In July, the operating rate of yellow phosphorus enterprises in China has dropped sharply and the product price is rising significantly due to the supervision and investigation of the environmental protection policies.

On July 3, CCTV exposed that yellow phosphorus in Yunnan and Guizhou provinces of China have polluted the air and water. As many yellow phosphorus manufacturers are distributed in the middle and upper reaches of Yangtze river, and the protection efforts for Yangtze river are expected to continue to increase, therefore, the unqualified enterprises may shutdown and the prices of yellow phosphorus and the downstream products are expected to rise continuously.

The yellow phosphorus production areas in China are concentrated in Yunnan, Sichuan, Guizhou and Hubei provinces, among which yunguichuan area accounts for more than 90% of the total output. As the many enterprises stopped production in the area, the supply may be tightened and the whole industry will be affected.

Yellow phosphorus is mainly used for production of phosphoric acid, phosphate, red phosphorus, phosphorus trichloride, phosphorus pentasulfide,etc, which are widely used in the production of synthetic detergent, pesticides, national defense and military industry and other industries. Driven by the rising price of yellow phosphorus, the prices of the organophosphorus herbicides, and organophosphorus insecticides are also soaring.

Until July 22, the mainstream price of yellow phosphorus in China is about 25,000-26,000 Yuan/ton. With the strengthening environmental protection inspection, it is expected that the operating rate of the yellow phosphorus will be kept at a low level while market price be kept at high level in the short term.

Buyers could pay attention to the price trend of the standardized yellow phosphorus suppliers in China, such as Chengxing Group, which has the yellow phosphorus production capacity of 180,000MT, Xingfa Group, which has the production of 140,000MT and Yuntianhua Group, which mined 950,000MT yellow phosphorus ore in 2018.