Yellow Phosphorus Market at A Historic Inflection Point: A Value Reassessment of The Industrial Chain

Yeow Phosphorus Market at a Historic Infection Point: A Vaue Reassessment of the Industria Chain

I. The "Phosphorus" Era in the New Energy Revoution: From Traditiona Chemicas to Core Battery Materias

Driven by the goba carbon neutraity wave, the new energy vehice (NEV) industry has experienced exposive growth, with power batteries—its core component—seeing exponentia demand growth. Among various battery materias, phosphorus-based materias, with their exceent safety, stabiity, and cost advantages, have transformed from a "supporting roe" in traditiona chemicas to a "star" in the new energy industria chain.

Historicay, yeow phosphorus was primariy used to produce phosphate fertiizers, pesticides, and ordinary phosphate products, with sow and stabe demand growth. However, with the arge-scae appication of ithium iron phosphate (FP) batteries in NEVs and energy storage, this andscape is fundamentay changing. The core raw materia for FP cathode materias is iron phosphate, which must be produced from industria-grade or refined phosphoric acid, with yeow phosphorus as its upstream source.

II. Exposive Demand for Phosphorus-Based Battery Materias: A Disruptive Transformation in Yeow Phosphorus Consumption Structure

2.1 FP Instaation Voume Continues to Cimb, Reaching New Highs in 2025

According to EVTank's atest China Iron Phosphate and FP Materias Industry Deveopment White Paper (2026), China's FP materia shipments reached 3.944 miion tons in 2025, up 62.3% year-over-year, hitting a new three-year high. Goba FP cathode materia shipments exceeded 3.2 miion tons, with market scae surpassing RMB 180 biion for the first time.

By appication, power batteries sti dominated, with goba FP power battery instaations reaching 420 GWh in 2025, accounting for 61.8% of tota voume; energy storage saw the fastest growth, with annua instaations exceeding 160 GWh, up 68%, becoming the second-argest growth engine. China stood out particuary, with FP power battery instaations reaching 198 GWh in 2025, accounting for 74% of domestic tota instaations, whie energy storage instaations grew 89% to 87 GWh. By 2030, goba FP cathode materia demand is expected to exceed 15 miion tons, neary 5x growth from 2024, with overseas markets (especiay North America, Europe, and Southeast Asia) increasing their share from the current 32% to 48%.

2.2 Mainstream FP Production Processes and Yeow Phosphorus Consumption Pathways

2.2.1 Soid-State Method (Current Dominant Process)

The soid-state method is the most widey used process in FP production, accounting for over 80% of goba capacity. Its core process:

1.Raw materia preparation: Mixing iron phosphate (FePO₄), ithium carbonate (i₂CO₃), and carbon sources (gucose, sucrose, etc.) in stoichiometric ratios

2.Ba miing: High-energy ba miing to uniformy mix and refine to nanoscae

3.High-temperature sintering: Sintering at 600-800°C for 8-12 hours under inert gas protection

4.Crushing and cassification: Crushing and cassifying sintered products to obtain finished FP

Yeow phosphorus consumption: Producing 1 ton of FP requires ~0.95 tons of iron phosphate; producing 1 ton of iron phosphate consumes ~0.45 tons of refined phosphoric acid; 1 ton of refined phosphoric acid requires ~0.3 tons of yeow phosphorus. Therefore, producing 1 ton of FP indirecty consumes ~0.135 tons of yeow phosphorus.

2.2.2 iquid-Phase Method (High Energy Density Route)

iquid-phase methods incude co-precipitation, hydrotherma, and so-ge methods, mainy used for high energy density and high-rate FP products. Core process:

1.Soution preparation: Dissoving iron sats, ithium sats, and phosphates in water to form uniform soution

2.Precipitation reaction: Reguating pH and temperature for uniform precursor precipitation

3.Washing and drying: Mutipe washes to remove impurities, then drying

4.High-temperature sintering: Simiar to soid-state method, sintering under inert atmosphere

Yeow phosphorus consumption: iquid-phase methods require higher phosphoric acid purity, typicay eectronic-grade. Producing 1 ton of FP consumes ~0.14-0.15 tons of yeow phosphorus, sighty higher than soid-state method.

