The main factory shuts down! Related raw materials hit a 9-year high!

On October 28th, the production lines of the hazardous chemical equipment-TCPP (triester phosphate) of two large domestic chemical companies, Futong Chemical Co., Ltd. and Taizhou Ruishite New Material Co., Ltd., ceased production and have stopped supplying them to downstream enterprises. 

Futong Chemical Co., Ltd. and Taizhou Ruishite New Material Co., Ltd. are domestic large-scale TCPP manufacturers. Their production capacity ranks third and fourth in the industry, and both rank in Taizhou, Jiangsu. It is reported that the TCPP (triester phosphate) capacity of the two companies is about 65,000 tons/year, accounting for about 30% of the total domestic production capacity and about 2.5% of the total global production capacity.

▷Futong Chemical Company is a phosphorous chemical manufacturer specializing in the research and development, production and sale of phosphorous trichloride, phosphorous oxychloride, Phosphorous Acid and phosphorous flame retardant products TCPP and TEP. It enjoys a high reputation in the domestic Phosphorus chemical industry, and its technical level is at the forefront of the industry.

▷Rishite, a well-known manufacturer of phosphate ester Flame Retardants and polyurethane additives at home and abroad. Among them, the flame retardant production capacity is 80,000 tons/year, and it has more than 200 customers at home and abroad.

Do not rule out the possibility of permanent shutdown!

As early as the afternoon of April 24, 2020, the Taizhou Emergency Management Bureau held a special meeting to interview the heads of Futong Chemical and Ruishite. The meeting pointed out that Futong Chemical and Ruishite used their own explosive chemicals (ethylene oxide and propylene oxide), which belong to the scope of shutdown and must be shut down within a time limit.

The products produced by Futong Chemical Company and Ruishite Company include TCPP products. Propylene oxide, one of the main raw materials of TCPP, is an explosion-related chemical.

The relevant person in charge stated that the current national safety production situation is tense and an appropriate exit mechanism may be established. From a general perspective, the high-risk chemical industry needs to gradually withdraw from the park.

The industry chain has exploded! Prices may continue to rise!

Due to the suspension of production of the main factories, TCPP-related raw materials are expected to start a new round of excitement!

This year, the upstream propylene oxide price of TCPP has been rising all the way, TCPP is also supported by the cost of raw materials, the increase has exceeded 60% since June 30, and hit a new high since 2011.

It is understood that the latest price of propylene oxide on October 28 was 18066.67 CNY/ton, an increase of 34.83% in the last 60 days. In addition, the demand for phosphorus-based flame retardants in the global market is increasing. On the supply side, with very limited new capacity in the next 2-3 years, the price of phosphorus-based flame retardants will rise sharply.

The research report shows that since 2019, the price of engineering plastics BDP flame retardant has increased from 20,000 CNY/ton to 31,000 CNY/ton, and the price of polyurethane TCPP flame retardant has risen from 10,000 to 11,000 CNY/ton in the first half of the year to 1.5 -16,000 CNY/ton. Whether it is engineering plastics or polyurethane, the price of phosphorus flame retardants has risen by 50%.

Due to the wide use of flame retardants, there are many companies that produce them, but there are fewer engineering plastic flame retardant (BDP) companies, mainly concentrated in three companies, Wansheng Co., Ltd., Adike and Daba Chemical Co., Ltd. Leading enterprises in different industries have the largest production and sales volume.

Affected by the news that the two main devices have stopped production, other domestic flame retardant manufacturers may benefit. On October 29, Wansheng shares and Chenhua shares rose 9.80% and 12.05% respectively.

The market prospect is huge! The price will not come down in the short term!
It is understood that the current supply of flame retardants in the market is very tight, coupled with the limited new capacity of TCPP this and next two years, if the related equipment of Futong Chemical and Ruishite is permanently shut down, it will take 3-5 to establish a new production line. Under the circumstances of 2015, TCPP will face supply tensions for a long period of time.

At present, the market demand for flame retardants is still very large, and there is still room for market supply. Therefore, the price increase trend will not be eased in a short time. The annual performance of related listed companies this year is affected by the increase in product prices and should be worth looking forward to.