Yellow phosphorus production restricted in Yunnan for power crunch 03-15-2023

Summary: In March, some producers of electrolytic aluminium or yellow phosphorus in Yunnan had to suspend due to tight electricity. Restricted production and supply may push up the ex-works price of yellow phosphorus in the short term. However, given the downstream downturn, the rise will be minimal and yellow phosphorus may face sales difficulties with the high offers.

In March, many enterprises in Yunnan Province reduced their electricity consumption load, to ease the power tensions mainly caused by the recent low rainfall. To minimise the negative impact, some have brought forward their annual maintenance plans to March—most had planned to carry them out after June.


Electricity in Yunnan is mainly generated by hydropower, while the province is in its dry season. With little precipitation in most parts of Yunnan since 2023, Jan. and Feb. received significantly less rainfall than the same period in previous years. Meteorological drought is developing rapidly in local areas of Yuxi, Dali and Lijiang cities, which has led to a tight hydropower supply in Yunnan.


This is the third round of large-scale power restrictions in Yunnan. Electrolytic aluminium and yellow phosphorus producers are the main electricity users in the province. Some of them said that power restrictions have continued since September 2022, with the first round reducing production capacity by 10%, the second by 20%, and this time further compressing operating capacity by 40%. At present, electrolytic aluminium enterprises that were notified of power restrictions have basically implemented them, with an uncertain duration (may last until the high water period or when local hydropower situation has improved). The supply of yellow phosphorus is tight and local producers hold a strong intention to raise prices. More than half of them have temporarily suspended production, particularly in the city of Qujing where power shortage is severe. Details of some producers in the province are as follows:

  • Yunnan Yuntianhua Co., Ltd. had to reduce its yellow phosphorus production from three production lines to only one due to the power cut;
  • Yunnan Xuanwei Phosphorus Electricity Co., Ltd. is producing yellow phosphorus normally currently, but will suspend in the short term;
  • Yunnan Chengjiang De'an Group Co., Ltd. and Yunnan Chengjiang Huaye Phosphorus Chemicals Co., Ltd. have temporarily halted production.
  • Sichuan and Guizhou provinces, although not as restricted by power constraints as Yunnan, also see high electricity costs and low production of yellow phosphorus due to the dry period. Moreover, phosphorus ore prices tended to rise in early March, which will curb the productivity and supply of yellow phosphorus and fuel its ex-works prices in the short term. As the downstream market for yellow phosphorus remains depressed, some traders are selling the product at low prices and some producers have to increase their offers to stabilise prices. However, very limited price increases are expected recently and there may be difficulties in selling on the market. After all, both producers and purchasers of yellow phosphorus are very cautious about closing orders.


More information can be found at CCM Glyphosate China Monthly Report.

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