January 20, 2005

China's calcium phosphate supply tight in near-term

An eFeedLink Exclusive Report            

Prices of calcium phosphate in China were higher during the week. As at January 21, ex-factory prices of locally-produced calcium phosphate issued by Sichuan Longmang Mineral Feed and Zhengda hovered at RMB1,600/ton; while those of Sichuan Chuanheng Chemical Co were about RMB1,520/ton, up RMB30/ton from the previous week.

Meanwhile, ex-factory prices issued by other local producers mostly ranged from RMB1,500-1,530/ton, marginally up compared with the previous week.         

The higher prices have been attributed to the following:

• tight raw material supply;
  
  
• lower production volume in certain regions due to power restrictions;
  
  
• transport problems in producing regions. 

Analysts are concerned about the near-term supply of calcium phosphate according to the following: 

1. Supply of raw material remains tight. According to a Guizhou producer, supplies of two key raw materials for calcium phosphate - rock phosphate and sulphur - were rather tight. Currently, only cash transactions are accepted and producers have been waiting in line to purchase. Due to the shortfall in these raw materials, producers in certain regions have ceased production temporarily.
   
   
2. Production volume has reduced significantly as major calcium phosphate producing regions experienced electricity restrictions. Currently, Sichuan is experiencing grave electricity restrictions. According to a major producer, production has been seriously affected, with daily volumes reduced by 30 - 40 percent.
   
   
3. Tightened rail transport ahead of the Spring Festival has impeded delivery to markets, creating shortfalls despite sufficient supplies. 

As a result, some producers have stopped accepting orders. At the same time, many producers doubt they can deliver existing orders from feed millers in time before the Spring Festival.