According to CCM’s statistics, market price of yellow phosphorus slumped in
China in 2015. The average price dropped from USD2,365/t (RMB15,500/t) in 2014
to USD2,106/t (RMB13,800/t) with a YoY decrease of 10.95%.
Specifically, domestic yellow phosphorus price slid after Chinese Lunar New
Year for the following three reasons:
- In 2015, the traditional peak season for the glyphosate market was not as
prosperous as previous years, leading to a stagnant demand for yellow
phosphorus. To reduce inventory pressure and recoup funds, yellow phosphorus
manufacturers had no choice but to reduce product price to increase sales
volume;
- The preferential electricity price policy was put into implementation in
Yunnan Province. During the low-flow period, production costs were able to be
reduced and this gave opportunity to downstream companies to put pressure on
yellow phosphorus manufacturers to lower their prices;
- Influenced by depressed market conditions, many phosphate manufacturers
frequently suspended production and this has affected the sales of yellow
phosphorus.
Considering that market conditions of downstream products such as phosphoric
acid, glyphosate and phosphate will not be improved in the short time, CCM
predicts that China's yellow phosphorus market may continue to be depressed in
2016.
- Forecast of supply of yellow phosphorus in China.
In 2015, about 1.72 million t/a of yellow phosphorus was put into production
(some manufacturers stopped production in 2015 and their capacity was excluded)
and the actual annual output reached approximately 666,000 tonnes with an
operating rate of only 38.70%.
Based on the current market conditions, the overall structure of the downstream
market of yellow phosphorus will not be greatly adjusted. Thus, demand from
downstream markets will not be able to support the yellow phosphorus market to
recover. So, CCM predicts that in 2016 domestic yellow phosphorus manufacturers
will remain low operating rates and only slightly adjust the rates according to
market fluctuations.
- Forecast of price of yellow phosphorus in China
CCM predicts that in 2016, market price of yellow phosphorus will be stable at
USD1,831/t-USD2,060/t (RMB12,000/t-RMB13,500/t) for the following reasons.
1. Currently, China's phosphoric acid and glyphosate industries are in the
depression. Reaping few profits, downstream purchasers would put heavier
pressure on yellow phosphorus manufacturers to lower their prices in order to
reduce cost pressure. In other words, yellow phosphorus manufacturers have no
supports to raise their prices.
2. Electricity price which will influence production costs is expected to be
reduced after reforms. Since 2015, Chinese government has been planning reforms
to cut coal electricity price in most areas in China. In addition, approvals to
electricity price reforms plans in Yunnan and Guizhou provinces have made the
reforms more feasible. After yellow phosphorus manufacturers successfully
reduce their production costs, they will face heavier pressure from downstream
purchasers' require for lower prices.
Ex-works price of yellow phosphorus in China by month, Jan.- Dec. 2015
Source: CCM
This article comes from Phosphorus Industry China Monthly Report 1602, CCM
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Tag: phosphorus