Guizhou Province Plays a Demonstration Role in the Phosphorus Chemical Industry in China

Date: 2015-08-09

“Improving the approval of mining rights and rectifying the ore resources industry are two important measures in the Twelfth Five-year Plan for the Chemical and Mining Industry. These actions lay the foundation for the development of the Thirteenth Five-year Plan for the chemical mining industry. Hainan Province has set an example for other provinces with its policies, which have restricted mining and furthered sustainable development in its phosphate industry.

With abundant phosphorus ore resources and as a leading province in the production of phosphorus chemicals, Guizhou Province plays a demonstration role in the phosphorus chemical industry in China. CCM learned from the Chemical Industry Association of Guizhou Province that Guizhou Province will place emphasis on the development of WPA, high-concentration phosphate compound fertilizer as well as the recycling of phosphorus resources etc. during the 13th Five-Year Plan period.

Countries around the OBOR are major export destinations of China’s phosphorus chemical products, especially countries in Southeast Asia which are major export destinations of China’s phosphate fertilizers and phosphoric acid. The construction of the OBOR provides new opportunities for China’s phosphorus chemical industry in these regions and accelerates China’s transformation from a phosphorus chemical product exporter to a phosphorus chemical technology exporter.

In late March 2015, CCM paid visits to Chinese major food-grade phosphate production areas and investigated the domestic market conditions of the food-grade phosphate industry. At present, the industry access threshold is improved and the export market of the food-grade phosphate industry shows a good momentum in China.

Yunnan Yuntianhua is to vigorously carry forward its strategy transition as it is facing expanding losses. Its current transition strategies, as known by CCM, mainly focus on the following two aspects: firstly, laying a solid foundation for basic businesses, strengthening scientific and technological innovations and enhancing the competitiveness of products; secondly, vertically extending and horizontally expanding the industrial chain to improve the industrial distribution.

Hubei Xingfa is going to acquire Jixing Chemical. After this acquisition, Hubei Xingfa will actively plan the fine phosphorus chemicals project of Jixing Chemical relying on the local existing resources and supported by the local government. Also, this acquisition will boost the interregional reorganization and integration of Hubei Xingfa’s phosphorus chemical industry.

On 30 March, 2015, it is known from the MEP that it will revive the research of green GDP to accelerate the ecological civilization construction and to effectively promote the implementation of the new Environmental Protection Law. The promotion of green GDP will facilitate the phosphorus chemical industry moving towards a green industry.

Enrichment technology for low-grade phosphorus ore of Le Chemical, which can effectively improve the quality of phosphorus ore and raise the utilization rate of low-grade phosphorus ore, has realized industrialization.

Since 1 Jan., 2015, China’s export rebate rates for STPP and SHMP have been raised. However, seeing from the export of these products in recent months, the adjustment of the export rebate rates has not exerted expected stimulation on export of STPP and SHMP yet.

Since electricity cost accounts for a large amount of the production cost of yellow phosphorus, electricity price influence the price of yellow phosphorus a lot. In April, 2015, with the coming of the high-flow period in China’s major yellow phosphorus production areas, electricity price in these regions will drop to some extent, which will lead to falls in ex-works prices of yellow phosphorus.”

“2015 is the key year for comprehensive deepening reforms, and is also the final year of the Twelfth Five-year Plan for the Chemical Mining Industry. Also, the Thirteenth Five-year Plan is being drafted. In 2015, accelerating the transformation will also become the development trend of the phosphorus chemical industry. CCM learned from the Chemical Industry Association of Guizhou Province that Guizhou Province will place emphasis on the development of WPA, high-concentration phosphate compound fertilizer as well as the recycling of phosphorus resources etc. during the 13th Five-Year Plan period.

Regarding policies, on 30 March, 2015, the Ministry of Environmental Protection of the People’s Republic of China planned to revive the research of green GDP to accelerate the ecological civilization construction and to effectively promote the implementation of the new Environmental Protection Law. The promotion of green GDP will facilitate the phosphorus chemical industry moving towards a green industry. Besides, on 16 April, 2015, the State Council of the People’s Republic of China released the Action Plan for Water Pollution Treatment. Since 1 Jan., 2015, China’s export rebate rates for STPP and SHMP have been raised. So as of April 2015, the new export rebate policy has been implemented for 4 months. However, seeing from the export of these products in recent months, the adjustment of the export rebate rates has not exerted expected stimulation on export of STPP and SHMP yet.

As for companies, the 2014 annual report of Yunnan Yuntianhua showed that it suffered from losses in 2014. Its net profit dropped by 535.87% year on year. In order to make a U-turn, Yunnan Yuntianhua is to vigorously carry forward its strategy transition and gradually picture a sustainable diversifying development blueprint. It plans to optimize and integrate its producing capacity, products and markets so as to realize long term sustainable growth. Besides, in March 2015, Hubei Xingfa planned to acquire Jixing Chemical. After this acquisition, Hubei Xingfa will actively plan the fine phosphorus chemicals project of Jixing Chemical relying on the local existing resources and supported by the local government.

The USD/RMB exchange rate in this report is USD1.00=RMB6.1434 on 1 April, 2015, sourced from the People’s Bank of China. All the prices mentioned in this report will include the VAT, unless otherwise specified.”

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