NEW YORK, Dec. 17, 2016 /PRNewswire/ -- In July 2016, China's phosphorus chemical market remains dull. Most phosphorus chemical products has seen slight price falls and manufacturers put off their production resumption plans. Specifically:
Phosphorus ore: The market is quite stable, reflecting in both quotations and transaction volume. Manufacturers under production maintained low operating rates, mainly for maintaining relationships with regular clients and manufacturers under production suspension have no plans to resume production in the short term.
Yellow phosphorus: The market keeps depressed. Market prices continue falling slightly due to the stagnant downstream markets.
Phosphoric acid: The market remains dull. Manufacturers are suffering heavier pressure from downstream manufacturers on lowering the prices due to the falling price of raw materials, yellow phosphorus.
STPP: The market remains stagnant. Both the transaction volume and the operating rate are low. Manufacturers under production maintained low operating rates, mainly for maintaining relationships with regular clients.
MAP: The market is still dull. Demand from the compound fertiliser industry is insufficient. Suffering from heavy pressure from inventory, some manufacturers reduce their prices to promote sales.
DAP: The market is also weak. The peak consumption season in autumn hasn't begun yet and demand from the domestic market is insufficient. Manufacturers have to turn to the export market to ease inventory pressure. Currently, many small- and mid-sized manufacturers suspend production for maintenance and the overall operating rate of the industry is less than 60%.
Notably, In July 2016, China called for a thorough overhaul of mined-out areas in subsurface metal and nonmetal mines around the country, and requested that complete records of said areas be kept. This new regulation also pertains to phosphorus ore, the most upstream product of the phosphorus chemical industry. The regulation will not only restrict the disorganized mining activities of small- and mid-sized ore manufacturers, but also help to promote an environmentally friendly mining technology, cut-and-fill mining.In July 2016, China's ammonium phosphate market remains stagnant. CCM holds a pessimistic attitude towards the domestic market in H2 2016 and believes that increased demand over the peak consumption season in autumn and brought about by the stockpiling of fertiliser for winter will not be enough to negate the negative influence brought by the economic downturn, shrinking exports of ammonium phosphate, and low grain prices.
On 17 July, 2016, Xinyangfeng Fertiliser announced that it would be acquiring Jiangsu Greenport for USD60 million. According to CCM, the acquisition will accelerate the company's industry transition from traditional phosphate fertiliser to modern agriculture. A diversified development strategy which includes internet, chemical engineering, agriculture and finance, and outstanding profitability from both its ammonium phosphate and compound fertiliser businesses should make the company a winner in the domestic fertiliser market.
On 1 July, 2016, the resource tax reform on phosphorus ore was put into implementation. Hubei Xingfa announced that this will help the company to reduce production costs by USD3.76 million (RMB25 million) in H2 2016.
In July 2016, China XLX Fertiliser announced that its subsidiary, Henan XLX Fertiliser, will cooperate with Jilin Province Supply and Marketing Cooperative to establish a new compound fertiliser production base. This will not only help Henan XLX Fertiliser to obtain additional market share in Jilin Province, but also help Jilin Province to head in the goal of realising zero growth in chemical fertiliser consumption.
At the end of June 2016, Guangxi Mingli announced that its application for recording the iron phosphate project has been passed. This signifies that the company is to march into the iron phosphate market by taking advantage of its phosphorus chemical production techniques and facilities so as to seek for new development opportunities.
At the end of June 2016, Hubei Xingfa announced that it has finished the acquisition of 49% of shares in Yichang Fengye. According to CCM, this acquisition will help Hubei Xingfa to further integrate upstream industry and optimise its phosphorus chemical industry chain.
On 29 June, 2016, Anhui Annada announced a further investment of USD3.16 million (RMB21 million) in its subsidiary, Nayuan Material, to expand its iron phosphate production capacity. According to CCM, China's alternative energy industry has skyrocketed since 2015 and the industry's phenomenal growth is the main driving factor behind Anhui Annada's further investment. However, on the basis that frequent investments have been made in the market recently, and will continue to be made, overcapacity in the future seems probable, and profits are liable to be lower than expected following several years of development.
In July 2016, China called for a thorough overhaul of mined-out areas in subsurface metal and nonmetal mines around the country, and requested that complete records of said areas be kept. This new regulation also pertains to phosphorus ore, the most upstream product of the phosphorus chemical industry. The regulation will not only restrict the disorganized mining activities of small- and mid-sized ore manufacturers, but also help to promote an environmentally friendly mining technology, cut-and-fill mining.
In June 2016, China's yellow phosphorus market kept depressed. Market prices continued falling slightly and operating rates in Yunnan, Sichuan, Guizhou and Hubei provinces remained low. Considering that some manufacturers planned to resume production in the shorty term and downstream markets (the glyphosate and phosphoric acid markets) were stagnant, CCM believes that market price of yellow phosphorus may further decline later in China.
In June 2016, China's STPP market remained stagnant. The operating rate of the industry was low and the transaction volume of STPP was small. Considering that downstream market will not improve in the short term influenced by the economic downturn and market prices of raw materials keep falling, CCM believes that market price of STPP may continue to decline in the near future.
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