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 reaches of the entire phosphorus chemical industry chain. The downstream demand of yellow phosphorus is mainly concentrated in phosphoric acid (43%) and Phosphorus trichloride (37%), and is also widely used in specific applications. In other aspects, yellow phosphorus is mainly used to produce Sodium hypophosphite, Phosphorus pentasulfide, red phosphorus, hexa Metaphosphate, Phosphorus pentoxide, etc. Its consumption accounts for about 15% of the total consumption of yellow phosphorus.
2、 Market analysis
According to the monitoring of the Commodity Market Analysis System of the Business Society, the market price of yellow phosphorus fell in the first half of the year. At the beginning of January, the average price of yellow phosphorus was 33125 yuan/ton, while at the end of June, the average price was 22900 yuan/ton. In the first half of the year, the price decreased by 30.87%. The highest point from January to June was 33250 yuan/ton on January 4th, and the lowest point was 20000 yuan/ton on May 14th.
In the first quarter, the price of yellow phosphorus continued from January to March, with an average price of 33125 yuan/ton on January 1st and 30300 yuan/ton on March 31st. The cumulative decline from January to March was 8.53%.
In January, the market price of yellow phosphorus decreased by 4.15%. This month, manufacturers have had a lot of maintenance, and in the first half of the month, the pre holiday stocking of the yellow phosphorus market was basically completed. Many downstream and traders have started taking vacations, and there are plans to shut down during the Spring Festival. There are currently no procurement plans for yellow phosphorus in the short term. After the Spring Festival holiday in the second half of the month, the market has just recovered, so we are cautious in picking up goods and are more wait-and-see. We mainly supply pre holiday orders, but new orders have limited transaction volume. As of that month, the yellow phosphorus prices in Guizhou and Sichuan regions were mostly in the range of 31000-32000 yuan/ton.
In February, the market price of yellow phosphorus first fell and then rose, and overall, the price slightly decreased by 0.63%. This month, the manufacturer has had a lot of maintenance, and most of them do not provide external quotes. In the first half of the month, the overall market trading situation was light, with downstream bearish sentiment and low buying enthusiasm, making it difficult to close high-end prices. In the later part of the second half of the month, news of power rationing in Yunnan was spread, and the overall market trading situation improved. Market demand increased, and it was difficult to find low-priced goods. Market prices were moving closer to high-end prices, gradually implemented. As of the current month, the yellow phosphorus quotation is mostly in the range of 31000-32200 yuan/ton.
In March, the market price of yellow phosphorus fell by 3.81%. Manufacturers send more preliminary orders and often do not provide external quotations. In the first half of the month, the market trading situation was light, with a strong wait-and-see atmosphere, low buying enthusiasm, difficulty in closing high-end prices, and a decrease in market prices. In the second half of the month, the supply and demand of yellow phosphorus market remained relatively stagnant, with prices temporarily stabilizing and consolidating. Some manufacturers in Yunnan have completed maintenance and significantly increased their supply, but the price of raw material phosphate rock has increased. Manufacturers are more resistant to low-end prices, and most companies are temporarily not offering prices to the outside world, maintaining negotiations on actual orders. As of the current month, the mainstream quotation is around 28200-32000 yuan/ton, and the actual transaction is subject to negotiation.
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 average price on April 1st was 30300 yuan/ton, while on June 30th it was 22900 yuan/ton. The cumulative decline from April to June was 24.42%.
In April, the market price of yellow phosphorus significantly decreased by 20.79%. In the early part of this month, the manufacturer mainly issued preliminary orders and mostly did not provide external quotations. The market trading situation is light, the market wait-and-see atmosphere is strong, the buying enthusiasm is not high, it is difficult to close high-end prices, and the market price has been lowered. At the end of this month, most of the yellow phosphorus enterprises have cost inversion, and most of the enterprises in production have reduced their production load. Some enterprises have stopped production, and can still receive orders and ship goods normally. However, they do not provide external quotations, and will discuss the actual orders in detail. As of that month, the quotation for Sichuan region was around 24000-25000 yuan/ton, while the quotation for Guizhou region was 28000 yuan. The actual transaction was negotiated on a single basis.
In May, the market price of yellow phosphorus first fell and then rose, and overall, the market fell by 8.75%. In the early part of this month, the overall market trading situation was poor, and many manufacturers did not provide external quotes. The wait-and-see atmosphere was strong, and the buying enthusiasm was not high. The actual orders were discussed in detail. In the middle of this month, price stability is the main focus, and market price transactions are limited. At present, in the later part of this month, many yellow phosphorus production enterprises have reduced their production load, and some enterprises have stopped and delayed their driving time. The prices of enterprises have increased, and the market spot is slightly tight, with prices rebounding. As of the current month, the quotation for the Sichuan region is around 21800-22000 yuan/ton, and the actual transaction is subject to negotiation.
