Tightened Supply Against Sturdy Demand Will Keep Yellow Phosphorus Market Bullish

06th June 2022, Singapore: The Yellow Phosphorus market across the Asia Pacific has heated up in the last month. The average increment in the offers was observed at USD 278 per tonne in the last week, the offers shot up 4.7% in the Chinese domestic market. The bullish sentiments remained persistent throughout May and prevailed its impact in June 2022.

This development in the market movement is majorly attributed to the resumption of arbitrage after the Chinese authorities uplifted a prolonged lockdown regarding the improvement of public movement and resumption of activities in the Chinese domestic market. It further coupled with the rising inflation due to gyration in the upstream energy cycle across the regions, as a repercussion, boosted the enthusiasm amongst the producers of Yellow Phosphorus across the Asia Pacific.

In addition, the Russia-Ukraine war has tightened the global market scenario, and the food crisis is looming over several significant economies. Most Ukrainian grains were stuck at the black sea ports, and European players were hesitant to procure the Russian cargoes. Whereas the sanctions of the western authorities over Russia had a significant impact on the fertilizers industry, the UN FAO stats showcased that the food pricing index gained in value tremendously in the past three months.

At present, the operating loads at the Yellow Phosphorus facilities are not high in the Chinese market, and the operating loads remain suppressed with a minimal increase in the on-site operations. The sentiments in the spot market are tight, and the transactions were active with the prices. China's domestic Phosphate rock market showed another bullish sentiment due to the low running inventories and narrowed market circulation. Although the market sentiments strengthened, the overall mining of the Phosphorus ore is low, widening the supply-demand gap against the rising inquiries from the domestic and overseas markets.

As per ChemAnalyst, the Yellow Phosphorus market in China is likely to maintain its upward trajectory, as currently, the uncertainties regarding the inventories of the key feedstock Phosphate rocks will drive the tight market outlook in terms of supply. Some producers are still keen to raise the quotations, but they will take a wait-and-see attitude if the prices exceed a limit.