US Phosphorus Pentachloride Market Struggles with Weak Demand and Supply Issues

The US Phosphorus Pentachloride market has sustained a downhill path as weak demand in the downstream lithium-ion manufacturing sector has crumbled the market. However, the prices of Phosphorus Pentachloride have held steady in August due to upward pressure from the upstream markets. The ongoing monsoon season has led to constraints in upstream phosphate rock supply, impacting the availability of yellow phosphorus. As a result, the manufacturers have raised Phosphorus Pentachloride prices. Typically, July sees a slowdown in industrial activities due to monsoon rains, which may dampen demand temporarily. However, with the current push in procurement, the demand is presumed to be sustained.

The majority of the Phosphorus Pentachloride comes from Germany in the US market. Meanwhile, Germany has been facing challenges with its economy once again. Sentiment among companies in Germany has deteriorated. In July, both the assessment of the current business climate and future expectations saw a significant decline. Demand for chemicals continued to decrease, and the order backlog is projected to be even lower than the previous month. No significant boost from international markets is anticipated either. Consequently, companies have scaled back production and are planning substantial staff reductions in the coming months. Capacity utilization dropped from 76.9% in April to 74.8% in July, compared to the long-term average of 82%. As a result, the arrival of Phosphorus Pentachloride in the US market has remained moderately low. Along with this, the price pressure on European Phosphorus Pentachloride manufacturers continues to rise.

The EV sector has lost momentum due to an excess supply of key raw materials, disappointing EV sales, and a stagnant energy storage industry. Exporting nations are struggling with low demand and oversupply in the Phosphorus Pentachloride market as well. Demand for Phosphorus Pentachloride has weakened in key markets, and increased supply from African nations, putting additional pressure on the market. Major Chinese producers have invested in vertically integrated mining projects.

Demand conditions have remained stagnant in the Phosphorus Pentachloride market, with procurement of new supplies slowing further due to high domestic inventory. Market activity in both Europe and North America has been subdued recently. The sellers active in both European and North American markets observed that these regions usually command a premium over seaborne Asian markets. In the U.S., electric vehicle (EV) sales grew by 11.3% year-over-year in the second quarter, reaching a record 330,463 units, with total sales 23% higher than in Q1. Despite a 6.3% decline in Tesla's sales volume, new products from manufacturers like General Motors contributed to the overall increase in EV sales. Tesla’s share of U.S. EV sales fell below 50% for the first time, settling at 49.7% in Q2.

As per the pricing intelligence team at ChemAnalyst database, the Phosphorus Pentachloride market is anticipated to showcase resilience in the H2 of 2024.