Since April, driven by strong upstream raw material prices, persistently tight supply, and concentrated downstream demand, the domestic yellow phosphorus market has continued its strong upward trend, becoming the standout performer in the phosphate chemicals sector. Based on the SunSirs benchmark price as of April 15 and recent views from leading institutions, the price transmission logic for yellow phosphorus and its upstream and downstream sectors is summarized below.
I. Price Trends of Yellow Phosphorus (April 15)
SunSirs Benchmark Price on April 15: 31,162.67 RMB/ton
Compared to early April (27,166.67 RMB/ton): +14.71%
Compared to early March (23,000.00 RMB/ton): +35.49%
Phosphate Rock (30% grade, market price in major producing regions)
April 15: Market price 1,025 RMB/ton
Compared to early April: +3.53%
Compared to early March: +15.79%
Thermal Phosphoric Acid (Downstream of Yellow Phosphorus)
April 15 Market Price: 6,660 RMB/ton
Compared to early April: +4.23%
Compared to early March: +12.34%
II. Logic Behind Price Transmission Between Upstream and Downstream Sectors
1. Cost Side: Dual increases in phosphate rock and electricity drive rigid cost increases
The production costs of yellow phosphorus are primarily composed of phosphate rock, electricity, and environmental protection fees, with phosphate rock accounting for approximately 30% and electricity for approximately 45%. The simultaneous rise in these two factors provides strong support.
Regarding phosphate rock, domestic high-grade ore resources are scarce. Coupled with environmental regulations and resource consolidation, supply in major producing regions remains tight, driving continuous price increases and providing solid raw material support for yellow phosphorus. Regarding electricity, the main production region in Southwest China is currently in the dry season, resulting in insufficient hydropower supply and widespread increases in industrial electricity rates. As a highly energy-intensive product—with an energy consumption of approximately 14,000 kWh per ton—rising electricity prices directly drive up production costs. Under this dual cost pressure, companies are less willing to produce and are strongly inclined to maintain prices.
2. Supply Side: Production Constraints + Reluctance to Sell, Persistent Spot Market Tightness
The supply side is the core driver of this round of yellow phosphorus price increases. From an industry policy perspective, yellow phosphorus is subject to strict controls on new capacity additions; new projects must implement capacity replacement on a one-for-one or reduced basis, and outdated capacity continues to exit the market, highlighting the rigidity of supply in the medium to long term.
In the short term, the main production region in Southwest China is affected by factors such as power shortages during the dry season and environmental inspections, keeping enterprise operating rates at low levels. Some facilities have temporarily suspended operations, resulting in insufficient effective market supply. At the same time, manufacturers are generally reluctant to sell, resulting in a decrease in low-priced inventory and persistently tight spot market supply. Most producers are focusing on fulfilling existing orders, while quotes for new orders continue to rise, further fueling the upward price trend.
3. Demand Side: Concentrated Essential Demand + Substitution Effects, Boosting Purchasing Activity
The demand side exhibits characteristics of rigid support and structural optimization. As the largest downstream sector for yellow phosphorus, thermal phosphoric acid has seen prices rise in tandem with raw material costs, prompting enterprises to maintain essential procurement. Industries such as pesticides and phosphates have entered their traditional peak season, with increased order volumes driving a steady rise in demand for yellow phosphorus.
Additionally, rising costs for wet-process phosphoric acid due to high sulfur prices have improved the cost-effectiveness of thermal phosphoric acid, leading to process substitution in certain sectors and further boosting demand for yellow phosphorus. Faced with tight supply, downstream enterprises have accelerated their procurement pace and strengthened their willingness to stockpile, creating a virtuous cycle of “tight supply → increased procurement → rising prices.”
III. Core Market Characteristics and Impact on the Industry Chain
The current yellow phosphorus market is characterized by “strong cost support, tight supply, and inelastic demand,” making prices prone to rise but resistant to fall. The price transmission along the industrial chain follows a smooth path: upstream raw material price increases → yellow phosphorus price increases → downstream product price increases, with profits concentrated in the upstream raw material and yellow phosphorus segments.
For downstream industries, high yellow phosphorus prices have led to a significant increase in production costs. Products such as thermally produced phosphoric acid and phosphates have been forced to follow suit with price hikes. However, end-user demand has limited capacity to absorb these increases, and some small and medium-sized enterprises are facing cost pressures, resulting in a divergence in industry operating rates. For the upstream phosphate rock industry, the strong performance of the yellow phosphorus market has driven demand for ore, further highlighting the value of resources, and prices remain at high levels.
IV. Market Outlook
In the short term, the dry season will persist, and the tight power supply situation is unlikely to ease. Coupled with ongoing plant maintenance, the tight supply of yellow phosphorus will remain unchanged. With strong support from the cost side and sustained rigid demand from downstream sectors, prices are likely to rise rather than fall, with the market primarily fluctuating at high levels.
Overall, supported by the three factors of rigid supply, high costs, and steady demand, yellow phosphorus prices are expected to remain at elevated levels in the medium term. The scope for short-term corrections is limited. Both upstream and downstream players in the industry chain need to adapt to the high-price environment by focusing on procurement based on essential needs and maintaining reasonable inventory levels to navigate market fluctuations.
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