Phosphoric Acid Market Rebounded Strongly In China Despite Lull Demand

In the third quarter of 2021, the Chinese authorities decided to restrict the imports of Phosphate based fertilizers (Diammonium Phosphate (DAP)) and raw materials. Despite being accounted as a major exporter across the globe besides limiting its consumption in the domestic market. Although, the diversification of its utilization spread in the EV batteries segment kept the supply-demand outlook balanced in the Chinese domestic market. The move to restrict the exports of Phosphate based fertilizers and raw material were majorly attributed to the rising global food pricing index and natural gas prices. The restriction on the exports will prevail till the second quarter of 2022.

In the first half of Q1, the demand outlook from the fertilizers sector currently going through its offseason besides suppressing the inquiries for Phosphoric Acid in the Chinese domestic market. As a ripple effect, the prices observe a consistent decrement since mid-January amidst the ease in the demand outlook of Phosphoric Acid in China. Although, in recent terms, the geopolitical conflict in the eastern European region between Russia and Ukraine uplifted the offers for Crude Oil in the international market. In response to the current hindrances in the market, movement soared inflation drastically on a global scale, and the Crude oil offers crossed the USD 100 per barrel mark for the first time since 2014. It laid an impact on the complete value chain of the Phosphoric Acid besides making the players rush to procure adequate volumes of all grades of Phosphoric Acid. The cost support from the upstream Sulphur was also running on a higher level. Therefore, in the past few weeks, we observed an unprecedented rebound in the offers of Phosphoric Acid despite lull demand from the fertilizers industry.

As per ChemAnalyst, the Phosphoric Acid market dynamics has shifted drastically since its applications in the EV batteries segment paces upwards after the vast volumes shifted from the fertilizers segment to the EV segment. Therefore, due to the uncertainties presented by the conflict in the eastern European region, several market experts anticipated that the prices are likely to stagger upwards in the upcoming period.