9.23-9.27 Weekly summary of phosphoric acid and raw materials
Weekly market summary of phosphoric acid and raw materials(9.23-9.27)
Phosphate Rock:
There have been no recent changes in the price of phosphate rock, with stable prices in the mining sector and mainly focusing on shipments. Downstream products such as DAP MAP account for approximately 60% of the demand for phosphate rock. The dependence of phosphate rock on the operation of phosphorus fertilizers is relatively high. Traders were worry about the possibility of later prices may be adjusted downward due to the downward trends in both downstream phosphorus fertilizer prices and operation rate. Phosphate rock production in the north has still not recovered, with limited supply and few new transactions. Enterprises mainly rely on existing orders. However, from the third to the fourth quarter is the traditional winter storage and supply production season for Chinese fertilizers, so there is a low likelihood of a significant decline in the start of production for phosphorus fertilizers. The end of the fourth quarter is the traditional non-mining period for phosphate rock, with limited supply. In the near term, focus should be placed on the start of production and price changes in the phosphorus fertilizer industry.
Yellow phosphorus:
The summary of the situation in the yellow phosphorus market this week is that while production rates are good, downstream customer demand remains weak. In order to promote sales, some manufacturers and traders have continuously reduced prices and signed contracts, leading to frequent occurrences of low market prices. Supply-wise, the operating rate of yellow phosphorus manufacturers remains high, but new orders continue to be weak as early orders are gradually delivered. Some companies are facing pressure on capital and inventory, with the need to sell goods to recover payments. Additionally, traders are constantly selling their stockpiles, making it difficult to maintain a stable price. From the demand perspective, some downstream customers have completed their pre-National Day holiday stockpiling and have no purchase plans before the holiday. However, some other downstream customers still have purchasing needs but are delaying their purchase plans due to the difficult-to-stop downward trend in yellow phosphorus prices, resulting in a scarcity of new orders. Overall, the market for yellow phosphorus faces a situation of oversupply and volatile prices, and the market will need to wait for post-holiday demand to further clarify its direction.
As the upcoming National Day holiday approaches, the yellow phosphorus market is expected to experience a basic halt in trading activities. Both supply and demand sides are on the lookout for market conditions after the holiday, with an overall quiet trading atmosphere.
After the holiday, yellow phosphorus downstream customers have restocking plans, but considering the need for producers to sell their products, a supply-demand game is expected to emerge. Prices are likely to remain relatively stable, with the possibility of individual companies offering slight discounts to sign contracts for faster delivery to meet inventory needs.
Positive factors:
- Downstream enterprises have experienced a seven-day holiday, and their raw material inventories are low, leading to restocking plans. It is expected that demand will be relatively concentrated in the short term after the holiday.
- Entering the flat-water period in October, there is an expected increase in electricity prices in Yunnan, leading to an increase in yellow phosphorus costs, which will support a tendency for prices to rise rather than fall.
Negative factors:
- Yellow phosphorus manufacturers are operating well, with inventories built up during the holiday, and some companies are expected to face pressure to sell their products.
- The downward price trend before the holiday is difficult to contain, and it is expected that downstream customers will continue to have a mindset of pressing prices after the holiday, making it difficult to trade at higher prices.
- Some downstream customers are expected to pre-sign orders after the holiday, which may lead to a decrease in demand after the holiday, making it unfavorable for price negotiations.
Overall, the market for yellow phosphorus is expected to experience a period of adjustment and stabilization after the holiday, with both positive and negative factors influencing the direction of prices.
Thermal phosphoric acid:
This week, the thermal phosphoric acid market remained stable in operation rate. However, with the price of raw material yellow phosphorus declining, the cost support for thermal phosphoric acid weakened, resulting in a slight decrease in its prices. As the National Day holiday approaches, downstream customers had sufficient stockpiling before the Mid-Autumn Festival, leading to lower pre-National Day restocking demand. Most purchases were based on immediate needs, with only a few new orders traded. Some downstream customers showed interest in inquiries and deliveries, but the overall downstream market sentiment was bleak, and the enthusiasm for pre-stockpiling was low. Market trading was relatively quiet. It is expected that next week, the thermal phosphoric acid market will enter a holiday mode with reduced market trading activity. After the holiday, the market price of thermal phosphoric acid is expected to remain stable.
Wet purified phosphoric acid:
This week, the price of wet-process purified phosphoric acid remained stable. Most manufacturers had low inventories, supported by a significant number of pending orders, mainly focusing on delivering existing orders or collecting orders at steady price. The lead time of many factories have been arranged until mid to late October. In terms of supply, as the holidays approach, downstream stockpiling activities have basically entered the final stage, and terminal users’ purchasing activity is average. From the demand perspective, some customers have completed their stockpiling and are primarily consuming previously purchased inventories, while others purchase according to their needs without a strong desire to stock up. Additionally, affected by the decreasing price of thermal phosphoric acid, there is intense competition between wet-process purified phosphoric acid and thermal phosphoric acid, with some customers shifting to purchasing thermal phosphoric acid. Overall, the new energy market demonstrates a stable demand for purified acid, which helps to maintain the stability of purified acid prices. International demand remains stable, and wet-process purified phosphoric acid enterprises are normally delivering foreign trade orders. It is expected that the market for wet-process purified phosphoric acid will remain calm and the price will be maintained stable in the upcoming week.
