Hormuz Closure Threatens Global Electric Vehicle Supply

The ongoing closure of the Strait of Hormuz is having far-reaching consequences that extend beyond oil prices. Electric vehicle (EV) manufacturers, in particular, are facing a potential crisis due to their reliance on sulphuric acid for battery production.

Sulphuric acid is crucial for extracting metals such as nickel and lithium from ore, which are essential components of EV batteries. The Strait of Hormuz was previously the primary route for seaborne sulphur exports, with about half of global supplies passing through it before the conflict began.

Since then, volumes have plummeted, with only 30,000 metric tons making it out in April and 180,000 tons in March. This has led to a 50% surge in delivered prices to Asia, reaching as high as $880 per ton.

The impact on EV manufacturers is significant, particularly for those reliant on nickel from Indonesia and lithium from Australia. While alternative methods exist, they are not suitable for producing battery-grade nickel or require higher energy inputs for copper and lithium extraction.