phosphorus based products to cost more

Phosphorus-based products to cost more
12 Jun, 2008, 0000 hrs IST,Nidhi Sharma, ET Bureau

MUMBAI: Prices of phosphorus-based products such as safety matches, insecticides, pharmaceuticals, agrochemicals, lubricant additives, and water treatment compounds are likely to go up with China imposing an export duty of 120% on yellow phosphorus (YP).

The revision of duty structure is significant for India as it imports a major quantum — 20,000 to 25,000 tonne annually — of phosphorus from China. Prices of some key ingredients that go into the making of these products have already gone up significantly during the past six months due to an acute shortage of the chemical.

The price of red phosphorus used in making safety matches is up by over 250% to Rs 750 per kg, aluminium phosphide used as an insecticide and fumigant for grains storage is up by 125% to Rs 450 per kg and phosphorus oxychloride used in making generics in pharmaceutical industry is up by over 800% to Rs 275 per kg.

China imposed export duty on yellow phosphorus to 10%, which was increased to 20% in June 2005 and now it is 120%. In the last four-five years, the price of YP has gone up ten times from $900 per tonne to current levels at $8,500-$9,000. In addition to export duty, China has simultaneously increased the minimum price on which export duty is leviable from $4,000 per tonne to $8,000.

United Phosphorus chairman Rajju Shroff said his firm has already increased the prices of most products between 30% and 70%. “Indications are that there can be more trouble and prices can further go up,” he added. His company, which also imports phosphorus, is the only manufacturer of phosphorus in the country and also supplies key phosphorus-based products.

Mr Shroff said cost incurred to protect grains during storage (by farmers and government through FCI) will rise with increase aluminium phosphide prices. Ninad D Gupte, vice-chairman of Crop Care Federation of India, said nearly 40% of insecticides consumed in India are organo-phosphorus compounds, like aluminium phosphide, which are economical. “The price of this group of insecticides has gone up substantially,” he said. He pointed out that farmers have already started feeling the pinch of high prices.

China emerged as a major player in phosphorus and its intermediates due to large reserve of rock phosphate, used in making phosphorus. China’s low prices exports led to closure of manufacturing units in India and other countries. Basic Chemicals, Pharmaceuticals and Cosmetics Export Promotion Council chairman Satish Wagh pointed out that volatile raw-material prices have already led to supply problems for user industries.

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