H1 2026 Phosphoric Acid Market Review and H2 Outlook
In the first half of 2026, China’s phosphoric acid market trended upward with overall volatility. Both purified wet-process P.A. and hot-process P.A. showed price uptrend, mainly driven by high raw material costs and resilient new energy demand. Meanwhile, the two processing routes presented divergent market performances and operating rates, with June marking a critical turning point for annual price movements.
Wet-process P.A.
The market maintained a tight supply pattern and strong price momentum throughout H1. From Jan. to Feb., rigid high costs of sulfur, phosphate rock and electr. power, coupled with facilities maintenance and production cuts, which squeezed market supply. The iron phosphate production for new energy industry maintained an operation rate of over 70%, providing solid demand support and offsetting sluggish transactions in traditional downstream sectors, keeping market prices steady and firm. From Mar. to May, market fundamentals continued to strengthen. Sustained high sulfur prices and tight raw material supplies restricted capacity release, while the operation rate of iron phosphate and downstream lithium iron phosphate industries rose to around 80%. Further more, boosted by spring fertilization restocking, P.A. market prices rose sharply on multiple occasions. Despite weakened downstream affordability and growing market caution, solid cost support and structural supply-demand gaps prevented any substantial price decline. In June, market prices hit the yearly peak. Sulfur prices broke through CNY8,000/t, significantly lifting production costs. Coupled with slow facilities resumption and tight spot supply, robust rigid demand from the new energy sector kept the market at a high level. Although sulfur prices retreated slightly in late June, they remained at a relatively high level, sustaining manufacturers’ price-supporting sentiment. The price of wet-process P.A. surged from CNY7,144/t to CNY12,647/t in H1, a year-to-date increase of approximately 77%.
Hot-process P.A.
The market operated at high volatility with a strong performance earlier and weakened later in H1. From Jan. to May, supported by high yellow phosphorus costs and alternative demand amid tight wet-process P.A. supply, as well as new energy orders offsetting sluggish traditional seasonal demand, factories operation rates climbed steadily and exceeded 60% in May. Its price rose from CNY7,015/t to CNY11,657/t (+66%). Market fundamentals loosened in June. Falling yellow phosphorus prices, sluggish traditional downstream demand and accumulated inventories weakened alternative terminal demand. While official offers remained firm, actual transaction prices declined, putting overall market prices under pressure.
The two production routes showed obvious divergence in operation rates. Restrained by high sulfur costs, wet-process P.A. producers actively reduced loads to control costs, with the overall operation rate staying below 60% and declining continuously after April. In contrast, improved profitability drove steady capacity expansion and rising operation rates for hot-process P.A., driving continuous adjustments to the industry supply structure.
The market logic will shift from cost-driven to supply-demand rebalancing in H2 2026, with overall prices expected to correct downward. Wet-process P.A. is expected to drop to CNY10,500–11,500/t and hot-process P.A. would go down to CNY9,000–10,000/t respectively. Declining sulfur prices will weaken the cost support for wet-process P.A., while discounted shipments of hot-process products will further limit the wet one’s upside potential, widening the price gap between the two products. Rigid new energy demand will underpin market bottom prices, yet weak traditional demand and intensifying industry competition will keep the market range-bound at high levels. Key indicators include sulfur price trend, iron phosphate operation rate and actual release progress of new production capacity.
