Phosphorus Chemical Weekly: Yellow Phosphorus Stops Falling and Rebounds, Two Acids Diverge, Industrial Ammonium Bottoms Out [SMM Analysis]

1. Yellow phosphorus: Oversold market stabilizes, with supply side driving the rebound

The yellow phosphorus market had been weakening earlier due to pre-holiday price cuts by producers to clear inventory and downstream pressure for lower prices. This week, market sentiment recovered, and the price center edged up. On the supply side, after the earlier concentrated destocking, industry inventory pressure eased. Producers' willingness to sell at low prices faded, and their inclination to hold prices firm strengthened, which was the core driver of this recovery. On the cost side, electricity prices in Yunnan, the main production area, remained stable, while rising prices of coke and other auxiliary materials provided bottom support, limiting downside room for prices. Demand remained generally weak, with downstream sectors such as thermal process phosphoric acid and phosphorus trichloride making only just-in-time procurement, and pre-holiday concentrated stockpiling had not yet begun. This round was mainly an oversold recovery rather than demand-driven, and the sustainability of the price increase still needs to be confirmed by downstream orders.

2. Phosphoric acid: Supply-demand stalemate persists, with divergent costs between thermal and wet processes causing fluctuations

Overall market activity for phosphoric acid was low this week, with downstream enterprises mostly purchasing as needed. The raw material side showed a clear two-way trend: sulfur-based raw material prices declined, weakening cost support for wet process phosphoric acid, while yellow phosphorus prices bottomed out, directly pushing up production costs for thermal process phosphoric acid and causing the price spread between thermal and wet process phosphoric acid to keep reshaping. On the supply side, new phosphoric acid capacity in central China was brought on stream in an orderly manner, spot availability steadily increased, and industry supply pressure gradually became more evident. Demand remained generally stable, with no notable fluctuations in traditional industrial phosphate demand and steady release of just-in-time demand for purified phosphoric acid from the new energy sector, but there was no concentrated bulk purchasing in the market. In the short term, the market is likely to continue moving sideways within a narrow range. Key factors to watch include yellow phosphorus price fluctuations, the pace of new capacity releases, and actual downstream end-user procurement.

3. Industrial-grade MAP: Firm list prices but flexible actual deals, with new energy just-in-time demand supporting the market

This week, the industrial-grade MAP market showed a pattern of firm list prices but flexible actual deals. On the cost side, upstream phosphate ore and wet process acid prices weakened, lowering raw material costs and giving producers room to sell at more favorable prices. Demand was structurally divided: traditional agricultural demand was essentially stagnant with no new orders, while just-in-time demand from the new energy battery sector continued to support the market and ensure baseline sales volumes. The market was dominated by spot orders and just-in-time long-term contract deals, lacking any major positive driver. In the short term, industrial-grade MAP is expected to move sideways within a range, with market conditions highly dependent on the procurement pace of new energy end-users. Without concentrated stockpiling, prices are unlikely to see a sustained rise, and close attention should be paid to iron phosphate operating rates and procurement dynamics.

4. Outlook for next week

1. Yellow phosphorus | Expected to drift higher before the holiday

Low inventory combined with cost support keeps the bottom solid; weak demand limits upside, and the market is mainly in a recovery-driven consolidation.

2. Thermal process phosphoric acid | Consolidating on a weak note, following yellow phosphorus

Raw material costs are rising along with yellow phosphorus, squeezing corporate profits and lowering operating rates. Weak demand constrains price adjustments, and the market is likely to consolidate on a weak note in the short term.

3. Wet process phosphoric acid | Consolidating on a weak note

Cost support is weak, and supply from new capacity is ample. In the short term, deals are mainly negotiated case by case, with prices consolidating on a weak note.

4. Industrial-grade MAP | Consolidating at lows

Soft costs are limiting price elasticity, agricultural demand is almost completely stalled, and just-in-time demand from the lithium battery sector is supporting the bottom. The market is expected to remain in weak, stable consolidation in the short term.