Phosphoric Acid Market Dynamics Intelligence, Analysis, and Forecast

I. Recent Market Dynamics
(A) Price Trends
1. Overall Prices: The domestic phosphoric acid market exhibited an accelerating upward trend in May 2026. As of May 22, the weekly cumulative price increase for domestic 85% industrial-grade thermal-process phosphoric acid reached RMB 650/ton, representing a rise of approximately 7.18%. The market reference average price rose from RMB 9,050/ton on May 18 to RMB 9,700/ton on May 22. For wet-process purified phosphoric acid, quotations in Jiangsu and Shandong provinces remained stable within the range of RMB 10,200–10,300/ton.
2. Regional Prices: Significant regional price disparities exist. As of May 25, quotations for 85% industrial-grade thermal-process phosphoric acid in Shandong Province ranged between RMB 7,000 and 9,400/ton: Han Yue Chemical Co., Ltd. (Shandong) quoted RMB 7,500/ton for domestic product, while Yushuo Chemical Co., Ltd. (Shandong), distributing Xingfa Group’s product, quoted RMB 9,300/ton. In Shanghai, prices were notably higher, with Guoke E-Commerce Co., Ltd. quoting RMB 10,600/ton for domestic phosphoric acid.

(B) Raw Material Prices
1. Yellow Phosphorus: On May 22, the yellow phosphorus market price in Yunnan Province stood at RMB 32,000/ton—a daily increase of RMB 1,500/ton (up 4.92%). Nationally, the yellow phosphorus market price was RMB 31,900/ton as of May 22, up 3.97% week-on-week and up 42.22% year-to-date.
2. Sulfur: The domestic sulfur market showed an upward oscillation trend. Bulk granular sulfur prices at Zhenjiang Port reached RMB 7,350/ton, rising RMB 250/ton (3.4%) during the week. As of May 22, the national sulfur price stood at RMB 7,675/ton—up 204.0% year-on-year.

(C) Production Volume and Operating Rates
1. Overall Output: During the week of May 15–21, 2026, China’s integrated phosphoric acid production totaled 86,100 tons, down 1.13 percentage points week-on-week. Specifically, wet-process purified acid output reached approximately 56,400 tons, with an operating rate of 54.38%, down 0.98 percentage points week-on-week; thermal-process phosphoric acid output totaled approximately 28,900 tons, with an overall operating rate of 60.36%, down 0.15 percentage points week-on-week.
2. Reasons for Operating Rate Changes: Wet-process acid producers reduced output or halted operations due to persistently high sulfur prices and mounting raw material cost pressures. Meanwhile, soaring yellow phosphorus prices have squeezed thermal-process acid producers’ profit margins, constraining their willingness to produce.

(D) Inventory Status
Phosphoric acid inventories across major producers remain at low levels. Mainstream wet-process acid manufacturers, constrained by raw material shortages, continue to scale back output, maintaining lean inventory positions.

(E) Demand Conditions
1. New Energy Sector: Lithium iron phosphate (LFP) battery production remains robust—operating above 80% capacity—sustaining strong, inflexible demand for both wet-process purified and thermal-process phosphoric acid. In April 2026, national iron phosphate output reached 396,600 tons, up 10.18% month-on-month; anhydrous iron phosphate plants operated near full capacity.
2. Traditional Sectors: Amid persistently elevated phosphoric acid prices, traditional phosphate salt industries exhibit limited tolerance, significantly reducing raw material procurement volumes. Some enterprises have implemented production load reductions. Similarly, refractory materials, metal surface treatment, and other end-user sectors are curtailing phosphoric acid purchases or actively seeking alternative chemicals.

II. Analysis and Assessment
(A) Cost-Driven Pressure
Sharp increases in yellow phosphorus and sulfur prices constitute the primary drivers behind rising phosphoric acid prices. As the principal feedstock for thermal-process phosphoric acid, surging yellow phosphorus prices directly inflate production costs. Likewise, elevated sulfur prices—critical for wet-process phosphoric acid—have intensified cost pressures on wet-process producers, prompting some facilities to reduce output or suspend operations entirely, thereby tightening supply and further fueling price increases.

(B) Supply-Demand Dynamics
1. Supply Side: Soaring raw material costs have driven down operating rates for both wet-process and thermal-process phosphoric acid producers, shrinking overall market supply. Additionally, some producers, facing eroded profitability, have suspended quotations or curtailed output—further intensifying supply constraints.
2. Demand Side: Demand from the new energy sector continues growing steadily, providing critical support for the phosphoric acid market. Conversely, traditional end-users show diminishing acceptance of elevated phosphoric acid prices, resulting in weakened demand. Overall, the market remains in a tight supply-demand equilibrium.

(C) Market Sentiment
Amid rising raw material costs and tightening supply, market sentiment leans bullish, with participants holding relatively optimistic price expectations. However, downstream buyers’ tolerance for high prices is gradually waning, increasing transactional friction. Several enterprises are encountering a “price exists but no transactions occur” scenario.

III. Outlook
(A) Short-Term Forecast
1. Price Trend: The phosphoric acid market is likely to maintain an “upward-biased but hard-to-fall” posture in the near term, albeit with growing resistance to transactions at elevated price levels. Sustained high yellow phosphorus prices provide firm cost support for thermal-process acid; steady LFP battery production ensures resilient demand for phosphoric acid; and declining industry operating rates tighten spot supply—all supporting continued price strength. Nevertheless, current phosphoric acid prices have entered historic highs, and downstream acceptance is progressively deteriorating. Wet-process acid producers are now experiencing deep losses; such high input costs are beginning to constrain downstream demand release, limiting further upside potential.
2. Market Transactions: The market may witness a “passively driven” price increase under cost pressure, yet the risk of “price without trade” is accumulating. Downstream enterprises may fulfill only essential, just-in-time replenishment orders, with little appetite for large-scale procurement.

(B) Long-Term Forecast
1. Price Rationalization: As downstream tolerance for high phosphoric acid prices continues to decline—and assuming potential stabilization or correction in yellow phosphorus and sulfur prices—phosphoric acid prices are expected to gradually revert toward rational levels. A moderation or decline in key raw material prices would alleviate cost pressures on phosphoric acid producers, paving the way for corresponding price adjustments downward.
2. Supply-Demand Structural Adjustment: The rapid expansion of the new energy sector will sustain robust demand for phosphoric acid. However, demand from traditional sectors is likely to remain subdued. Producers may adjust production portfolios accordingly—increasing allocation to new energy applications while scaling back exposure to traditional markets. Concurrently, industry competition may intensify, prompting select enterprises to enhance competitiveness through technological innovation and rigorous cost control.