Brief analysis of yellow phosphorus market in 2022 and prediction for 2023 02-06-2023

Summary: Yellow phosphorus prices were greatly influenced by the supply side in 2022 and the overall price remained at a high level. Yellow phosphorus prices are predicted to edge up in 2023.

Q1 2022: Yellow phosphorus prices dropped and then mounted up; the overall price kept at a high level. Before and after the Spring Festival (early Jan. 2022), many downstream enterprises stocked up on yellow phosphorus and some yellow phosphorus enterprises suspended production; the export market thrived and global customers were actively purchasing yellow phosphorus; some enterprises from new energy sector also bought a certain amount of yellow phosphorus. Electricity curbs were not seen in Yunnan Province and manufacturers mainly maintained normal production; the production of downstream industry was affected by the epidemic and some downstream enterprises even halted production, which caused yellow phosphorus prices to slip. In late Q1, yellow phosphorus enterprises were determined to hold high their prices and thus yellow phosphorus prices rebounded after reaching the lowest level.

Q2 2022: Yellow phosphorus prices continuously climbed and then edged down slightly; the prices still stayed high. Only a few yellow phosphorus manufacturers maintained production and yellow phosphorus prices rose for several times because yellow phosphorus manufacturers and traders gathered together to hold high their prices; the high prices of yellow phosphorus gave huge pressure to downstream purchasers.

Q3 2022: Yellow phosphorus prices fluctuated dramatically. Yellow phosphorus prices declined as the downstream market was depressed and operating rates of downstream enterprises were low under slack demand and scorching weather. As a result, the consumption of yellow phosphorus was limited and production of yellow phosphorus enterprises kept steady, continuously leading supply to exceed demand. In mid to late Q3 2022, yellow phosphorus prices surged mainly because COVID-19 outbreaks were found in Weng'an County and Dunyun City of Qiannan Buyi and Miao Autonomous Prefecture, Guizhou Province on 15 Aug.; the whole city was shut down to help control the spread of the disease. Yellow phosphorus enterprises still kept production as usual, but they faced difficulties transporting their products; downstream customers scrambled to purchase yellow phosphorus from Yunnan Province. In addition, Sichuan Province issued the notice on production suspension on around 15 Aug. due to electricity shortage; therefore, yellow phosphorus enterprises in Mianyang City, Mabian Yi Autonomous County, and Shimian County in Sichuan Province suspended production, decreasing yellow phosphorus output in the province.

Q4 2022: Yellow phosphorus prices fell and then picked up. Downstream enterprises were cautious about purchasing as yellow phosphorus prices rose rapidly while the downstream market remained stagnant; so few downstream customers bought yellow phosphorus after the prices swelled and then the prices sank significantly. In late Q4, some yellow phosphorus enterprises in Yunnan Province could not export their products owing to local epidemic influence; the market supply of yellow phosphorus shrank which caused yellow phosphorus enterprises to collectively raise their prices; many yellow phosphorus enterprises stopped offering quotations at present. In the end of 2022, yellow phosphorus prices went up mainly because of the power cut in Guizhou Province; operating rates of local enterprises decreased and accordingly the overall operating rate of yellow phosphorus industry also edged down. Nevertheless, Yellow phosphorus enterprises showed intention to support their prices in late 2022 and they expected downstream enterprises to replenish before the Chinese New Year (late Jan. 2023).

Supply and demand of yellow phosphorus is likely to barely keep even in 2023 and yellow phosphorus prices are anticipated to continue to increase in 2023 for the following reasons:

  • In terms of supply, yellow phosphorus capacity grows slowly; the designed capacity under construction is large in the market but the actual progress is also slow;

  • The supply of phosphorus ore is estimated to become tight in the future given the pressure of environmental policies.
Figure Monthly ex-works price of yellow phosphorus, Jan.–Dec. 2022

Source: CCM


More information can be found at CCM Phosphorus China Monthly Report.

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