In late March, the domestic yellow phosphorus market experienced a significant “V”-shaped rebound. Following a prolonged period of price declines, trading activity suddenly heated up starting on March 20, with prices halting their decline, rebounding, and continuing to climb. As of March 25, spot prices in the major production regions of Yunnan, Guizhou, and Sichuan had climbed from 24,500 RMB/ton to 26,300 RMB/ton, with Guizhou’s tender prices even surpassing 26,500 RMB/ton, setting a new stage high. This article will comprehensively analyze the logic behind this round of yellow phosphorus price increases by examining the core drivers of the market, current conditions, and future trends.

(1) Concentrated Recovery in Demand Drives Price Rises

The core driver behind this round of yellow phosphorus price rebounds stems from the concentrated release of downstream demand. The combined effects of supply chain transmission, end-user essential demand, and market restocking activities have directly fueled the surge in yellow phosphorus procurement demand.

1. High Sulfur Prices Drive Substitution Demand for Thermal Phosphoric Acid: Upstream sulfur prices have remained at elevated levels, with the mainstream granular price at Zhenjiang Port rising to 5,100 RMB/ton on March 19. As sulfur is the primary raw material for wet-process phosphoric acid, its high price directly increases production costs for wet-process phosphoric acid. This, in turn, has reversed the cost disadvantage of thermal-process phosphoric acid, leading to a significant increase in inquiries from end-users for thermal-process phosphoric acid. As yellow phosphorus is the main upstream raw material for thermal-process phosphoric acid, demand for it has rebounded accordingly, with a substantial increase in inquiries. As of this writing, Wengfu’s ex-factory price for wet-process phosphoric acid has increased by RMB500 per ton, further strengthening the substitution effect for thermal-process phosphoric acid and indirectly driving up procurement demand for yellow phosphorus.

2. Synergistic domestic and international demand for glyphosate: As a key downstream application for yellow phosphorus, glyphosate has recently entered its peak demand season—with overseas downstream sectors initiating phased strategic restocking and domestic demand surging during the traditional spring farming season for pesticide preparation. This dual-pronged demand from both domestic and international markets has directly boosted glyphosate producers’ enthusiasm for purchasing yellow phosphorus.

3. Support from Phosphorus Trichloride and Traders’ Restocking: Phosphorus trichloride producers have ample spot supply. Driven by expectations of price hikes for liquid chlorine in northern Jiangsu, production capacity utilization has increased, and their enthusiasm for purchasing yellow phosphorus has gradually recovered; At the same time, traders have keenly detected signs of a recovery in downstream demand and are actively entering the market to restock. Some short sellers, concerned about delivery pressures, are rushing to buy and fulfill orders, further increasing market buying interest and fueling the rise in yellow phosphorus prices.

(II) Joint Price Support from the Supply Side Consolidates the Uptrend

During this window of recovering demand, yellow phosphorus producers swiftly seized the opportunity. Through coordinated price support and holding back sales, they further drove prices upward, consolidating the market’s upward momentum.

Starting March 20, yellow phosphorus producers gradually raised their quoted prices, increasing from an initial 25,000 RMB/ton to 26,500 RMB/ton or higher over three consecutive days. In just three trading days, the cumulative increase in mainstream transaction prices exceeded 1,400 RMB/ton, representing a significant rise; Furthermore, the results of sales tenders at yellow phosphorus plants in Sichuan and Guizhou continued to hit new highs, further solidifying sellers’ reluctance to release inventory. A small number of high-price transactions continued to boost market sentiment. Some enterprises ceased quoting prices immediately after making small shipments, leading to increasingly scarce low-priced supplies in the market. The center of transaction prices steadily shifted upward, further driving yellow phosphorus prices higher.

(3) Market Sentiment Heats Up, Amplifying Upward Momentum

As of March 25, the upward trend in the yellow phosphorus market showed no signs of abating, with prices in the major production regions of Yunnan, Guizhou, and Sichuan breaking through the 26,500 RMB/ton mark, and market prices continuing to climb. Currently, most manufacturers in Yunnan and Sichuan are holding back inventory and reluctant to sell. Although most downstream end-users maintain a cautious wait-and-see attitude, driven by the market sentiment of “buying on the rise rather than the fall,” downstream inquiries are gradually increasing, and the market trading atmosphere continues to heat up. The current scarcity of low-priced inventory has further amplified bullish sentiment, creating a virtuous cycle of “price increases—rising inquiries—intensified reluctance to sell,” which is driving yellow phosphorus prices to new highs.

II. Market Outlook: Downstream Follow-Through Confirmed; Market May Face Volatility

Although yellow phosphorus prices have surged continuously, this has also placed significant cost-pass-through pressure on the downstream industry chain. Currently, downstream products such as thermally produced phosphoric acid, phosphorus trichloride, and end-use phosphorus chemical products are undergoing concentrated price adjustments to keep pace with the increases. As a result, downstream enterprises have slowed their procurement pace for yellow phosphorus. If downstream enterprises lack sufficient acceptance of these price adjustments, procurement demand may struggle to keep up, and the yellow phosphorus market may enter a phase of consolidation at high levels, awaiting a rebalancing of market supply and demand.

As an integrated internet platform providing benchmark prices, on March 27, SunSirs' benchmark price for yellow phosphorus stood at 26,796.00 RMB/ton, an increase of 10.85% compared to the beginning of the month (24,172.67 RMB/ton).

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