Indian chemical companies relying on China for phosphorus are a worried lot. Supplies from China have been erratic for over a year but the Chinese government's decision to raise export tax for phosphorus from 20% to 120% promises to compound the problem. The revised tax is applicable for exports 20 May 2008 to 31 December 2008.
Price increases can be expected and global majors appear to have taken the lead. LANXESS announced last week that it will "increases its prices significantly for all its phosphorus compounds". The move was a result of a considerable rise in the cost of phosphorus, it said.
"This sixfold increase directly affects phosphorus prices globally and forces us to adapt our prices in line with the amount of phosphorus used in the respective application," said the company's marketing manager for phosphorus chemicals. LANXESS offers a broad range of products based on phosphorus, such as synthesis chemicals, corrosion inhibitors, extraction agents, flame retardants, antifoams and solvents for a wide range of applications.
China is estimated to have 80% of the world's phosphorus reserves and is a major exporter. Although the 120% export tax is applicable only until the end of the year Indian companies need to start thinking of alternatives given the Chinese government's commitment to curb the growth of energy intensive and environmentally sensitive industries.