1、 Overview of Yellow Phosphorus Industry
Yellow phosphorus, also known as white phosphorus. White or light yellow semi transparent solid. Yellow phosphorus is located in the middle of the entire phosphorus chemical industry chain, and the downstream demand distribution of yellow phosphorus is mainly concentrated in the two major fields of phosphoric acid (43%) and phosphorus trichloride (37%), and it is also widely used in specific applications. The main uses of yellow phosphorus in other aspects are the production of sodium hypophosphate, phosphorus pentoxide, red phosphorus, hexametaphosphate, phosphorus pentoxide, etc. Its consumption accounts for about 15% of the total consumption of yellow phosphorus.
2、 Market analysis
| Gamma-PGA (gamma polyglutamic acid) |
According to monitoring of commodity data, the yellow phosphorus market in 2023 is mainly divided into three stages of decline, rise, and fall, with overall prices falling. At the beginning of the year (January 1st), the average price of yellow phosphorus was 33125 yuan/ton, and at the end of the year (December 31st), the average price was 22962.67 yuan/ton. The price has decreased by 30.68% during the year. The highest point of the year occurred on January 4th at 33250 yuan, and the lowest point occurred on May 11th at 20000 yuan. The first stage is the downward phase from January to mid May. The second stage is the upward phase from mid May to mid November. The third stage is the downward phase from mid November to the end of December.
The market price of yellow phosphorus mainly declined from January to March in the first quarter. Before and after the Spring Festival holiday in January, the market was relatively quiet. The news of power rationing in Yunnan in late February has improved the overall market trading situation. In March, the supply of yellow phosphorus in the market increased significantly, making it difficult for high-end prices to be traded and leading to a decrease in market prices. The average price on January 1st was 33125 yuan/ton, and on March 31st it was 30300 yuan/ton. The cumulative decline from January to March was 8.53%.
In the second quarter, from April to June, the price of yellow phosphorus first fell and then rose, with the overall decline being the main trend. The domestic yellow phosphorus market continued to be weak in April, with limited new orders and a significant drop in yellow phosphorus market prices. In May, the market price of yellow phosphorus first fell and then rose. Many yellow phosphorus producing enterprises reduced their production load, some enterprises stopped production, delayed driving time, and later increased prices, causing prices to hit the bottom and rebound. In June, the price of yellow phosphorus in the market first rose and then fell, and there was not much inventory on the market. They were reluctant to sell at low prices, and the overall market situation rose. The average price on April 1st was 30300 yuan/ton, and on June 30th it was 22900 yuan/ton. The cumulative decline from April to June was 24.42%.
In the third quarter, from July to September, the price of yellow phosphorus first rose and then fell, with an overall increase being the main trend. The construction of the 7-8 market is still at a low level, and it is difficult to find low-priced goods on the market. The atmosphere of new order negotiations is strong, and prices are rising. In late September, downstream stocking and procurement were basically completed, and on-site distributors sold at low prices. The focus of new transaction prices gradually declined. The average price on July 1st was 22900 yuan/ton, and on September 30th it was 25522.67 yuan/ton, with a cumulative increase of 11.45% from July to September.
In the fourth quarter, from October to December, the price of yellow phosphorus first rose and then fell, with an overall decline being the main trend. In October, the price of upstream phosphate ore increased, and there were many inquiries from downstream, making it difficult to purchase at a lower price. Manufacturers increased their prices. Affected by the power rationing policy in Yunnan region in November, companies showed strong reluctance to sell and their prices were raised. The market trading situation in December was light, with poor demand and downstream procurement at lower prices, resulting in a downward market focus. The average price on November 1st was 25522.67 yuan/ton, and on December 31st it was 22962.67/ton. The cumulative decline from October to December was 10.03%.
Yellow phosphorus production capacity
The production capacity of yellow phosphorus in China is distributed in provinces with relatively concentrated phosphate ore and hydropower resources, mainly in the four provinces of Hubei, Sichuan, Guizhou, and Yunnan. In 2022, the total production capacity of yellow phosphorus reached 1.4485 million tons, an increase of 2.73% year-on-year. According to incomplete statistics from relevant institutions, the domestic yellow phosphorus production capacity has slightly increased. As of the end of December 2023, the scale of yellow phosphorus production capacity has increased to 1.459 million tons/year. There is not much difference compared to 2022. In terms of production, May 2023 had the lowest output, with a monthly output of around 35000 tons. The highest production was in October, with a monthly output of around 74500 tons. The comprehensive estimated production in 2023 is around 660000 tons.
Yellow phosphorus import and export volume
According to customs statistics, the cumulative export volume of yellow phosphorus from January to November 2023 was 57600 kilograms, with an export amount of 385920 US dollars. From January to December 2023, China imported a total of 0 tons of yellow phosphorus. Considering tariffs and transportation costs, large-scale import and export of yellow phosphorus is still not feasible. It is expected that in recent years, China’s yellow phosphorus will still be mainly produced and sold domestically, with relatively small import and export volumes.