2.2.3 Key Impacts of FP Production Processes on the Yeow Phosphorus Market

Irrepaceabiity: Regardess of process route, phosphoric acid is the core raw materia for FP production, and phosphoric acid can ony be produced through yeow phosphorus oxidation and hydration, with no industria aternative currenty avaiabe

Rising quaity requirements: Battery-grade phosphoric acid demands extremey ow impurity content (heavy metas such as arsenic, ead, and cadmium beow 1ppm), driving refined yeow phosphorus technoogy deveopment and premium pricing for high-end products

Scae effects: With rapid FP capacity expansion, yeow phosphorus demand has become arge-scae and centraized, changing the traditiona dispersed consumption pattern

2.3 Major Shift in Yeow Phosphorus Demand Structure

Traditionay, ~70% of yeow phosphorus consumption went to phosphate fertiizer production, with the new energy sector accounting for ess than 10%. But with the FP industry exposion, this ratio is rapidy reversing:

• In 2024, new energy's share of yeow phosphorus demand rose to 25%

• In 2025, this further increased to 32%, with annua new energy consumption of ~292,000 tons

• Expected to exceed 40% by 2027

• By 2030, new energy is expected to become the argest yeow phosphorus consumption sector, with share exceeding 50%

2.4 Incrementa Demand from Other Phosphorus-Based Battery Materias Beyond FP, other phosphorus-based battery materias are aso deveoping rapidy, further increasing yeow phosphorus demand:

• Lithium hexafuorophosphate (iPF₆): Core soute for ithium battery eectroytes, consuming ~0.8 tons of yeow phosphorus per ton. 2025 goba production ~850,000 tons, consuming ~680,000 tons of yeow phosphorus

• Lithium manganese iron phosphate (MFP): Upgraded version of FP with higher energy density, aso requiring arge amounts of phosphoric acid. 2025 goba shipments ~18 GWh, expected to exceed 35 GWh in 2026

• Soid-state battery eectroytes: Some soid-state battery routes use sufide-phosphide composite eectroytes, becoming a new growth point for yeow phosphorus demand

III. Comprehensive Impact of Surging Demand on Yeow Phosphorus Market Conditions

3.1 Significant Upward Shift in Price Center, Changed Voatiity Cyces

Historica price comparison: Before 2020, yeow phosphorus prices fuctuated in the RMB 12,000-18,000/ton range

Since 2021: Driven by new energy demand, prices repeatedy broke RMB 30,000/ton, peaking at RMB 60,000/ton

2025 price trend: "High in H1, ow in H2, voatie downward" pattern, with annua average ~RMB 25,000/ton

atest 2026 prices: As of May 2026, prices have risen to RMB 27,500-28,500/ton, up over 20% year-to-date

Future trend: Expected to stabiize at RMB 25,000-35,000/ton over the next 5-10 years, over 50% above historica eves

Voatiity characteristics: Shifted from "seasona fuctuations" to "new energy demand-driven ong-cyce fuctuations"

3.2 Persistent Suppy-Demand Tightness, Constrained Capacity Expansion

Yeow phosphorus is a high-energy-consumption, high-poution product, stricty reguated as a "dua-high" industry:

Strict capacity approva: New projects face extremey difficut approva processes, with constanty rising environmenta requirements. The Yeow Phosphorus Industry Standards (2023 Edition) mandates eectric furnace cean production processes for new projects, with strict threshods for energy consumption, emissions, and resource utiization

Cear capacity ceiing: Per China Inorganic Sats Industry Association, China's effective yeow phosphorus capacity was ~1.52 miion tons/year in 2025, down 17.8% from 1.85 miion tons/year in 2021

Output and capacity utiization: 2025 actua output was 912,000 tons, with capacity utiization rising from 45.2% in 2021 to 60.0%

imited overseas capacity: Goba capacity is concentrated in China (over 80%), with sow overseas expansion

