Analysis of Phosphoric Acid and Phosphate Markets in Oct 2017

1. Oct Market Review

1.1 Chinese Phosphoric Acid Market Review

The Chinese phosphoric acid market fluctuated higher in October, supported by the yellow phosphorus market. During the National Day holiday, the overall trading was thin. At the end of October, yellow phosphorus market continued moving up, and phosphoric acid producers raised prices slightly. Up to October 31, ex-works prices for wet process phosphoric acid were in the range of RMB 4,500-4,700/mt (including VAT and excluding packaging cost) with dealing prices being negotiable. Ex-works prices for phophoric acid in Hubei were around RMB 4,800/mt. Negotiation prices for industry-grade phosphoric acid in East China were in the range of RMB 5,150-5,400/mt (including VAT and excluding packaging cost). The supply of low-priced phosphoric acid was declining. Negotiation prices for industry-grade phosphoric acid in Southwest China were in the range of RMB 4,600-4,8000/mt (including VAT and excluding packaging cost). USD offers for food-grade phosphoric acid in South China were in the range of $880-900/mt FOB Fangcheng Port. Dealing prices for industry-grade phosphoric acid were in the range of RMB 4,900-5,100/mt in Guangxi.  

1.2 Chinese STPP Market Review

The Chinese phosphate market remained stable in October. After the National Day, yellow phosphorous and sodium carbonate prices were high, and the phosphate market was firm. At the end of October, a few phosphate producers raised prices. Up to October 31, mainstream ex-works prices for 94% industry-grade sodium tripolyphosphate (STPP) were in the range of RMB 5,800-6,200/mt. The lower prices increased by RMB 100/mt M-O-M. Some higher prices were above RMB 6,700/mt. Prices in North China and East China were in the range of RMB 6,200-6,500/mt, with some higher prices were RMB 6,800/mt. Offers for sodium carbonate in Central China were in the range of RMB 2,200-2,300/mt. USD offers for industry-grade STPP were around $810 FOB Huangpu.  

1.3 Chinese SHMP Market Review

The Chinese sodium hexametaphosphate (SHMP) market were stable and high in October. Most producers supplied goods to their old customers. At the end of October, the yellow phosphorus market prices went up, which supported the phosphate market. Up to October 31, mainstream ex-works prices for 68% industry-grade SHMP in Southwest China were in the range of RMB 6,600-6,700/mt. Delivered prices were in the range of RMB 6,800-7,100/mt, which increased by RMB 100/mt or so. The supply was not much. USD offers for industry-grade SHMP were $970/mt FOB Huangpu.

1.4 Chinese Monopotassium Phosphate Market Review

The Chinese monopotassium phosphate market was largely stable in October. Yellow phosphorus prices were high in Sichuan, which supported the overall market. The downstream demand was soft. Up to October 31, mainstream ex-works prices for 99% monopotassium phosphate produced via furnace process were in the range of RMB 6,700-6,800/mt in Shifang.

2. Yellow Phosphorus Market Analysis

The yellow phosphorus market moved marginally in October. The embargo on highways during the National Day holiday influenced the trading in the yellow phosphorus market. Most phosphorus trichloride units in Jiangsu were shut, which weighed down the demand for yellow phosphorus. Moreover, the nut coke prices slid. Hence, the yellow phosphorus market became soft in H1 October. Lower prices declined to RMB 15,600-15,700/mt in Yunnan. In H2 October, the demand recovered and electrovalence went up. The yellow phosphorus market rebounded.

3. Forecast

3.1 Phosphoric Acid Market Forecast

Raw Materials: The electrovalence will increase greatly in November, which will support the yellow phosphorus market.

Wet Process Phosphoric Acid: The operating rate will be high and the output will be at high levels, which will influence the sales of phosphoric acid produced via furnace process.

Supply and Demand: The supply will be stable while the demand will be weak.

It is predicted that the phosphoric acid market will fluctuate higher pressured by the high production cost.

3.2 Phosphate Market Forecast

Operating Rate: The operating rate will be stable in Southwest China. As the electrovalence is high, the operating rate of phosphate may decline.

Export: As the November is the consumption peak season of phosphate. The export volume may inch up.

Demand: The consumption volume in the food industry will increase.

Raw Materials: Yellow phosphorus and phosphoric acid prices will be high in November. Sodium carbonate prices will be high on the tight supply.

It is predicted that the phosphate market will inch up in November.