SHANGHAI, Sep 29 (SMM) - In compliance with the Energy Efficiency Management Plan for Energy Consumption Industries from September 2022 to May 2023 formulated by relevant departments of Yunnan Province, yellow phosphorus enterprises in Yunnan shall reduce or stop their production in an all-round way from 0:00 on September 26. As of September 28, the daily output of yellow phosphorus in Yunnan was 805 mt, a decrease of about 580 mt or 41.87% from mid-September.
The document has categorised the province's energy efficiency management into two grades: 3 million kilowatts and 4.5 million kilowatts. The enterprises involved are required to comply with the energy efficiency management indicators on the basis of the benchmark load before September 25, 2022, and shall adjust their power load according to the electricity supply and demand in Yunnan in the future. The energy efficiency management list targets 37 enterprises in yellow phosphorus, cement, lead, zinc and other industries.
Yellow phosphorus inventories are currently at a low level due to supply shock caused by the power rationing, which has fuelled bullish sentiment and left suppliers reluctant to sell. Downstream restocking after the National Day holiday will tighten the supply further and send its prices even higher.
Some market players said that Guizhou and Sichuan may also introduce similar energy consumption and production restrictions due to the approaching dry season, which will further reduce the production of yellow phosphorus.
As of September 28, the spot price of yellow phosphorus climbed to 34,900-36,900 yuan/mt, and the average price gained 400 yuan/mt in a single day to 35,900 yuan/mt. In just two trading days, the spot price of yellow phosphorus had risen by 500 yuan/mt, and soared 9,350 yuan/mt or 35.22% from August 5.
It should be noted that Yunnan issued the Notice on Firmly Commit to Energy Consumption Double Control in the same period last year. Due to high energy consumption, yellow phosphorus enterprises were required that their monthly average output from September to December 2021 shall not exceed 10% of that in August.
The sharp supply contraction, combined with the arrival of the farming season, once sent yellow phosphorus prices to a three-year high of 62,776 yuan/mt in last September.
