Sichuan Chuanlin and Huize reach agreement for phosphorus chemical project 11-11-2019

On October 18, 2019, Sichuan Chuanlin Industry Co., Ltd (Sichuan Chuanlin) and Huize County reached an agreement for a phosphorus chemical project of USD 46.66 million (RMB 330 million) with Yunnan Phosphorus Chemical Co., Ltd (Yunnan Phosphorus Chemical), which will promote the development of Yunnan Phosphorus Chemical and economic growth in the Yunnan province. The project is divided into two phases. RMB 250 million will be spent mainly on the technological transformation and relocation of electric furnaces which can produce of 50,000 tons of yellow phosphorus annually, and other devices which annually produce 100,000 tons of wet-process phosphoric acid, 500,000 tons of phosphoric slag powder, 120,000 tons of lime from exhaust as well as 200,000 tons of phosphates in the first phase of the project.

In the second phase of the project, Sichuan Chuanlin and Huize County will invest RMB 80 million mainly in the technological transformation and relocation of devices for phosphatic fertilizer production and compound phosphate fertilizer production.

The first phase is estimated to be completed within 18 months, and the second phase will start once the first phase is finished. The project will make a strong new phosphorus chemical industry in Huize County and will also speed up the restructuring and transformation of the phosphorus chemical industry.

Increased supply of Chinese phosphorus lowers prices, hurts profits

China is the largest producer and exporting country of yellow phosphorous in the world. However, the phosphorus chemical products that China exports are mostly primary commodities, such as yellow phosphorus, phosphoric acid, sodium tripolyphosphate (STTP), animal fodder as well as calcium monophosphate and sodium hypophosphite for toothpaste. The profit margin of these products is low, and therefore, manufacturers do not earn significant profits from the products. In particular, the export products of yellow phosphorus have recently experienced an increase in supply and prices have decreased.

China does not have a large variety of different types of phosphorus chemical product, and high-quality phosphate chemicals must be imported from other countries. Generally speaking, the product structure of the phosphorus chemical industry is not balanced, consisting of large percentage of low valued inorganic phosphorus chemical products and small percentage of high valued organic phosphorus products. The phosphorus chemical companies should learn how to make profits in the market, and the companies should consider it as both an opportunity and a challenge; otherwise they will be eliminated.

Phosphorus production energy intensive and pollutive

China has rich phosphate rock resources. It ranks the second in the world when it comes to the total number of phosphate rock resources that have been found, while Morocco ranks first globally.

Phosphate rock resources were mainly found in five provinces, namely Yunnan, Guizhou, Hubei, Hunan and Sichuan. Making phosphorus chemical products is a process with high energy consumption. For example, in the production of yellow phosphorus, each ton of yellow phosphorus requires more than 14,500 kilowatt-hours of electricity on average. The cost of the electricity accounts for over 70% of the total manufacturing cost of yellow phosphorus. Also, the technology of producing phosphorus in China is not developed and highly energy consuming.

For example, the electricity consumption of yellow phosphorus production is 12,500 kwh/t in other countries while the electricity consumption of yellow phosphorus production is 16,000 kwh/t in China. Additionally, the phosphorus chemical industry is an industry with high contamination. For example, substances such as slag, ferrophosphorus, gas, phosphorous slag and wastewater are created during the production of yellow phosphorus. If these substances cannot be used wisely, they will become refuse which will cause environmental pollution. The increasing amount of phosphorous slag has reached 8 million tons each year, releasing 1.2 billion Nm3 of exhaust in the air. The emissions of SO2, fluoride and phosphorus are 12,000 tons, 1,000 tons and 120 tons respectively.

For more information on China’s phosphorus market, please check our resources on phosphorous chemicals.

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