Tuesday, February 19, 2013

Hubei Xingfa intended to keep the phosphate-base water treatment project on track

On Dec.11th, 2012, Dequest AG (Dequest) announced that its cooperation with Hubei Xingfa Chemicals Group Co., Ltd. (Hubei Xingfa) came to an end. Meanwhile, Hubei Xingfa also posted a decision about the liquidation of its joint venture with Dequest AG—Hubei Fuxing Chemical Co., Ltd. (Fuxing Chemical) on Dec.13th, 2012, according to CCM’s January issue of Phosphorus Industry China Monthly Report.

With a 45:55 of capital shares, Hubei Xingfa and Dequest AG set up Fuxing Chemical on May 20th, 2011, aiming to jointly develop product of phosphates and PCl3. Since the establishment of Fuxing Chemical (more details about Fuxing Chemical please see page11 issue1, Vol.1: Hubei Xingfa cooperates with Dequest to develop phosphate chemicals), Hubei Xingfa set about developing the 30,000t/a phosphate-base water treatment chemicals project.  

Although Hubei Xingfa ascribed Dequest's quit to the market movement across China and overseas' phosphate industry, it could still be speculated that the bankruptcy of Dequest's parent company—Thermphos International B.V.might drive Dequest's quit partly. Nonetheless, Hubei Xingfa indicated that the quit of Dequest didn't mean the end of the phosphate-base water treatment chemicals project. It intended to keep the phosphate-base water treatment project on track.
According to Hubei Xingfa, it completed the feasibility study, environmental impact assessment and safety evaluation for the project. Although the project was in pre-development phase, there's USD2.78 million of investment thrown at the project by now.

However, it is noteworthy that the guidance from government does not always lead to a perfect result. Hubei Province, as the largest production province of phosphate fertilizer (accounting for 31.56% of China's total output in 2012), correspondingly has a huge demand for phosphorus ore. If Yichang City continues to tighten the supply of phosphorus resources as well as Hubei Government's move at the beginning of 2011, it is bound to trigger a rising in the price of the local phosphorus ore.

Yichang City, the centre of Hubei Province's phosphorus industry, recently reminded local phosphorus firms to focus on resources integration and industry development, which was ever highlighted by Hubei Government one year ago.
On Dec. 23rd 2012, Yichang City passed a discussion paper regarding the overall development plan for local phosphorus industry in 2012-2020. In accordance with the plan, Yichang City is to further strengthen integration for local phosphorus resources and propose a scientific and reasonable yield for local phosphorus ore exploration during the planning period.
It is speculated that Yichang City expected to beat back the continuously rising output of local phosphorus ore, not merely setting targets or in response to Hubei Province's integration strategy for phosphorus industry.

Phosphorus Industry China Monthly Report is a monthly publication released by CCM. It offers timely update and close follow up of China’s various kind of Phosphorus market dynamics, analyze the market data and trends. Major columns include market dynamic, company dynamic, raw material supply, price update, import & export analysis, consumption trend & competitiveness.

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