China’s Defeat on Export Restriction Case not to Hit Yellow Phosphorus

On Jan. 30th, 2012, World Trade Organization (WTO) adjudicated that China's export restriction on nine types of raw materials is illegal. Amongst the nine types of materials in the ruling, yellow phosphorus is included, according to CCM International’s February issue of Phosphorus Industry China Monthly Report.

On the very next day, China's Ministry of Commerce made a response that China set the export rules for protecting resources and maintaining the sustainable development of these resources. After review of this verdict, China declared it will adopt scientific methods to administrate export of these resources in accordance with WTO rules, although it viewed such export restriction legitimately.

In the face of such an arbitrament, some people suggest that China could take several actions to protect native resources. Despite of WTO's ruling, China is still entitled to increase resource tax or environment tax to restrict resource export. Besides, China could raise electricity price and through other methods to drive up the production cost rather than levying tax, which is also in favor of restricting resource export.

 

However, if China adopts the suggestion, it will confront potential inflation resulting from the soaring prices of raw materials. Perhaps further improving the standard on the quality of export commodities is a more effective way to solve the present problem.

Generally speaking, it makes little difference on China's yellow phosphorus export whether China would improve taxes or the standard on exported commodity quality. In 2011, China produced 853,565 tonnes of yellow phosphorus, only 1.8% being exported.

Compared with other prime yellow phosphorus exporters, China's export tax in yellow phosphorus is a bit high indeed. However, even with such a high tax, the average export price of China is still lower than that of the US—another prime exporter of yellow phosphorus in the world.

As is known to all, the export tax of yellow phosphorus in China is ever up to 70% before 2009. Even China levies a 20% export tax on yellow phosphorus at present, its export situation of yellow phosphorus still seems to have a downturn.

However, it is noteworthy that China has been implementing export quota on phosphorus ore and high export tariff on phosphate fertilizer. Different from yellow phosphorus, China and other countries all have strong demand on phosphorus ore and phosphate fertilizer. In view of WTO's ruling on China's nine types of raw materials' export, once loosening the export of these two phosphorus products, it will bring about the outflow of native resources to a larger extent, which is against China's original intention.

Source: Phosphorus Industry China Monthly Report 1202

http://www.cnchemicals.com/Newsletter/PhosphorusIndustryChinaMonthlyReport.shtml

Content of Phosphorus Industry China Monthly Report 1202:

Phosphorus ore

Global Insight:  Japan accelerates phosphorus resource exploitation overseas   

New Technology:  New process to promote application of low-grade phosphorus  

Indusry Dynamics:  Guizhou phosphorus enterprises lead phosphorus-fluorine integration 

Yellow Phosphorus

Policy & Legislation: China’s defeat on export restriction case not to hit yellow phosphorus  

Industry Dynamics: Tight electricity supply in 2012 to hit yellow phosphorus    

Phosphate fertilizer 

Global Insight:  China ties up with international phosphate fertilizer market 

Industry Dynamics: China’s phosphate fertilizer to develop stably with deep integration during 2012-2015    

Company Dynamics: Sinofert to expand phosphorus chemical business

Fine phosphate Chemical 

Company Dynamics: Sichuan Hebang to start IPO for phosphate chemical projects 

Company Dynamics: Xingwang Group to extend its phosphorus chemical business 

Import & Export

International trade situation of phosphate chemicals in 2011

Price Update 

Price monitor of some phosphate chemicals in January

Phosphorus Industry China Monthly Report, a monthly publication issued by CCM International on 15^th of every month, provides you the latest information on company dynamic, industry dynamic, factors impacting the price fluctuation, technology improvement, supply & demand of China's phosphorus industry.

(Guangzhou China, February 16, 2012)

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