A major disruption in China’s power supply has led to a sharp increase in the prices of basic chemicals in Asia as the power outage in the chemical major has affected 25% of chemical production in Asia. The plants of chemicals like Chlor Alkali, Formic Acid etc. have been impacted following which there has been a price hike of almost 5-40% in several basic chemicals in the last 15 days.

The power outages in the provinces of Jilin, Liaoning and Heilongjiang were caused by power rationing during peak hours. The rationing began on Thursday amid coal shortages and took place without advanced warning.

Major factories including United Phosphorus Limited (UPL) have shut down production because of the outage problem. This has led the prices of yellow phosphorous soaring and caused severe shortage of raw materials for products like glyphosate, glufosinate and oyrethroids. These products are produced by companies including UPL, Bayer CropScience, and Heranba Industries.

China is the world’s second largest economy and a major supplier of chemicals throughout Asia and Europe. A disruption in power supply in China means a major supply pressure which is generated onto the chemical supplies in Asia therefore the prices experiencing rise in the levels. The effect of the power outages as they fade away will surely result into stabilization of prices.

As per ChemAnalyst, “the power outages in China are surely going to affect chemical prices in Asia as the country is the major producer of many chemicals in Asia with almost 25% of Asia’s chemical production happening in China. With the coal shortage triggered outages, it will be interesting to see how China copes with the outages and whether the government will take sustainable energy solutions seriously after the outages are over.”