Industry Insight: A Stable Market with Diversifying Growth - An Analysis of Phosphoric Acid (CAS 7664-38-2)

Industry Insight: A Stable Market with Diversifying Growth - An Analysis of Phosphoric Acid (CAS 7664-38-2)

A Press Release

FOR IMMEDIATE RELEASE

December 31, 2025 — The global phosphoric acid (CAS 7664-38-2) industry, a linchpin of modern agriculture and manufacturing, is navigating a period of stable growth underpinned by robust demand and evolving applications. Traditionally dominated by its fertilizer-grade variant, the market is witnessing a dynamic shift as high-purity food-grade and specialized industrial grades carve out significant growth trajectories. This evolution is driven by global food security imperatives, a booming processed food and beverage sector, and the surprising emergence of the electric vehicle (EV) battery supply chain.

Market Overview and Capacity Landscape

The phosphoric acid market is a multi-billion dollar industry with a solid foundation and positive future prospects. Valued at approximately USD 40.79 billion in 2025, the market is projected to grow steadily, reaching an estimated USD 50.71 billion by 2035. This growth is supported by substantial and expanding global production capacity.

According to industry data, the worldwide production capacity for phosphoric acid stood at 61.6 million metric tons (expressed as P₂O₅) in 2024 and is forecast to rise to 70.25 million metric tons by 2029. The Asia-Pacific region is the undisputed leader, accounting for over 55% of global consumption, with China being a pivotal producer and consumer. This concentration is facilitated by the dominance of the wet-process production method, which supplies over 90% of global tonnage due to its cost-effectiveness for large-scale fertilizer production.

A significant industry trend is the ongoing technology shift from thermal to wet-process production, particularly in China, due to its efficiency and lower environmental footprint. Furthermore, the industry is moderately concentrated, with the top five global producers controlling roughly 55% of the market capacity.

Grade-Specific Dynamics and Demand Drivers

The demand and growth prospects for phosphoric acid differ markedly between its primary grades, reflecting their distinct end-uses.

1. Fertilizer-Grade: The Volume Backbone
Fertilizer-grade phosphoric acid remains the industry's volume driver, constituting nearly 80% of global consumption. Its demand is directly tied to global agricultural needs and food security programs. Government subsidies and initiatives aimed at boosting crop yields, particularly in Asia-Pacific and Africa, provide a stable demand floor. However, this segment faces headwinds from environmental regulations concerning by-product disposal and price volatility of key raw material, phosphate rock. Major global producers like Mosaic, OCP, Nutrien, and PhosAgro dominate this space.

2. Food-Grade: The High-Growth Niche
The food-grade phosphoric acid segment, valued at an estimated USD 2.5 billion, is experiencing faster growth. Its primary role as an acidulant and flavor enhancer in carbonated soft drinks (like colas) and ready-to-drink beverages fuels this expansion. The processed food sector's growth, driven by urbanization, further bolsters demand for its use in preservation and pH control. Key players include Innophos, Prayon, and various specialized Chinese producers. This segment commands premium prices due to stringent purity requirements set by bodies like the U.S. FDA and European EFSA.

3. Industrial-Grade: Diversifying Beyond Tradition
Industrial-grade phosphoric acid (commonly at 85% concentration) serves a wide array of applications, including metal surface treatment, water treatment, and as a chemical intermediate. It is a mature but stable market, anticipated to grow at a steady pace. Notably, a powerful new demand driver has emerged: the lithium iron phosphate (LiFePO₄) battery sector for electric vehicles. The production of battery precursors like industrial-grade phosphoric acid and industrial-grade monoammonium phosphate (IMA) is redirecting a significant portion of phosphate resources. In 2025, it was estimated that 35% of China's industrial-grade IMA capacity was being absorbed by the battery industry, creating a new and competitive demand channel that is reshaping traditional supply dynamics.

Challenges and Strategic Outlook

The industry's path forward is not without obstacles. Key challenges include:

• Resource Constraints: Geopolitically concentrated and depleting high-grade phosphate rock reserves pose a long-term strategic risk.

• Environmental Scrutiny: Strict "zero liquid discharge" rules and the management of phosphogypsum waste stacks increase compliance costs, particularly for wet-process plants.

• Trade Policy Volatility: Export quotas and tariffs, as seen in China and Morocco, can create regional supply tightness and price shocks.

In response, leading companies are strategically pivoting. The focus is shifting from pure volume to value-added diversification. Investments are flowing into:

• High-Purity Production: Expanding capacities for food-grade and ultra-pure electronic-grade phosphoric acid for the semiconductor industry.

• Circular Economy Models: Developing technologies for phosphate recovery from waste streams and recycling phosphorus from spent EV batteries.

• Vertical Integration: Securing phosphate rock resources and building integrated production chains to mitigate raw material volatility.

Conclusion
The phosphoric acid industry stands at a crossroads between its traditional agricultural identity and a future shaped by high-tech and consumer goods. While fertilizer demand provides a stable core, the most dynamic growth and value creation are occurring in the food-grade and battery-material segments. Success for market participants will increasingly depend on their ability to navigate regulatory landscapes, invest in purification and sustainable technologies, and strategically align their product portfolios with these evolving, high-value demand centers.