Tom: Hi, everyone. Welcome to another Argus Media Podcast. I'm Tom Hampson. I'm the phosphates editor, based in London. And I'm joined today by Yohanna Jing, who is an analyst covering the Chinese market, based in Beijing, and has agreed to talk to me all about purified phosphoric acid. Hi, Yohanna. Thanks very much for joining.
Yohanna: Hello. Thanks, Tom. I think some subscribers might have already noticed that Argus launched a new Chinese purified phosphoric acid export prices back in April, in the phosphate weekly report. And today, we are going to dive into what exactly purified phosphoric acid is, and why we decide to start publishing the new prices. If this topic sparks you interest after our chat, and you want to get more information, you can grab our purified phosphoric acid web paper right from this podcast page, and there is a link for you to download the white paper.
Tom: So, as very short background on the new prices, so, we're assessing prices for 85% H3PO4 purified phosphoric acid. So, we'll call that PPA in this podcast, and we're assessing separate prices, both for industrial grades and food grades. So, Yohanna, what exactly is PPA? How is it made?
Yohanna: Yeah, I think when we talk about PPA, we are specifically talking about purified phosphoric acid made by the wet process. The wet process itself involves using sulfuric acid to break down phosphate rock and create phosphoric acid. While the thermal process is totally different. It use high heat to refine phosphate rock, with coking coal and silica, to yield yellow phosphorus. Then phosphate producers oxidize and hydrate that, to make phosphoric acid. And the product we are looking at typically contains about 85% H3PO4, which is roughly equivalent to 61% to 62% P2O5. And as a comparison, fertilizer-grade phosphoric acid typically contains 52% to 54% P2O5. If you make phosphoric acid using the thermal process, it's pretty much ready to go for industrial use right away. But if you are using the wet process, you have to make through the purification to achieve the quality standards for the industrial application. The problem is the thermal process creates a lot of dust and toxic gases, and is also highly energy intensive. So that's why the wet process is gradually taking over in China's phosphoric acid sector. It use way less energy, and it's generally better for the environment.
Tom: Interesting. So, from a production standpoint, are PPA prices mostly driven by trends in prices of phosphate rock, sulfur, sulfuric acid?
Yohanna: Yeah, pretty much. But Chinese suppliers also keep an eye on thermal process phosphoric acid prices, and adjust accordingly. Like, if thermal process acid prices drop, maybe because of lower energy costs, they will usually bring down their wet process PPA prices too, if possible.
Tom: I see. You mentioned wet process phosphoric acid is the main way China makes phosphoric acid now, because of it being more energy efficient, etc. What else is really driving PPA's growth in China?
Yohanna: I think, to better understand this question, we need to explain what the main uses for PPA are. PPA that comes from the wet process gets sorted into a few different types, like industrial, food, and electronic grades. It just depends on how pure it is. The purer it gets, going from the industrial to electronic grade, the more complex it is to process, but you also get a lot more value out of it. Food-grade PPA is mostly used as an ingredient in making sugar, or as a food additive. And the electronic-grade PPA is primarily utilized in the specialized process of chip etching and cleaning within the semiconductor industry. Well, for industrial grade PPA, it serves as a crucial raw material in the production of cathode active material in lithium iron phosphate, or LFP, in the repeatedly expanding new energy vehicle battery market.
Tom: Yes, that's quite range of uses. So, it's, food grade's needed for fizzy drinks, and then other grades of, in our phones and our electric cars, depending on the grade.
Yohanna: Yeah, absolutely. So, going back to the question about what is really driving PPA's growth in China, my answer is mainly because of the rapid expansion of the electronic vehicle industry in recent years. This has fueled a big increase in demand for industrial-grade PPA, which is used in LFP batteries. EVs are becoming more and more popular in China in recent years, thanks to both government policy support and changing consumer preference. LFP batteries, with their higher thermal stability and longer lifespans, are gradually becoming the dominant choices for EVs. This surge has not only boosted demand for industrial-grade PPA, but also increased the need for technical MAP, which is T-MAP. Both of these products can be produced through different technical routes, to become raw materials for LFP manufacturing.
Tom: Thank you very much for the explanation. I imagine our audience might have a few questions on their mind. We know that China's phosphate fertilizer exports might be pretty limited this year. So, has that impacted phosphoric acid export?
Yohanna: Currently, phosphoric acid export haven't seen any impact. Suppliers are still moving forward with exporting various concentrations of phosphoric acid, including the fertilizer-grade acid.
Tom: What about prices in the export market right now?
Yohanna: Yeah, right now, I think the export prices are stable to soft. Because downstream demand isn't very good, producers have lowered their export offers weeks ago. However, the worry that food supplies drops will just make buyers hold back even more, leading to less deals. So, for this week, producers are still holding their prices unchanged.
Tom: Very interesting. Thank you so much, Yohanna. That was really interesting. And thank you, everyone, for listening to the podcast. Just a reminder that if you want to get more information on the topic, please download the white paper through the link in the podcast episode page. Until next time, thank you very much and goodbye.
Yohanna: Thank you. Bye-bye.
