Monthly Review of Phosphorus-Based Flame Retardant Raw Materials: Yellow Phosphorus Market Deadlocked and Stable Before Holiday, Surged After Holiday

Monthly Review of Phosphorus-Based Flame Retardant Raw Materials: Yellow Phosphorus Market Deadlocked and Stable Before Holiday, Surged After Holiday

1. Focus of the Month

①Yellow phosphorus enterprises in main production areas maintained a firm stance and withheld sales throughout the month. This included maintaining production during the Spring Festival holiday and withholding supply after the holiday, leading to tight circulating inventory. 

②Downstream pre-holiday stocking was light. After the holiday, driven by the "buying into rising prices rather than falling ones" mentality, concentrated replenishment occurred.

③Overseas policies concerning critical materials became a turning point, completely reversing the previous stalemate and opening an upward price channel.

2. Analysis of Industrial Chain Price Fluctuations This Month

In February, the yellow phosphorus price in Southwest China was 23,399 RMB/ton, up 1.77% month-on-month. The average monthly price center moved higher compared to January. On the supply side, yellow phosphorus enterprises maintained a firm stance and withheld sales throughout the month. Combined with maintenance during the Spring Festival and post-holiday supply withholding, spot supply was tight. On the demand side, downstream users made just-in-time purchases before the holiday, resulting in lackluster transaction activity. After the holiday, driven by the "buying into rising prices" mentality, concentrated replenishment occurred, leading to increased transaction volumes. Detailed analysis is as follows: At the beginning of the month, the deadlock and gaming between supply and demand continued to escalate. Although yellow phosphorus enterprises intended to support prices, downstream demand was difficult to stimulate. Procurement was mainly just-in-time with price suppression pressure, and market transactions were light. Prices showed a pattern of "firm opening, then weakening steadily," with mainstream spot transaction prices in Yunnan, Guizhou, and Sichuan ranging between 23,300-23,500 RMB/ton. In the middle of the month, as the Spring Festival approached, market transactions gradually stalled. The supply side successively implemented maintenance and production reduction plans. Downstream stocking fell short of expectations, and market prices stabilized quietly at 23,300-23,450 RMB/ton. Subsequently, the market entered a dormant state during the holiday. 

It is noteworthy that market sentiment shifted significantly after the holiday. Stimulated by macro-level news that the United States included phosphorus elements and glyphosate in its defense critical materials list, expectations for global supply chain restructuring heightened. Market sentiment quickly improved. Yellow phosphorus enterprises successively withheld supply, making low-priced goods difficult to find. Downstream users and traders could only buy into the rising trend and place follow-up orders, pushing prices into a rapid upward channel. As of February 27th, mainstream spot ex-works prices for yellow phosphorus in Yunnan, Guizhou, and Sichuan had risen to 24,000-24,400 RMB/ton, with firm orders subject to negotiation.

The market price center for phosphorus trichloride moved upward in February, mainly influenced by raw material price fluctuations. In February, the average monthly price of liquid chlorine in Jiangsu decreased by 39.86% month-on-month, and in Shandong by 92.58% month-on-month, mainly due to subsidies on liquid chlorine prices in many regions during the holiday. The operating rate for phosphorus trichloride increased significantly. The average monthly delivered price of yellow phosphorus in East China increased by 1.78% month-on-month. From the above data, the cost side saw mixed price changes. However, cost pressure on the industry was significant after the holiday. Phosphorus trichloride enterprises had a strong inclination to support prices and withhold sales. Quoted prices remained firm at 6,300-6,500 RMB/ton throughout the month. Downstream buyers, unable to secure lower prices through inquiries, had to purchase accordingly. The transaction center for new orders gradually shifted slightly upwards. As of the time of writing, actual ex-works transaction prices for phosphorus trichloride in Shandong and Jiangsu were referenced at 6,050-6,150 RMB/ton, with most enterprises quoting on a case-by-case basis.

Purified Wet-Process Phosphoric Acid: In February 2026, purified wet-process phosphoric acid prices remained firm, with the negotiation space for actual transactions narrowing. Supported by high phosphate rock costs, electricity costs, and environmental protection costs, downward price pressure was limited. Before the holiday, supply tightened due to maintenance and production cuts at some plants. Inventory remained persistently low, slightly exacerbating the structural supply-demand contradiction. Downstream lithium iron phosphate (LFP) enterprises had mostly completed their pre-holiday procurement, and new orders were hard to come by. Post-holiday demand recovery is highly dependent on the implementation pace of new energy battery orders and the release progress of new production capacity, with market sentiment dominated by a wait-and-see approach.

Thermal Phosphoric Acid: In February, the thermal phosphoric acid market continued its firm trend. High yellow phosphorus prices provided rigid cost support for the production side. Before the holiday, some enterprises reduced production, leading to tightening spot supply. The market mainly focused on delivering existing orders. Pre-holiday stocking demand was largely realized. Traditional downstream sectors entered the off-season, limiting new orders. Some enterprises, supported by new energy orders, maintained production during the holiday. The pace of post-holiday resumption was relatively slow, and downstream procurement recovery lagged. The market primarily digested existing inventory, and the tight supply-demand balance remained unchanged. Driven by the continuous upward push in yellow phosphorus costs, the expectation for price increases strengthened, and market confidence was stable with a positive bias.

3. Market Outlook Forecast

Looking ahead to the yellow phosphorus market in March, prices are expected to show a volatile trend of "rising first and then falling." The market in early March is likely to continue its strong pattern, mainly supported by the following points: First, market sentiment remains high. Supply chain concerns triggered by the US policy are unlikely to dissipate quickly in the short term and will continue to provide speculative themes for the market. Second, supply-side operating rates are slowly recovering, but yellow phosphorus enterprises still show a clear reluctance to sell. Low-priced goods are difficult to find in the market, and holders are eager to wait for further price increases. Third, downstream users had insufficient pre-holiday stocking. Liquid chlorine prices remain low post-holiday, and phosphorus trichloride producers are actively inquiring and purchasing high-priced yellow phosphorus. Additionally, sales of glyphosate and thermal phosphoric acid improved in the first quarter. Raw material inventories are gradually being consumed, creating some post-holiday replenishment demand. However, it should be noted that the market may face correction pressure in the mid-to-late part of the month. On one hand, as prices rapidly climb to relatively high levels, the cost pressure on downstream enterprises will gradually become apparent. Enterprises producing phosphorus trichloride, in particular, have limited profit margins, and their ability to absorb high-priced raw materials will be tested. On the other hand, whether actual demand can continue to materialize becomes crucial. If there is no support from genuine demand, a market rally overly reliant on sentiment is unlikely to be sustainable. It is expected that the yellow phosphorus price fluctuation range in March will be between 23,500 and 24,500 RMB/ton.