The rapid development of the new energy field has greatly increased the demand for lithium iron phosphate. At the same time, its upstream phosphoric acid market is also rising. The wet-process purified phosphoric acid (PPA) process has sprung up relying on cost advantages, and its production capacity has been greatly released, but this has also put pressure on the market. The author believes that with the acceleration of PPA production capacity layout, the head effect will be further highlighted, and a new market ecology will be formed.
The main reasons for this situation are as follows. First, the cost advantage of PPA is prominent. Due to the high energy consumption and cost of thermal phosphoric acid, its market share has been gradually squeezed by PPA with lower energy consumption and more cost advantages in recent years. In addition, driven by the new energy vehicle market in recent years, PPA has been widely used in the production of lithium iron phosphate batteries, and the demand has increased steadily. Although the fineness of thermal phosphoric acid is higher, in terms of cost, downstream enterprises tend to choose PPA whose process is slightly different from that of thermal phosphoric acid. With the continuous release of PPA production capacity, it has been evenly divided with the thermal phosphoric acid process. At the same time, thermal phosphoric acid enterprises are affected by the market, and the operating rate and output are lower than that of PPA. At present, the supply of PPA in the market has exceeded that of thermal phosphoric acid.
Second, the production capacity of PPA has been greatly released. Entering the third quarter, the 400,000-ton/year PPA project of Guiyang Kailin Chemical Fertilizer Co., Ltd. was officially put into operation and produced qualified products. According to statistics, the domestic PPA design annual production capacity is about 3 million tons per year, of which Guizhou Phosphate Group has an overall PPA production capacity of 2 million tons per year, accounting for about 68% of the national production capacity and more than 20% of the world's share. With the concentrated launch of new PPA production capacity in 2023, the supply of refined acid market is sufficient, prices and profits are gradually being compressed, and new production capacity may be delayed. In the next 5 years, most of the planned production capacity in the phosphoric acid industry will be PPA, and the contradiction between supply and demand will increase by then.
Third, the PPA market is fiercely fought. With the rapid expansion of lithium iron phosphate production capacity, its raw material phosphoric acid market has been greatly affected. Before 2023, the production of iron phosphate will mainly use PPA, and a small number of enterprises will use thermal phosphoric acid. However, since the second half of 2023, with the rapid expansion of iron phosphate production capacity and the lower than expected demand, the profit of iron phosphate has been close to the cost line, forcing iron phosphate manufacturers to reduce production costs to increase or maintain product profits. In this context, some iron phosphate manufacturers began to test the use of crude acid to produce iron phosphate. Due to the gradual increase in the use of crude acid by iron phosphate enterprises, some phosphoric acid production capacity will not be able to enter the new energy market, and the overcapacity will be further aggravated. In addition, as of the end of 2023, the production capacity of iron phosphate and lithium iron phosphate under construction and proposed will both exceed 12 million tons per year. It is expected that 2 million tons of new production capacity will be put into operation this year, but so far this year, the production capacity of iron phosphate will be less than 500,000 tons. The production progress has slowed down significantly, which in turn has intensified the pressure on the raw material phosphoric acid market.
In addition, whether PPA by-product phosphogypsum can be recycled will also restrict the development of the industry. Every ton of wet-process phosphoric acid produces 4.5 tons of phosphogypsum slag, which is extremely harmful to the environment. Part of the by-product phosphogypsum is used in cement retarder, gypsum board, construction gypsum, and road construction, but most of it is still disposed in the form of stacking.
To sum up, the lack of supporting power in the downstream new energy industry of PPA has emerged, and the PPA industry will eventually survive the fittest. It is expected that the launch of new PPA production capacity will change from strong to weak in the next few years. Or will gradually withdraw from the production sequence. (Shi Xuan)
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