Indian manufacturers have been battling with soaring raw material prices since past few months for different commodities. Yellow Phosphorus, which is an essential raw material for several commodities, remained unavailable for spot buyers while scheduled cargoes also getting delayed due to production halts in China. Several downstream derivatives affected by these consistent hikes, one of the highly affected commodities include Phosphorus Trichloride, which has risen exponentially due to critical scarcity of raw materials.  As per ChemAnalyst data, an extreme hike in prices by around 24% was observed for Phosphorus Trichloride across Indian market within last 6 weeks.

The major reason behind these consistent hikes in price was production cuts for raw material Yellow Phosphorus in China. Since past couple of months, Yellow Phosphorus mining have been under strict control of Chinese government in compliance to the dual control policy in China. These regulatory measures were implemented after witnessing sudden rebound in global economy, which pressurised manufacturers to ramp up their production that intensified energy consumption of the country. To control this intensified energy consumption, government of China imposed production cuts on several facilities and even imposed temporary shutdowns on some domestic plants during September-October months. Due to these restrictions, Yellow Phosphorus output reduced by more than 50% for global market from China, pushing up prices of almost all downstream derivatives including Phosphorus Trichloride in the regional market.

Talking about the importance of Phosphorus Trichloride and Yellow Phosphorus in the global market, Phosphorus Trichloride is widely utilised product in agrochemical, textile, and plasticizers industries, while Yellow Phosphorus is the key raw material for several prime sectors. The impulse of these factors disturbed Indian market, as India is highly dependent upon China for imports of this key raw material.

As per ChemAnalyst analysis, Phosphorus Trichloride prices are expected to remain buoyant thus further sharp uptrend is expected in near term across global market. Reason behind these speculations are persistent halts on production of raw material in China coupled with high demand amid prolonged scarcity. However, these restrictions might show some ease in early Q1 2022, but prices are expected to take time to exhibit any significant decline in Indian market.