Yunnan Implements Power Restrictions, Reduces Yellow Phosphorus Production by Up to 80% Max!

The news of power restrictions in Yunnan, China has surfaced again in the first quarter of 2023. The main reason for the power restrictions this time is the significant decrease in water flow, which has resulted in a significant drop in hydroelectric power generation.?

With an unfavorable outlook for future hydropower supply, power restrictions and production stoppage are the only choices. Although there is no official timetable yet, the current situation has already affected many phosphorus chemical factories.

Yellow phosphorus: production cut by up to 80%

Starting in February, there has been an increase in maintenance and shutdowns among yellow phosphorus manufacturers, with signs of limited availability. Subsequently, yellow phosphorus companies in Yunnan, such as Kunming, Qujing, and Honghe, received power restriction notices. The degree of power restriction varies among different companies, with smaller reductions of up to 15% and larger reductions of 70% to 80%. It is estimated that daily production of yellow phosphorus in Yunnan will decrease by approximately 210 tons.

The latest offer for upstream phosphorus ore is 1,089 yuan/ton, an increase of approximately 65% from the same period last year, which has pushed up the price of yellow phosphorus. The price of yellow phosphorus in Yunnan has increased to 31,000-32,000 yuan/ton, and orders are not accepted for prices below 30,000 yuan.

Due to circuit reconstruction and environmental inspections in Guizhou, the operating rate has decreased, with some companies shutting down for a week. Yellow phosphorus companies in Sichuan and Guizhou followed suit in raising prices, with the intended acceptance price increasing to around 30,000 yuan.

Considering the power restrictions and production cuts in September 2022, the supply-demand imbalance in many chemical products, such as industrial silicon and yellow phosphorus, is severe, and price increases are inevitable. The possibility of a significant reduction in phosphorus ore production in the future is high, and the prices of phosphorus-related products are expected to rise.

Content source: paint procurement website(涂料采购网)

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