Yellow phosphorus manufacturers suspend production for power cuts in Sichuan

    Summary: Many phosphorus chemical manufacturers in Sichuan Province faced temporary suspension from 15 Aug., 2022 due to the six-day power cut policy guaranteeing people's livelihood.   

    On 15 Aug., 2022, the People's Government of Yibin City, Sichuan Province issued the notice of the Implementation Plan for Industrial Enterprises in Yibin City to Suspend Production to Guarantee People's Livelihood to Tide over Peak-load during Summer in 2022. The document showed that the province would expand industrial power cuts to 19 cities and prefectures (except Panzhihua City and Liangshan Yi Autonomous Prefecture) in the province from 15 Aug. to 20 Aug. as high temperatures overstretched local power grid.   

    Supply—Yunnan, Guizhou, Sichuan, and Hubei provinces are the four major producing regions of yellow phosphorus in China. Some yellow phosphorus manufacturers in Sichuan Province suspended production owing to tight electricity supply and this power cut policy slowed down the growth of yellow phosphorus supply in the province; nevertheless, the capacity and output of yellow phosphorus in Panzhihua and Liangshan accounted for over 50% of the total in Sichuan, so yellow phosphorus supply will remain adequate in the short term.   

    Demand—Some phosphoric acid (PA) and phosphate enterprises in Sichuan Province also suspended production because of power curbs and most of the enterprises stopped accepting orders. PA manufacturers in other regions mainly maintained stable production and the production of downstream agricultural enterprises may be affected in the future.   

    In addition, given the Orderly Power Consumption Plan for 2022 in Yunnan Province released by Yunnan Province in April 2022. Based on the premise of safeguarding safety, the document suggested the implementation measures for orderly power consumption should be staggering power consumption first, avoiding peak-load period next, and then power rationing, and finally power cut-off. China has seen continuous high temperatures since July this year; most yellow phosphorus manufacturers in Yunnan Province reduced their operating rates from 13 July; most enterprises undertook staggering power consumption from 15 July, which means they could only maintain normal production or production under low loads at night. Yellow phosphorus prices are likely to edge up in the short run considering the influence of the power cuts.