Limit electricity for carbon reduction

oktober 5, 2021
blog

The Chinese government has decided to limit electricity for carbon reduction. China is aiming to reach a peak in its CO2 emissions before 2030 and become carbon neutral by 2060. To achieve this goal the government has launched schemes to limit the use of fossil fuel power plants as well as direct carbon emissions from the industry. Despite the good intentions, direct consequences are visible in the short term. Until electricity is generated from renewable sources this will and has resulted in severe uncertainty in the supply of raw materials.

Prepare for chemical price rises and longer lead times from China

Limit electricity has big influence on the chemical production. Shortages of raw materials affecting different products we supply. For example, Yunnan province is the main producing area of Yellow Phosphorus. This covers around 50% of the capacity of China, but is now shut down for 90% until the end of 2021. Resulting in limited production of Antioxidants like Omnistab AN 168 & Omnistab AN 626. But also Flame retardants are affected. Another raw material affecting the production of flame retardants is Bromine.

For our Optical Brighteners we see one of the main raw materials for production of the Omnistab OB & Omnistab OB-1 is difficult to purchase. This is immediately resulting in longer lead times and higher prices. Also our specialty Optical Brighteners like OB KCB, OB FP127 and OB CBS-351 are part of this.

Besides the shortages of chemical raw materials, we still face the global logistic challenges. Shortages of containers, vessels and truck drivers resulting in longer lead times to plan your shipment from A to B. Along with prices which have never been so high.

In the upcoming months we believe it’s really important to plan ahead with the demand forecast.

Upcoming awareness dates

  • Christmas holidays at the end of the December
  • Most Chinese factories will suspend production at the beginning of January (if not suspend already)
  • Chinese New Year holidays from Feb. 1th – 7th, 2022
  • Winter Olympics in Beijing from Feb. 4th – 20th, 2022

What we expect short-term

  • Shortages of raw materials
  • Lead times are longer
  • Price for logistics will remain on a high level
  • Shift from long-term pricing to spot pricing for chemicals

What you can do

  • Contact us to make a clear forecast together and discuss the current local stock levels available
  • Lay in enough stock of products now for your demand in Q1, 2022.
  • Keep in touch for the latest information

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