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Phosphorus ore prices rose more than 200% in the past two years
China's phosphate resources are limited, with the current mining period estimated to be less than 20 years. Despite total reserves of 13.1 billion tons, after accounting for design and mining losses, only 2.1 billion tons remain as industrial reserves, of which high-grade ore is just 1.1 billion tons. Under the current mining model, China’s guaranteed phosphate supply is not sufficient to last beyond two decades. This scarcity has led to a sharp increase in phosphate ore prices—rising over 200% in the past two years.
The combination of mineral phosphorus and phosphorus has become a key trend in yellow phosphorus production. With phosphate resources becoming more constrained, the importance of phosphorus ore in the production process has grown significantly. Additionally, power shortages have forced some yellow phosphorus plants to halt operations. In the first half of this year, Yunnan implemented strict power rationing measures for yellow phosphorus producers, highlighting the critical role of stable energy supply in maintaining production continuity.
To mitigate risks from raw material shortages and energy instability, large-scale yellow phosphorus producers have started purchasing phosphate ore and building their own power plants. This strategy helps ensure a steady supply chain and reduces dependency on external factors.
Refinement is increasingly seen as the future direction of the phosphorus chemical industry. While low-value products like sodium pentaoxide have reached market saturation, export has become a necessary channel to absorb excess capacity. On the other hand, high-value-added products such as toothpaste-grade calcium hydrogen phosphate, food-grade, and electronic-grade phosphoric acid remain in short supply both domestically and internationally. These fine phosphorus chemicals represent the next major growth area for the industry.
In the fertilizer sector, overcapacity in diammonium phosphate (DAP) production is a growing concern. With new domestic DAP capacity expected to reach around 5 million tons in the next two years, it will surpass the current annual import volume of 3 million tons. This surplus is likely to lead to intense market competition. Only those manufacturers that integrate acid or mineral fertilizers into their production processes will be able to maintain a competitive edge in the evolving landscape.