The capacity owned 36 qualified yellow phosphorus producers in China has approached half of China's total manufacturing capacity and can completely meet domestic consumption. These advantages have left the 36 qualified producers with potential ability on expanding their market share, especially in face of those low-efficiency competitors.
By now, numerous yellow phosphorus production facilities owned by 72 unqualified yellow phosphorus producers in China, who hold the rest half capacity, haven't reached the energy performance standards set by the Entry Criteria. It's obvious that the 72 unqualified producers running in quite a small scale might be unable to afford additional costs for improving their inefficient facilities.
Take Yunnan Province for example, 47 yellow phosphorus producers are located there, while only 18 of them have met the Entry Criteria. In addition, the 18 qualified producers account for 63.46% of local output of yellow phosphorus, amounting to 267,000 tonnes in 2010. For the unqualified yellow phosphorus producers there, they either improve their production facilities to meet the requirements of the Entry Criteria, or quit yellow phosphorus business under the squeeze from stronger competitors.
Therefore, it can be forecasted that China would be likely to see a reshaping in yellow phosphorus market in the next three or five years—due to market evolution and Chinese government's guidance.
Though there's no change in the Entry Criteria for Yellow Phosphorus (Entry Criteria), the number of qualified enterprises in China has decreased instead. High cost of maintaining green production of yellow phosphorus might be the major contributor to producers' failure to meet the Entry Criteria.
On Nov. 19th, 2012, China's Ministry of Industry and Information Technology (MIIT) issued the 2012 version of the list regarding qualified enterprises meeting the Entry Criteria. Compared with the previous public supervision version (details about the previous 2011 version see page 5, issue 1 Vol.1: 1st batch of enterprises meeting Entry Criteria for Yellow Phosphorus finally issued), the number of qualified enterprises had decreased from 45 to 36 in the 2012 version.
Overall, the 36 qualified yellow phosphorus producers represented a group with stronger competitiveness in China's yellow phosphorus market.
On one side, the 36 producers are eligible for enjoying preferential policies which could be conductive to saving production cost for them. In accordance with the Interim Measures on Management of Yellow Phosphorus Producers (Interim Measures), these qualified enterprises could apply for preferential electricity price and enjoy a favorable enterprise income tax.
On the other side, the 36 qualified enterprises hold higher efficiency in production compared with those 72 unqualified producers who even failed to meet the standards listed in the Entry Criteria. It's known that the Entry Criteria has specified various process parameters for advanced production of yellow phosphorus, such as consumption limits on feedstock (including phosphorus ore and electricity), design capacity for yellow phosphorus production equipment, limits on the level of pollution, etc.
Phosphorus Industry China Monthly Report is a monthly publication released by CCM. It offers timely update and close follow up of China’s various kind of Phosphorus market dynamics, analyze the market data and trends. Major columns include market dynamic, company dynamic, raw material supply, price update, import & export analysis, consumption trend & competitiveness.
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