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Phosphorus and Phosphorus Chemicals
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Published: April 2009
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There has been significant rationalization in this industry during the past ten to fifteen years, largely because of the diminishing use of sodium phosphates in home laundry detergent powders. The phosphorus industry has undergone a dramatic shift away from Western countries to Asian countries as a result of changes in technology and the increasing cost of electricity. The development of capacity to produce technical-grade phosphoric acid from wet agricultural acid has also resulted in the loss of market share for thermal acid, which is produced from elemental phosphorus. The decline in elemental phosphorus demand has resulted in capacity decreases in both Europe and North America and, in concert with high electric power costs, has caused Japan to cease yellow phosphorus production entirely. Capacity in the former USSR has also fallen, primarily because of economic, production and infrastructure difficulties. In contrast, China's elemental phosphorus production has rapidly increased, and its exports of elemental phosphorus and derivatives have impacted the industry in other parts of the world.
China became a major player in the phosphorus industry after the government decided to use its relatively large supplies of low-cost hydroelectricity in the mountainous southwest region as a basis for phosphorus production in that area. Almost all of China's yellow phosphorus capacity is located in four provinces in southwestern and central China—Yunnan, Guizhou, Sichuan and Hubei. Until recently, China enjoyed the advantage of cost savings over the phosphorus chemical producers in Western countries. Labor and utility costs were relatively cheap. Western producers either set up joint ventures or imported the product from China.
Consolidation and withdrawal of some producers have left the industry split between a few large players and many small-scale Chinese producers. Major producers expect the market to improve with the exit of smaller Chinese phosphorus producers. In 2007, the Chinese government issued a document titled “Guiding Directory for Industrial Restructuring,” in which it proposed that production units with a capacity below 3 thousand metric tons per year would be eliminated by 2008 and units with capacity below 5 thousand metric tons per year would be eliminated by 2010. Increased focus is being given to specialty phosphorus products, and companies are realigning their strategies to include specialty phosphorus compounds in their plans.
Further growth is expected for the phosphorus chemicals covered in this report—principally phosphorus chlorides—over the next five years. However, demand for thermal phosphoric acid, currently the largest-volume derivative of elemental phosphorus, is expected to continue to decline. In fact, declining phosphoric acid demand is expected to result in a slightly negative overall growth for world elemental phosphorus, despite the positive demand growth for phosphorus chemicals.
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