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Market analysis: China's yellow phosphorus output and export to drop in 2008

BEIJING, Feb22, 2008 (Xinhua via COMTEX) --

China's yellow phosphorus output and export in 2008 are anticipated to go downward along with the government's energy-saving drive and surging production cost.

Yellow phosphorus output in 2007 was estimated at 750,000 tons, a drop of 1.8 percent from 2006, partly because many inefficient phosphorus enterprises were forced to close amid nationwide energy- saving movement, which pulls down production capacity by 10 percent to 1.8 mln tons.

Under such circumstances, yellow phosphorus output in 2008 is forecasted to further shrink. The production cost is bound to surge on the ground that prices of raw material, phosphate ore, will go up 15 percent for tight supply. Meanwhile, the country will charge phosphorus producers higher electricity price.

Export of yellow phosphorus in 2007, for the first time, went up with the export totaling 83,000 tons, up 4.6 percent over the previous year. However, it is expected to go down this year due to the appreciating Renminbi (RMB) and the country's restricted export of energy-consuming products.

Besides, the world's slowing economy triggered by American credit crunch is anticipated to bring weaker demand for phosphorus products.

Apparent consumption of yellow phosphorus in 2007 was 667,000 tons, down 2.6 percent from a year ago.

Yellow phosphorus price in 2007 presented a sharp rise since October, surging from the first half's average level of 10,000-10, 800 yuan/ton to 14,500-15,000 yuan/ton till December because the supply was in shortage in southwest China's Yunnan Province limited by electricity supply.

It is expected the high-level price will keep going in the first quarter of 2008, and may stimulate producers to gear up output. However, the price would likely fall in Q2 and Q3 and rose in the fourth quarter.

The price of yellow phosphorus in 2008 on the whole is anticipated to rise over that of 2007.