Chinese Phosphoric Acid Market Showed a Stable-to-Down Trend ( Dec, 2017)

1.Chinese Phosphoric Acid Market

In December, the Chinese phosphoric acid market mainly declined, as the demand was weak. Factories suffered sales pressure. The supply of low-priced phosphoric acid saw increasing in the market. The yellow phosphorus prices continued decreasing, which did not support the production cost of phosphoric acid. The operating rate in downstream market was low, which caused the demand for phosphoric acid to be weak. The inventory in phosphoric acid factories increased. Under the inventory pressure, part of factories decreased the operating rate. The mainstream ex-works prices of phosphoric acid by wet process were in the range of RMB 4,200-4,500/mt. The contract price can be negotiated. The ex-works price of phosphoric acid in Hubei was RMB 4,600/mt, with a large space to climb. Th negotiation prices of industry-grade phosphoric acid by hot process were in the range of RMB 5,200-5,400/mt. The offers of high-end phosphoric acid declined. The negotiation prices of industry-grade phosphoric acid in Southwest China were in the range of RMB 4,700-4,900/mt, and the reference price of food-grade phosphoric acid in Southwest China was $900/mt FOB Fangcheng. The price of industry-grade phosphoric acid in Guangxi was RMB 5,000/mt for inner-supply.

2.Chinese STPP Market

In December, the overall price of Chinese sodium tripolyphosphate (STPP) was still on a high level. In H2 December, as the prices of yellow phosphorus and soda ash declined, part of factories decreased the STPP offers. The price of STPP in mainstream factories was stable, because producers operated for previous contracts and the new contracts were few. Up to December 29, the mainstream ex-works price of industry-grade 94% STPP was RMB 5,900/mt. The operating rate in downstream market was poor and the demand was moderate. Downstream players mainly produced for regular customers’ contracts and the negotiation price was flexible. The STPP prices in North and East China were in the range of RMB 6,000-6,300/mt, down in the range of RMB 200-300/mt. The soda ash price in Central China decreased to RMB 2,100/mt, and the prices of yellow phosphorus and phosphoric acid decreased greatly. The ex-works prices of STPP were in the range of RMB 5,900-6,500/mt, which were down in the range of RMB 100-200/mt. The STPP price was $800/mt FOB Huangpu, down $10/mt. The raw material price still declined. The STPP price will decrease next month.

3.Chinese SHMP Market

In December, the Chinese sodium hexametaphosphate (SHMP) market was tight. The new offers of SHMP were on a high level. Till in late December, the SHMP price was range-bound with the decreasing production cost. Up to December 29, the mainstream ex-works prices of industry-grade 68% SHMP in Southwest China were in the range of RMB 6,600-7,200/mt, down RMB 300/mt. The delivered prices of SHMP were in the range of RMB 7,000-7,300/mt. The supply was limited and the SHMP market was strong. The export price of SHMP was $1,000/mt FOB Huangpu. The production cost was high and the trades were moderate without price advantage. Many phosphate factories planned to adjust price in January, because the raw material prices decreased clearly. The overall SHMP price will fall back in January and the market will fluctuate marginally.

4.Chinese Yellow Phosphorus

In December, the Chinese yellow phosphorus decreased to a low level. The demand for yellow phosphorus was weak, while the operating rate was high. The supply-demand was unbalanced. The downstream users focused on the previous contracts, and yellow phosphorus producers suffered the inventory and economic pressure. So, the transaction price decreased to a low level. Up to December 29, the mainstream prices of yellow phosphorus in Yunnan were in the range of RMB 15,800-16,100/mt in cash. Few factories offered lower prices. The mainstream prices of yellow phosphorus in Guizhou were in the range of RMB 16,000-16,100/mt by acceptance. The mainstream ex-works prices of yellow phosphorus in Sichuan were in the range of RMB 16,500-17,100/mt in cash. There was no new high-priced contract. The delivered prices of yellow phosphorus in Shifang were in the range of RMB 16,300-16,500/mt. In December, the yellow phosphorus price in Southwest China was RMB 16,030/mt, down 6.09% M-O-M or up 14.26% Y-O-Y.

5.Phosphoric Acid Market Forecast 

Raw Materials: As the electricity prices in Yunnan and Sichuan will continue to increase, the yellow phosphorus price will stop decreasing, which will support the production cost in phosphoric acid market.

Wet-Process Phosphoric Acid: The unit of wet-process phosphoric acid in Wengfu Group will maintain a high operating-rate. The output will be high, and the offer will be on a low level, which will affect the sales condition and the price of wet-process phosphoric.

Supply and Demand: The operating rate of phosphoric acid will be low and the supply will decrease. The demand for phosphoric acid will be weak. Factories will focus on previous contracts. The export contracts will be few during the Christmas and new year holidays.

The operating rate will be low in the Chinese phosphoric acid market. As the downstream operating rate will be low, the demand will be weak. Factories will have sales problems. Part of factories will face the inventory pressure. The trades of low-end phosphoric acid will increase. Although the export contract of phosphoric acid will turn better, it cannot support the phosphoric acid market. It is predicted that the Chinese phosphoric acid market will be range-bound in January.