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Impact of China's yellow phosphorus production cut on Vietnam's exports in Q4

2021/12/29 11:52:17

Summary: In Q4 2021, China's manufacturers imported a certain amount of yellow phosphorus from Vietnam due to domestic production reduction of yellow phosphorus. The short-term demand increase pushed up the FOB prices of Vietnam's yellow phosphorus.

In Sept. 2021, China's supply of yellow phosphorus plummeted owing to the dual control of both energy consumption and intensity. As a result, yellow phosphorus prices in Yunnan, Guizhou, and Sichuan provinces shot up. In fact, the production decrease of domestic yellow phosphorus had an impact on not only the domestic side but also the global market.

 

China is the world's largest producer of yellow phosphorus, with an annual output of around 800,000 tonnes. Almost all of the products are used for domestic needs. Yellow phosphorus traded in the international market mainly comes from Kazakhstan (around 90,000 t/a) and Vietnam (around 85,000 t/a). Yellow phosphorus produced by these two countries is mainly supplied to international markets outside China.

 

However, China's power curbs triggered plunge in yellow phosphorus output; consequently, the tight supply also drove up domestic yellow phosphorus prices to over USD9,420.19/t (RMB60,000/t) from USD4,710.09/t (RMB30,000/t). China's chemical enterprises have also started to purchase yellow phosphorus from Vietnam since Sept. 2021 (see Picture 1), causing prices of Vietnam's yellow phosphorus to surge from around USD3,000/t to around USD5,000/t. Vietnam Customs data showed that in Aug.–Nov. 2021, FOB prices of Vietnam's yellow phosphorus increased month by month (see Picture 2).

 

Most of the yellow phosphorus used by Japan is imported from Vietnam and the product is mainly used to produce high-purity phosphoric acid (PA), which is ultimately used in the semiconductor industry. With soaring prices of yellow phosphorus from Vietnam, Japan's chemical plants bargained with semiconductor manufacturers over high-purity PA prices. Semiconductor manufacturers finally accepted a higher price in want of a stable supply, plus the high-purity PA could not be replaced easily, and thus the production costs of semiconductor mounted up. All these show that the shortage of yellow phosphorus supply inside China has affected the entire international market to a certain extent.

Picture Picture 1: Vietnam's yellow phosphorus to China, Oct.–Nov. 2021

Note: China has not imported yellow phosphorus from any other place in Jan.–Nov. 2021 except from Vetnam, and has only imported from Vietnam in Oct. and Nov.

Source:  CCM

Picture Picture 2: FOB price of Vietnam's yellow phosphorus in Aug.–Nov. 2021


Source: Vietnam Customs & CCM

Source:CCM


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