[Monthly Review of Yellow Phosphorus And Phosphorus-Containing Intermediates]: Prices Rebound After A Drop (July 2026)

Prices Rebound After a Drop (July 2026)

1. This Month's Highlights

This month, some yellow phosphorus producers in Guizhou reduced production, resulting in a month-over-month decline in industry output and capacity utilization.

Electricity costs fell during the rainy season, while auxiliary material costs fluctuated within a narrow range; the impact of sulfur on yellow phosphorus prices weakened.

On the demand side, producers of thermally processed phosphoric acid and trichloride are monitoring the market and placing orders as needed.

2. Analysis of Price Fluctuations in the Industry Chain This Month

In July, the average monthly price of yellow phosphorus in the Southwest region was 26,437 yuan per metric ton, down 19% month-over-month but up 18% year-over-year. The yellow phosphorus market in July was driven by its own supply-and-demand fundamentals; demand was primarily driven by essential needs, but prices corrected downward due to shrinking profits and tight supply coupled with firm prices in the Guizhou region.

At the beginning of the month, some yellow phosphorus producers carefully negotiated prices to move inventory, leading to a decline in actual transaction prices among major downstream buyers. The market traded weakly, with mainstream prices gradually falling from 28,500 yuan per metric ton. Some major producers achieved substantial sales volume at the 27,000 yuan per metric ton level, after which prices rebounded slightly at that price point. However, following reports that an auction by a certain producer failed to attract any bids and was declared void, market sentiment and prices came under pressure again, leading to a weakening trend. Buyers remained cautious about placing actual orders, and prices in the main production areas fell back to the 25,500–25,700 yuan/metric ton range. Profits continued to shrink. Additionally, some enterprises in Guizhou reduced production capacity, while mainstream producers were generally reluctant to sell at the 26,000 yuan/metric ton level, and many took the opportunity to push prices higher, the market price center showed a gradual upward trend. Production restrictions in the Guizhou region were intensified, and local major producers set strong tender prices, accelerating the industry-wide price hike. By the close of trading, the mainstream price range in Yunnan, Guizhou, and Sichuan stood at 27,000–27,200 yuan per metric ton.

Regarding phosphorus trichloride prices in July, due to the decline in yellow phosphorus prices, phosphorus trichloride prices came under passive pressure and followed suit. Additionally, during the off-season, downstream buyers were pushing for lower prices and showing little interest in purchasing, and with operational pressures on manufacturers becoming particularly acute—some of which suspended production to mitigate risks—prices subsequently rose by 100 yuan following a stabilization and rebound in yellow phosphorus prices, as well as an increase in liquid chlorine prices, before the market entered a wait-and-see phase. During the month, phosphorus trichloride prices ranged from 6,500 to 7,900 yuan per metric ton, while phosphorus trioxide prices generally ranged from 6,300 to 7,600 yuan per metric ton; Throughout the month, the three phosphorus compounds remained in the off-season for demand. Some companies continued to maintain minimal production capacity, with most adjusting production based on sales; actual transactions were primarily negotiated on a spot basis according to market conditions.

Wet-Process Purified Phosphoric Acid: In July, the domestic market for wet-process purified phosphoric acid remained largely stagnant with a slightly weak trend; while prices appeared stable on the surface, actual transaction levels softened somewhat. At the beginning of the month, major manufacturers maintained firm quotes. Although sulfur prices fluctuated, they remained at historically high levels, providing effective support for phosphoric acid prices from the cost side, leaving manufacturers with limited room to offer discounts. However, procurement sentiment remained persistently weak in downstream end-use sectors such as lithium iron phosphate, iron phosphate, and traditional phosphates. Only a small amount of essential demand was met, with few new order negotiations and a strong sense of market caution. From mid-month through the end of the month, as prices for thermally produced phosphoric acid and yellow phosphorus fell sharply, the cost-effectiveness advantage of wet-process purified phosphoric acid weakened. Low-priced substitutes exerted some pressure on the market, further suppressing procurement demand. With production and sales failing to align smoothly, inventory pressure gradually increased. Some production facilities were forced to reduce output or shut down to alleviate pressure. In certain regions, actual transaction prices showed a pattern of apparent stability but underlying declines, and room for price negotiation expanded somewhat. Overall, the pattern of weak supply and demand in the wet-process purified phosphoric acid market remained unchanged in July. Although costs provided bottom support, the lack of a substantive recovery on the demand side left prices with insufficient momentum for a rebound.

