonesia's high-pressure acid leaching (HPAL) nickel industry.

Huayou Cobalt stated that it will accelerate process upgrades to reduce sulfuric acid consumption and broaden sulfur procurement channels. At the same time, it will accelerate the layout of upstream mineral resources for nickel, cobalt, and lithium, and lock in raw material production capacity through investment and equity cooperation.