Asian Phosphoric Acid Market remains flat Amid Balanced Supply-Demand
Asian Phosphoric Acid Market remains flat Amid Balanced Supply-Demand

Asian Phosphoric Acid Market remains flat Amid Balanced Supply-Demand

  • 23-Jan-2025 9:00 PM
  • Journalist: Francis Stokes

As of mid-January, Phosphoric Acid prices in China and India have remained flat with minor variations. In China, prices rose modestly due to a tight supply of phosphorus yellow, influenced by maintenance shutdowns in production facilities. In India, prices stayed steady, supported by a balanced supply and demand situation. Government support for Diammonium Phosphate (DAP) with a special subsidy package is expected to benefit manufacturers, strengthening the sector’s outlook.

As of mid-week of Jan, the price of Phosphoric Acid exhibited a modest rise in China, influenced by the rising cost of its primary raw material, phosphorus yellow. The reduction in phosphorus yellow supply, driven by equipment maintenance at certain manufacturing facilities, created tighter market conditions. This constrained availability prompted an increase in raw material costs, which was reflected Phosphoric Acid pricing. Producers responded cautiously to the reduced supply, with reluctance to sell in bulk, further intensifying the upward pressure on Phosphoric Acid prices. Meanwhile, downstream buyers adopted a conservative approach, focusing on procuring smaller quantities to manage costs effectively.

Given the current market dynamics and the constrained availability of phosphorus yellow, Phosphoric Acid demand is expected to remain stable, while prices are anticipated to maintain a stable-to-upward trajectory in the near term as manufacturers adapt to ongoing supply-side limitations and steady downstream requirements. This week, the Phosphoric Acid market remained stable, with the supply and demand balance showing no significant fluctuations. Downstream buyers continued to engage in on-demand procurement, leading to a light market trading atmosphere. As of this week, market supply levels were steady, with no notable changes observed in either supply or demand dynamics.

In the Indian market the price of the Phosphoric Acid witnessed stability as of mid-week of Jan. This stability in the Phosphoric Acid price is majorly attributed to the balanced demand and the supply ratio from the market participants in the inventories managements. As per the data available, it is expected that fertiliser companies to post strong earnings growth in Q3, supported by volume growth in the urea segment and cost efficiencies in producing Phosphoric Acid for complex fertiliser manufacturers. Agrochemical companies are projected to achieve high single-digit volume growth, though lower than earlier expectations due to pest-free crops, favorable weather conditions, delayed seasons, and increased sales returns from the Kharif crop.

The Indian government has approved a one-time subsidy package of Rs 3,850 crore for DAP in CY25, including an additional Rs 3,500 per tonne subsidy. This support will benefit importers, standalone producers, and backward-integrated manufacturers, with Paradeep identified as the primary beneficiary. Improved Phosphoric Acid production economics and government measures are expected to strengthen the sector's outlook.

As per the ChemAnalyst anticipation, Phosphoric Acid prices are expected to follow a bullish trajectory due to stable demand and ongoing supply-side constraints. In China, tight phosphorus yellow supply, driven by production maintenance, will likely continue pushing Phosphoric Acid prices upward. In India, prices are anticipated to remain stable, supported by balanced market conditions and the Indian government’s special subsidy package for DAP. This government support is set to improve production economics, strengthening the sector and fostering continued growth for manufacturers in both markets. Phosphoric Acid production, raw material costs, and market dynamics will play key roles in shaping future trends.

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