Thermal Phosphoric Acid: In July, the domestic thermal phosphoric acid market generally fluctuated within a weak range, with the price center shifting slightly downward compared to the beginning of the month. At the start of the month, dragged down by the continued weakening of yellow phosphorus prices, cost-side support significantly eroded. Actual transaction prices for thermal phosphoric acid frequently hit new lows, with some small and medium-sized producers approaching the break-even point. Downstream purchasing sentiment remained subdued, new orders were slow to materialize, and market trading was light. Mid-month, costs softened again. Coupled with the impact of low-priced supplies from surrounding regions, manufacturers became more willing to offer discounts to move inventory, causing the actual transaction price level to ease slightly; some regions showed a pattern of apparent stability but underlying price declines. Mid-month, as yellow phosphorus prices rebounded temporarily, actual transaction prices for thermally produced phosphoric acid in some regions followed suit with a narrow-range increase. However, end-users maintained only essential procurement, and order volumes remained limited, leaving the price rally without sustained support. Overall, the pattern of weak supply and demand in July remained unchanged. Companies continue to face inventory pressure, and downstream players are largely adopting a wait-and-see attitude. The market is unlikely to show significant improvement in the short term. It is expected that August will continue to be dominated by inventory drawdowns, with prices consolidating at weaker levels.

3. Market Outlook

On the supply side, according to market sources, major yellow phosphorus producers in Yunnan and Sichuan will maintain stable production schedules. Attention should be paid to environmental protection developments in Guizhou, as industry supply may be slightly constrained.

On the demand side, new production capacity in the thermal phosphoric acid industry is coming online, which will benefit the yellow phosphorus market in terms of both actual demand and market sentiment. The chemical, fertilizer, and steel industries are expected to continue meeting only their essential demand for yellow phosphorus.

Based on a comprehensive analysis, on the supply side, attention should be paid to environmental regulations and their impact on supply volumes in the Guizhou region and the overall market during the month. On the demand side, the commissioning of new capacity in the thermal phosphoric acid industry will support demand for yellow phosphorus; however, it is expected that thermal phosphoric acid and the “three chemical” industries will primarily purchase yellow phosphorus on an as-needed basis this month. Regarding costs, taking Yunnan as an example, electricity prices are expected to decrease in August. With both positive and negative factors present in the yellow phosphorus market this month, and given the interplay between supply and demand, overall prices are expected to fluctuate within a relatively narrow range.

4. Analysis of the Impact on the Phosphorus-Based Flame Retardant Market

As the core raw material for phosphorus-based flame retardants, the price trend of yellow phosphorus directly affects the cost and pricing logic of downstream flame retardants. In July, the average monthly price of yellow phosphorus was 26,437 yuan per metric ton, down approximately 19% from June, which had multiple impacts on the phosphorus-based flame retardant market:

Cost pressures eased temporarily, but there was a time lag in price transmission. Phosphorus prices gradually declined from 28,500 yuan per metric ton at the beginning of the month to the 25,500–25,700 yuan per metric ton range, resulting in a significant decrease in raw material costs for phosphorus-based flame retardants (such as ammonium polyphosphate (APP), red phosphorus masterbatch, and organic phosphorus flame retardants). However, flame retardant manufacturers generally lag behind the raw material market in adjusting their prices—although yellow phosphorus prices corrected downward in July, they rebounded to 27,000–27,200 yuan per metric ton by month-end. Downstream flame retardant manufacturers, having just completed their price cuts, now face pressure from the rebound in raw material prices, compressing their window for price adjustments.

Potential disruptions exist on the supply side. According to market reports, the Guizhou region is currently facing environmental inspections, and local yellow phosphorus producers are expected to reduce output or suspend operations; industry output and capacity utilization rates have already declined month-over-month. If yellow phosphorus supply tightens further, it could drive prices to rebound again, thereby pushing up production costs for phosphorus-based flame retardants once more. Intermediates such as trichlorooxyphosphine are significantly affected by yellow phosphorus prices and environmental production restrictions, making them a key factor in cost volatility.

The demand side remains in the off-season. Downstream thermal phosphoric acid and trichlorophosphine industries are maintaining procurement at a level necessary to meet basic needs, while operating rates in end-user industries for flame retardants—such as modified plastics and cables—remain low, and buyers have limited acceptance of high-priced flame retardants. Even with falling raw material costs, flame retardant manufacturers still face the awkward situation of “raw material prices falling but orders not increasing.”

Overall Assessment: In the short term, yellow phosphorus prices are expected to find support around 27,000 yuan per metric ton. If environmental inspections in Guizhou are implemented, further price increases cannot be ruled out. Cost pressures for phosphorus-based flame retardant manufacturers will first ease and then intensify. Downstream users are advised to monitor their procurement timing, build moderate inventories during price correction windows, and simultaneously evaluate the long-term cost competitiveness of halogen-free flame retardant solutions.