After a previous period of weakness, the yellow phosphorus market has recently experienced a strong rebound. According to data from Chem99, the yellow phosphorus index surged over 4% in a single day on November 4, with a cumulative increase of over 7% in the past two weeks. As of November 5, the domestic spot price of yellow phosphorus reached 22,200 yuan per ton, up 264 yuan per ton from the previous trading day.
Supply Tightness Drives Price Increases
The current tightening of yellow phosphorus supply is mainly influenced by three factors:
Power supply restrictions during the dry season in southwestern China are the primary driver. As the dry season arrives, the operating rate of wet-process phosphoric acid installations in the main production areas in the southwest has dropped from 72% in the third quarter to 58% in early November.
Production halts at some leading companies have exacerbated supply tightness. Analysis indicates that related production capacity is expected to resume only by mid-December.
Rising raw material costs provide support for prices. Affected by geopolitical conflicts in the Middle East, the international sulfur price (CFR) has increased from $180 per ton at the end of September to $245 per ton in early November. Meanwhile, the average domestic phosphorus ore price has risen 12% year-on-year, pushing up the production cost of yellow phosphorus by about 1,200 yuan per ton.
Strong Performance on the Demand Side
On the demand side, performance in the new energy sector is particularly notable. The price of electrolyte raw material lithium hexafluorophosphate surged from 61,000 yuan per ton at the end of September to 107,500 yuan per ton by the end of October, a remarkable increase of 76%, significantly driving stockpiling demand among lithium iron phosphate cathode material enterprises.
In terms of traditional demand, the fourth quarter is the peak season for phosphorus fertilizer demand in Southeast Asia. The procurement season for major importing countries like India and Brazil has already begun. Customs data shows that China's domestic monoammonium phosphate exports increased 18% year-on-year in October.
Impressive Corporate Performance
Driven by rising market prices, phosphorus chemical listed companies generally reported better-than-expected third-quarter results. In the first three quarters of this year, the phosphorus chemical sector achieved a total net profit attributable to shareholders of 3.005 billion yuan, a year-on-year increase of 21.42%. Among this, the net profit attributable to shareholders in the third quarter was 1.383 billion yuan, a year-on-year increase of 51.21%.
Future Outlook
Looking ahead, yellow phosphorus prices may maintain high levels with fluctuations. The dry season in southwestern China will last until April 2026, and supply is unlikely to see significant relief under power constraints. Coupled with maintained resilience in downstream new energy and traditional sector demand, yellow phosphorus prices are expected to remain strong.
In the A-share market, the phosphorus chemical sector has been rising steadily since hitting a low on April 7, 2025. As of the morning session on November 6, the phosphorus chemical index had accumulated a substantial increase of 55.34% over approximately seven months, reflecting the market's positive expectations for the prospects of the phosphorus chemical industry.
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