Published September 2015
Phosphoric acid (H3PO4) is the leading inorganic acid produced and consumed in terms of production value and it is the second largest in terms of volume—after sulfuric acid. By far its greatest use is in the manufacture of phosphate chemicals consumed primarily as carriers of phosphorus values in fertilizers. Use in the production of animal feeds is of secondary importance. Phosphoric acid is also used in the manufacture of phosphate chemicals for use in water treatment and detergent builders, dentifrices, fire control chemicals, and a host of smaller markets. Consumption of phosphoric acid for its acid properties is relatively small (e.g., treatment of metal surfaces, beverage acidulation). Phosphoric acid is the leading intermediate product or processing step between phosphate rock and the end markets for phosphorus in phosphate form.
Overall and on a global level, the phosphoric acid market is expected to grow annually by about 2% per year. The supply/demand balance is demand driven. If all the announced projects materialize—especially the large ones by OPC in Morocco and Ma’aden in Saudi Arabia, as well as those by Vale in Brazil and by Sunkar in Kazakhstan—incremental capacity additions will be slightly in excess of additional demand. This will lead to an overcapacity situation, which is expected to depress operating rates. Global trade currently accounts for about 11% of demand. This is expected to decline slightly as emerging regions are heavily investing in downstream phosphate fertilizer production units. As a result, it is expected that older phosphoric acid production units in regions without indigenous phosphate rock reserves will come under additional pressure and will eventually be forced to close.
The following pie chart shows world consumption of phosphoric acid:
The primary market for phosphoric acid is the production of the phosphate fertilizer products ammonium phosphates and triple superphosphate. Fertilizer production accounts for an estimated 84% of the global market for phosphoric acid and animal feed for about 6%. The remainder is consumed in a variety of industrial applications.
Fueled by the rapid growth in the Chinese economy and the growing need for phosphate fertilizers, China has become the world’s largest producer and consumer of phosphoric acid. In 2015, production and consumption in China accounted for about 39% of the world total. From 2005 to 2015, phosphoric acid capacity in China grew at an average annual rate of almost 8%. Phosphoric acid production and consumption grew at an average annual rate of 8.5% during the same period. It is projected that phosphoric acid production and consumption in China will experience a moderate growth rate of about 1.8% per year between 2015 and 2020.
While phosphoric acid markets in both Western and Central Europe are fairly mature, capacity is expected to significantly expand in Eastern Europe. With phosphate reserves being exploited in Kazakhstan and Turkmenistan, new phosphoric acid plants are expected to be built. Several phosphoric acid plants have also been modernized and/or expanded in Russia.
Indian production of phosphoric acid is estimated to correspond to around 3.6% of global production, with Indian imports accounting for around 44% of global trade in 2015. Southwest Asian consumption will increase by about 2.4% per year during the next five years.
In Southeast and Northeast Asia, Indonesia is the major producer of the region, accounting for about 36% of phosphoric acid production in 2015. Indonesia has significantly increased its capacity in the past five years and imports have been increasing since 2011.
Since 2011, Japanese production and consumption of phosphoric acid has been decreasing as a result of the declining agrichemical market, while the industrial phosphoric acid market remains unchanged.
In Latin America, the first half of 2015 saw a reduction in demand for phosphate fertilizers as a result of lower food prices. In the second half, demand is expected to rise following increases in soybean prices.
The phosphoric acid market is driven by industrial applications, which are expected to grow by almost 5% per year through the forecast period, followed by animal feed and fertilizers at 3.4% and 1.7% per year, respectively. On a volume basis, production of DAP (diammonium phosphate) has the largest influence on global phosphoric acid growth rates, accounting for 35% of global consumption, and is projected to grow at about 2% per year through 2020.