US government agencies are exploring how to cut domestic transportation costs to incentivize Gulf coast refiners to export less sulfur and route the product toward phosphate fertilizer production, US Department of Agriculture (USDA) deputy secretary Stephen Vaden told Argus in an exclusive interview.
US refiners, who produce sulfur as a byproduct, have been more inclined to export sulfur with other major global supply points cut off by the closure of the strait of Hormuz, driving prices to record highs and causing phosphate producers to reduce output.
Spot US Gulf sulfur pricing was $1,000-1,050/metric tonne (t) fob last week, compared with $280-290/t fob for the same period in 2025 and up from $500-510/t fob in early January 2026.
The USDA is working closely with the US Department of Transportation, which has suggested utilizing railroad infrastructure for sulfur transport and to provide the necessary incentives to keep sulfur in the US, Vaden said.
"And to not only keep the sulfur that we already produce here (...) but to allow it to be transported via rail in such a way that it doesn't have to be remelted when it reaches our domestic fertilizer plants," Vaden said.
Sulfur flowing from Gulf coast refineries is usually in molten form and transported by rail, truck or occasionally barges within the domestic market, while imported sulfur usually needs to be re-melted from granular or prilled form. But it is possible that if there is an issue with temperature control or delays in unloading, molten sulfur could solidify during transportation.
A proposal is currently being discussed with multiple domestic fertilizer companies to see how to limit sulfur exports and possibly alter the issue of sulfur affordability given the global supply crunch that has sent prices higher.
Argus understands that US government officials are initially focusing on lowering transportation costs of sulfur via rail, but no other details have been confirmed. But one source indicated that, with multiple government agencies involved in addressing domestic sulfur concerns, there is a significant push to address these issues.
This proposal would not be something that would solve the issue of sulfur supply and pricing tomorrow, Vaden said, but it is something that if carried out could resolve any sulfur-related issues within the next two years.
Other strategies suggested by market participants include the creation of an incentive or program that would reduce the sales price of sulfur or alternatively a potential government funding program similar to in India, where producers have their cost of sulfur financially subsidized.
US phosphate producers have been vocal recently about elevated input costs hindering finished phosphate fertilizer production. Mosaic, the leading US producer, reduced output earlier this year across its Florida facilities and idled phosphate production at its Faustina plant in Louisiana. Global producers such as Morocco's OCP are also operating production at reduced rates because of sulfur costs.
It is not known to what extent some major players are involved in the government's proposal. But Mosaic did tell Argus that keeping more sulfur available for domestic producers would help strengthen US agricultural supply chains.
Still, some market participants pointed out that US sulfur supply availability is not the issue.
North America produces twice as much sulfur as it needs, and the biggest issue right now with phosphate production is sulfur pricing, so if incentives for refineries that reduce sulfur pricing can be introduced, that would be beneficial, a source said. Other sources expressed concern that, if sulfur pricing becomes regulated or subsidized, other aspects of the fertilizer production chain could fall under government regulation as well.
More recently, a handful of lawmakers from Florida, where the majority of Mosaic's production is located, addressed a letter to President Donald Trump and Department of Commerce secretary Howard Lutnick highlighting that historically higher sulfur prices since the start of the Mideast Gulf conflict have led to a downturn in domestic phosphate production. The letter demanded coordinated action from the US government to address sulfur supply disruptions and sulfur affordability, and that if farmer input costs continue to place pressure on the agriculture industry, food production could be impacted.
