On November 10th, according to baiinfo.com, the average ex-works price of yellow phosphorus is Yuan33,087 per ton, which is an increase of Yuan2,579 at 8.45%. At press time, most manufacturers do not quote, some individual manufacturers gave a reference quotation at Yuan35,000-38,000 per ton. A few of deals are made at Yuan33,000 per ton, based on negotiations. A few of factories have expressed that they would not accept purchase orders below Yuan35,000 per ton. In general, the price is going up. It is difficult to locate sources of supply at lower quotes.
Reasons for the price escalation
Firstly, from supply perspective, “with purchase orders at hand, we don’t worry about sale.” Most of the enterprises already hold purchase orders for execution, without sales pressure. It is understood that most of the enterprises have scheduled production up to next week or later this month, there is a slight shortage of goods in stock. Secondly, from inventory perspective, the inventory level on the market has fallen to a low level, which boosts up the speculation of price rise. Thirdly, from the demand perspective, at present buyers are mostly expending stocks while downstream enterprises need to make replenishment and are actively inquiring for supplies, which would promote closing of deals. Fourthly, from cost perspective, some factories say that phosphate ore price is rising, electricity tariff increases and cost increases.
Market forecast
It is expected that yellow phosphorus price will continue to rise in the short run for the reasons of:
1) Purchase orders and shipments are running well;
2) As material inventory is expended, downstream enterprises need to make replenishment;
3) Supply is expected to tighten due to following factors:
(1) In the provinces of Sichuan and Yunnan, there may be a shortage of power supply during the dry season, resulting in limited load of production in some manufacturers;
(2) In Yunnan Province, an energy consumption control may be implemented;
(3) Insider information shows that restriction in power supply will be implemented in Sichuan Province from November 15, which will affect production and supply in Sichuan Province;
(4) A yellow warning of heavy air pollution has been given in part of Sichuan Province, which brings uncertainty to productions in yellow phosphorus manufacturers.
(5) The productions in Guizhou Province are not running at full load even power supply has been improved. Meanwhile, environmental compliance inspection has started, which will affect productions in some manufacturers.
In the long run, yellow phosphorus price appears mostly on the rise, but a risk of declination exists. It is recommended to pay close attention to the load running of yellow phosphorus.
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