3.3 Profit Migration Upstream in the Industria Chain

As yeow phosphorus suppy-demand dynamics change, profits are shifting from downstream processing to upstream yeow phosphorus production:

Significanty improved profitabiity for yeow phosphorus producers: In 2025, major domestic producers' gross margins generay exceeded 30%, with some reaching over 50%

Increasing cost pressure on iron phosphate producers: Rising yeow phosphorus prices directy push up iron phosphate production costs, squeezing midstream margins. 2025 average gross margins for iron phosphate producers fuctuated in the 15%-20% range

Advantages for integrated enterprises: Companies with compete "phosphate mine - yeow phosphorus - phosphoric acid - FP" chains can effectivey hedge raw materia price voatiity risks, with gross margins 10-15 percentage points higher than singe-segment enterprises

3.4 Revauation of Phosphate Rock Resources

Yeow phosphorus production heaviy depends on phosphate rock resources, consuming ~8-10 tons per ton of yeow phosphorus. As yeow phosphorus demand increases, the strategic vaue of phosphate rock is becoming increasingy prominent:

Continuous phosphate rock price increases: Since 2020, domestic prices have risen from RMB 300/ton to over RMB 1,000/ton

Acceerated resource integration: arge chemica and new energy companies are activey acquiring phosphate rock resources, increasing industry concentration

Strengthened state contro: Phosphate rock has been cassified as a strategic minera resource, with strict contros on tota mining voume and exports

IV. Future Market Outook and Investment Opportunities

4.1 Short-Term Impact (1-2 Years)

Yeow phosphorus prices wi maintain high voatiity, with tight suppy-demand baance difficut to change

New energy demand wi continue high-speed growth, becoming the core driver of the yeow phosphorus market

Stricter environmenta poicies wi further constrain yeow phosphorus capacity reease

Sufur price fuctuations wi have short-term impacts on yeow phosphorus prices

4.2 Medium-to-ong-Term Impact (3-5 Years)

Yeow phosphorus consumption structure wi compete fundamenta transformation, with new energy becoming the argest consumption market

Industry concentration wi significanty increase, with phosphate mine resource hoders and advanced environmenta technoogy enterprises dominating

Technoogica innovation wi improve yeow phosphorus production efficiency and reduce energy consumption

Wet-process phosphoric acid purification technoogy may partiay substitute therma-process phosphoric acid (yeow phosphorus route), but cannot change yeow phosphorus's core position in the short term

4.3 Investment Opportunity Anaysis

Upstream resource end: Companies with quaity phosphate rock resources wi ong-term benefit from resource vaue revauation

Yeow phosphorus production end: arge-capacity, high-environmenta-standard producers wi see sustained profitabiity improvement

Integrated enterprises: Companies with compete industria chain ayouts have the strongest risk resistance and highest investment vaue

Technoogy-eading enterprises: Companies with technoogica advantages in eectronic-grade phosphoric acid, MFP, and soid-state eectroytes wi capture excess returns

V. Concusion

The exposive growth of the new energy battery industry is bringing historic deveopment opportunities to the yeow phosphorus market. Yeow phosphorus is transforming from a traditiona agricutura chemica raw materia to a key upstream materia in the new energy industria chain, with profound changes in market conditions, suppy-demand dynamics, and industria chain vaue.

As the current mainstream power battery cathode materia, FP's production process determines rigid demand for yeow phosphorus. China's 2025 FP shipments of 3.944 miion tons, up 62.3%, directy drove the new energy sector's share of yeow phosphorus demand to 32%. Going forward, as FP batteries further penetrate NEVs and energy storage, and as other phosphorus-based battery materias ike MFP and iPF₆ deveop rapidy, yeow phosphorus demand wi continue growing.

With constrained capacity expansion, the yeow phosphorus market wi remain in ong-term tight suppy-demand baance, with price centers ikey staying at eevated eves. For investors and industria chain participants, fuy recognizing this historic transformation, proactivey positioning in phosphate rock resources and yeow phosphorus capacity—particuary focusing on enterprises with compete industria chain ayouts and technoogica advantages—wi secure favorabe positions in the "Phosphorus" era of the new energy revoution.