China's Yunnan sets energy limits for fertilizer sector

The Yunnan national development and reform commission has published a policy seeking to restrict energy consumption in several industries in the Chinese province, including fertilizers.

The policy, published on 11 September, stipulates a production restriction for the fertilizer, basic chemical material, coal-processing and ferro-alloy smelting industries based on their energy consumption per 10,000 yuan ($1,552) of value-added output. Any plants consuming 1-2 times more energy than the industry average should reduce production to 50pc of operating ratio and any plants consuming more than two times the industry average should cut production to 10pc of capacity utilisation.

Yunnan is a key phosphate production region. The policy also applies to the production of yellow phosphorus — a raw material for phosphoric acid produced through the furnace process, which is then used in water-soluble phosphates and the production of other chemicals — as well as the steel, cement and aluminium sectors.

Monthly production of yellow phosphorus during September-December should be less than 10pc of output in August, according to the policy. Yellow phosphorus consumers may choose to buy wet-process phosphoric acid — which uses phosphate rock — as an alternative, potentially tightening supplies of the feedstock for DAP production in the short term in Yunnan.

Major phosphate producers in Yunnan like YUC and Xiangfeng are graded as advanced energy-efficient companies and so will not have their operations impacted, with DAP supplies from the province expected to remain unchanged in the short term.