Thermphos Banks on China's Exit From Phosphorus

19 January 2004 00:00  [Source: ICB Americas]

Thermphos International BV, Europe's only producer of elemental phosphorus, is hoping for an improvement in the worldwide supply-demand balance for phosphorus following the withdrawal of Chinese companies from the market because of higher energy costs.

"Some Chinese producers move in and out of the market, and we are hoping they will now stay out," says Jelle Groenink, director of the Dutch-based company.

"A lot of them are too small to compete on an economical basis," he adds. "They are being deeply affected by higher electricity prices in China, which they can't pass on completely to their customers. In the phosphorus business, energy is like a key raw material."

Rhodia was recently forced to raise the price of its phosphonates for the first time in three years because of a 40 percent increase over the past year in the production costs of Luophing Phospho-rus Chemical Company, its joint venture phosphorus producer in southwest China. Higher production costs have been based on surging electricity prices.

Shortages of water and a need to channel as much energy as possible into the industrial centers of eastern China have pushed up hydroelectricity costs in the mountainous southwest, where phosphorous production is concentrated.

China accounts for an estimated 30 to 40 percent of worldwide capacity in phosphorus, although a relatively large proportion of it is now unused.

Thermphos has an 80,000 ton-per-year phosphorus facility at Vlissingen, the Netherlands, which is largely dedicated to captive use. The company also has access to around 80,000 tons of capacity at Nobozhambulsky, Kazakhs-tan, which is owned by its sister company Kazphosphate LCC.

"Our objective is to produce as much as we can this year," says Mr. Groenink. "We cannot produce any more in the Netherlands but we are pretty close to reaching full capacity in Kazakhstan."

"The tight energy supplies in China will have an influence on pricing levels in Europe," he adds. "Sooner or later, prices will go up. We will be redirecting our own output to specific applications, depending on price levels."

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