Netbacks of Vietnam Yellow Phosphorus will Improve Amid China Reopening

Singapore: In the last month, Chinese authorities have officially announced easing the COVID-19 prevention norms after three years. In response, it anticipates boosting the country’s economic recovery and providing ample opportunities for some Vietnamese sectors in the upcoming terms. The resumption of the market and commercial activities in China will improve the participation of overseas players regarding the inquiries for Yellow Phosphorus from the Vietnamese domestic market.

Amid the COVID shutdown, several Vietnamese Yellow Phosphorus producers have observed considerable constraints over the availability of raw materials across the supply chain, a sharp surge in input costs, and congestion of goods. Although the drop in freight charges by more than 50% since the beginning of 2022 releases considerable pressure on the circulation of raw materials and finished products besides improving the production output and arbitrage practices.

Overall inquiries for Yellow Phosphorus from the overseas market have remained active and still relatively high, as the ban on the exports of crucial fertilizers from China and export quota from Russia has kept a bullish sentiment over the global market domain. Although, during the end of the third quarter main Yellow Phosphorus producing Yunnan province in China implemented “Energy Efficiency Management” to counter the power rationing in the region, which will extend till May 2023. In response, the production output and efficiency of Yellow Phosphorus have decreased sharply, impacting the overall supply of Yellow Phosphorus in the Chinese domestic market.

However, the resumption of market activities will soar inquiries about Vietnam’s Yellow Phosphorus to serve the manufacturing of Semiconductors, Electronics, and Electric Vehicles industries. As if the “Energy Efficiency Management” policy continues, it will keep the production output suppressed, and the offers will maintain a higher ground in the Chinese domestic market. As a ripple effect, the downstream player will be keener to inquire about Yellow Phosphorus from Vietnam and improve the netbacks of domestic producers of Yellow Phosphorus in Vietnam.