In June, the market price of yellow phosphorus first rose and then fell, with an overall increase being the main trend, with an increase rate of 4.57%. In the early part of this month, manufacturers mainly placed preliminary orders, but there was not much inventory on the market and they were reluctant to sell at low prices, resulting in an overall increase in the market situation. In the middle of the month, the overall market trading situation of yellow phosphorus was light, and the start of construction in the yellow phosphorus market was still at a low level. Some enterprises postponed driving, and market transactions were limited, with prices slightly falling. At present, most of the yellow phosphorus production enterprises are reducing their production load in the latter half of the year, with stable prices as the main focus. Downstream procurement is based on demand and can be taken as needed. As of the current month, the quotation for the Sichuan region is around 22800-23000 yuan/ton, and the actual transaction is negotiated.
In terms of upstream raw materials
According to data monitoring by Business Society, as of June 30, 2023, the reference average price of 30% grade phosphate ore in China was around 942 yuan/ton. Compared with January 1, 2023 (the reference price of phosphate ore was 1056 yuan/ton), the price was reduced by 114 yuan/ton, a decrease of 10.80%.
At present, the new orders in the phosphate rock market are generally traded, and downstream purchases are mainly based on demand. The phosphate rock industry is cautious. As of June 30th, the domestic market price for 30% grade phosphate ore is based on 850-1000 yuan/ton. The specific price may vary depending on factors such as the original ore specifications, powder to lump ratio, and transportation conditions. The specific details need to be negotiated through actual orders. The phosphorus ore data analyst from the Business Society believes that in the short term, the domestic phosphorus ore market is mainly subject to narrow adjustments, and the specific trend still needs to pay more attention to changes in supply and demand information.
Upstream fuel aspect
After two rounds of lifting and lowering at the beginning of the year in the first half of 2023, the price of the coke market remained stable for two and a half consecutive months. After entering April, it continued to decline for 10 consecutive rounds. As of the release of the report, the coke market had a total of 12 rounds of lifting and lowering, with a cumulative decrease of about 950 yuan/ton in the first half of 2023. The highest point of the year was 2682 yuan/ton on January 1, and the lowest point was 1754 yuan/ton on June 30, with a decrease of 34.6% within the six months.
Overall, in terms of cost, the increase in coking coal prices provides some cost support for coke. In terms of supply, the operating rate of coke enterprises in the main production area is low, and the inventory in the factory is running low, resulting in a slight shortage of supply. In terms of downstream demand, the steel industry has entered a seasonal demand off-season, and downstream demand is difficult to significantly improve. However, due to the previous 10 consecutive rounds of decline in coke, which has now fallen to the lowest level in the same period in nearly 5 years, coke companies have generally suffered losses. With the support of higher coking coal prices, it is expected that the first round of increase in the near future may be about to land. As of the deadline for publication, some steel mills in Xingtai, Tianjin, and Shijiazhuang have raised the purchase price of coke by 50 yuan/ton (wet quenching) and 60 yuan/ton for dry quenching, with the first round of increase partially implemented. In the future, the business agency predicts that Jiao Qi’s bullish sentiment will be strong in the short term, but due to downstream market constraints, the increase may be limited. In the long run, there is some room for improvement in the coke market after the weather turns cold and the off-season ends.
In terms of domestic demand
According to the Commodity Market Analysis System of the Business Society, the reference average price of 85% hot process phosphoric acid in China on January 1st was 9025 yuan/ton. On June 30th, the reference average price of 85% hot process phosphoric acid in China was 6300 yuan/ton. In the first half of 2023, the domestic price of hot process phosphoric acid decreased by 30.19%.
In terms of phosphoric acid, the price of phosphoric acid fluctuated and fell in the first half of 2023. In the first half of the year, the market for raw materials such as yellow phosphorus and phosphate rock weakened, resulting in insufficient cost support. The demand for phosphoric acid in the market is weak, and trading continues to be light, with bearish sentiment mainly on the market. There are fewer downstream purchases, and the transaction atmosphere is weak. Under the influence of weak factors of cost and demand, the domestic phosphoric acid price trend continued to decline from January to May. In June, the price of raw material yellow phosphorus stopped falling and stabilized, while the trend of raw materials for phosphoric acid was on the watch. The market price stopped falling and slightly increased. It is expected that the market price of phosphoric acid will steadily rise in the short term, and the actual transaction will be negotiated.
3、 Future Market Forecast
The yellow phosphorus analyst from the Chemical Branch of the Business Society believes that the current market for yellow phosphorus is tight in spot, with manufacturers mainly issuing preliminary orders. Some manufacturers have already arranged orders for ten days, and it is difficult to find low-priced sources of goods on the market, resulting in a strong atmosphere for new order negotiations. It is expected that the market price of yellow phosphorus will be mainly strong in the short term, and the actual transaction will be discussed separately.