In terms of upstream raw materials
According to data monitoring by Business Society, as of December 31, 2023, the reference average price of 30% grade phosphate ore in China was around 1034 yuan/ton. Compared with January 1, 2023 (reference price of 1056 yuan/ton), the price decreased by 22 yuan/ton, a decrease of 2.08%. In 2023, the overall market situation of domestic phosphate ore showed a slight decline ending in a mixed trend of ups and downs.
In 2022, China’s phosphorus ore production reached 104.745 million tons, a year-on-year increase of 1.8%. From January to November 2023, the overall production of phosphate ore was 94.05 million tons, and the cumulative production of major phosphate ore producing areas for the year decreased by 3 million tons compared to 2022.
In terms of upstream fuel
According to the Commodity Market Analysis System of Business Society, on January 1, 2023, the ex factory price of quasi first grade metallurgical coke was 2682 yuan/ton, and on December 31, the ex factory price of quasi first grade metallurgical coke was 2430 yuan/ton. The price has dropped by 9.4% this year. In 2023, the coke market first rose and then fell, with an overall downward trend.
According to the National Bureau of Statistics, from January to November 2023, the national coke production reached 450 million tons, an increase of 3.27% year-on-year. The overall production of coke has maintained a slight increase, with an estimated coke production of 490 million tons in 2023.
In terms of domestic demand
In terms of phosphorus trichloride, China is one of the world’s largest producers and consumers of phosphorus trichloride. It is expected that the production of phosphorus trichloride in China will increase to 1.9759 million tons in 2023, and the demand is expected to increase to 1.9653 million tons.
According to the commodity market analysis system of Shengyishe, as of January 1, 2023, the average price of phosphoric acid was 9025 yuan/ton, and as of December 31, the average price was 6340 yuan/ton. The price has dropped by 29.75% this year. In 2023, phosphoric acid showed an overall downward trend.
3、 Future Market Forecast
At the macro level, the Ministry of Industry and Information Technology, the National Development and Reform Commission, the Ministry of Science and Technology, the Ministry of Natural Resources, the Ministry of Ecological Environment, the Ministry of Agriculture and Rural Affairs, the Ministry of Emergency Management, the Chinese Academy of Sciences and other eight departments jointly issued the Implementation Plan for Promoting the Efficient and High value Utilization of Phosphorus Resources recently. The plan proposes that by 2026, China’s sustainable guarantee capacity for phosphorus resources will be significantly enhanced, the independent innovation ability and green safety level of phosphorus chemical industry will steadily improve, the supply capacity of high-end phosphorus chemicals will be significantly improved, the complementary regional advantages and linkage development ability will continue to strengthen, and the resilience and safety level of the industrial chain supply chain will be more stable. And specific development goals have been clarified from four aspects: innovation driven, structural optimization, green development, and ecological cultivation.
Upstream aspect: The slight decline in phosphate ore prices generally supports the cost of yellow phosphorus. The price decline in the coke market has limited support for yellow phosphorus. Overall, the cost support is not significant.
On the supply side, there is currently a slight increase in domestic yellow phosphorus production capacity, which is not much different from 2022. At present, there are plans for new projects in Yunnan, Sichuan, and Guizhou regions, but the actual implementation situation still needs to be evaluated based on the current situation. In the situation where the supply-demand contradiction in the yellow phosphorus market still exists in 2024, the actual plan for the production of new production capacity may be delayed.
In terms of import and export: According to customs statistics, the cumulative export volume of yellow phosphorus from January to November 2023 was 57600 kilograms. From January to November, a total of 0 tons of yellow phosphorus were imported. Considering tariffs and transportation costs, large-scale import and export of yellow phosphorus is still not feasible. It is expected that in recent years, China’s yellow phosphorus will still be mainly produced and sold domestically, with relatively small import and export volumes.
In terms of demand: With the continuous development of the economy, the scale of downstream industries such as phosphate fertilizers and lithium batteries continues to expand. In recent years, the demand for yellow phosphorus in China has continued to grow, and the industry has a broad consumer market. The downstream phosphorus trichloride has a promising prospect and has played a certain supporting role in the demand for yellow phosphorus.
In summary, in the year 2023, the supply-demand contradiction in the yellow phosphorus market led to an overall decline in market prices. In 2024, opportunities and challenges coexist in the yellow phosphorus market. Overall, the future will maintain stable development. Domestic yellow phosphorus production enterprises need to increase investment in environmental protection, improve production processes, reduce energy consumption and pollution emissions, and promote the industry’s development towards green and sustainable direction.
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