How Should the STPP Sector Shake Off Development Crisis?   

By Song Xigao
Guizhou Jianfeng Chemicals Industrial Co., Ltd.

The 1990s was a period of rapid development of detergents in China and the demand for sodium tripolyphosphate (STPP) grew rapidly. Besides that booming demand, hot-process phosphoric acid has a relatively low cost, the entry investment threshold for production technology is not high and the economic performance is satisfactory, so a large group of STTP enterprises sprang up like daisies. China's capacity to produce STTP has increased constantly in recent years. The production restoration of China Light Industry Group Yilan Co., the completion of the 120 000 t/a unit in Sichuan Yibin Tianlan Chemical Industrial Co., Ltd. (CCR2004, No. 5) and the startup of production of Sichuan Chuantou Chemical Industry Group Co., Ltd., Guizhou Jianfeng Chemicals Industry Co., Ltd., Chongqing Chuandong Chemical (Group) Co., Ltd., Guizhou Kaiyang Anda Phosphorus Chemicals Co., Ltd. and Yunnan Phosphorus Group Co., Ltd. have combined to bring the total capacity up to 1.8 million t/a, accounting for 60% of the world total. The demand for STPP produced in China (domestic consumption plus exported amount) is however less than 900 thousand tons. There is therefore a serious oversupply in the STPP sector. With the supply shortage of raw materials, the downstream demand going down, impacts from antidumping activities in overseas and control policies issued by the government, the situation of the STTP sector is becoming more and more severe.

Output and Sales of STPP in China          (thousand tons)
Year    2000    2001    2002    2003    2004    2005    2006
Output    682     827     942     898     761     746     910.5
Domestic sales    404    438    499     414     346     244     284
Export    279.6    391.2    444.9    485.4    417.6    501.6    577.0
Source: CNCIC


Application of STTP in Washing Powders in China   
       (thousand tons)
Year
    2000    2001    2002    2003    2004    2005    2006
Total output of washing powders
     1 713    1 960    2 070    2 281    2 727    2 941    3 343
Output of phosphorus-containing washing powders
    1 634    1 717    1 672    1 630    1536    1 436    1 504
Source: CNCIC


  1  Challenges

    (1) Shrinkage of market

    (i) Reduced consumption in making washing powders
STTP is mainly used in making washing powders. Typically general purpose washing powders are 25%-30% STTP. With the need for environmental protection and the great attention paid by the government to that, the eutrophication of water has aroused more and more concern. Starting from 2003 the use of phosphorus-free detergent products was advocated and various measures and regulations for restricting phosphorus were issued in many provinces and cities, having a great impact on the recipe of washing powders and the demand for STPP. According to statistics from the National Bureau of Statistics, the production of phosphorus-containing washing powders has dropped since 2000. The total output of washing powders in China was 3.343 million tons in 2006, of which the output of phosphorus-containing washing powders was 1.504 million tons, accounting for 45.0%, being 50 percentage prints lower than in 2000 and 3 percentage points lower than 2005.

    (ii) Emerging alternatives
As the eutrophication of natural water became more serious in the mid-1980s, China started research into STPP alternatives. Besides STPP, commonly-used detergent aids include 4A zeolite, sodium metasilicate, fast-dissolving sodium silicate and laminated sodium disilicate.
    When STPP and 4A zeolite are used as components of detergents, their consumption ratio is around 3:2 worldwide. Major 4A zeolite producers in China include Alumina Company of Chinalco Shandong Branch, Huiying Chemical Industry (Quanzhou) Co., Ltd. and Shanxi Yuci Changli High-Tech Co., Ltd. The total capacity exceeded 500 000 t/a at the end of 2006 and the output was 321 000 tons, an increase of 31.6%.

    (2) Fluctuation of raw materials

The price increase of yellow phosphorus, which started in September 2003, stopped at last in 2006, but the impact of that price rise on detergents and detergent ingredients is still being felt. First of all, the price rise has changed the confidence and dependence of washing powder producers on yellow phosphorus and STPP. Secondly, it has affected the quality of washing powders. Thirdly, an excellent opportunity has been provided for STPP alternatives. Fourthly, the changes of policy and market have put yellow phosphorus producers in a difficult position.
   The production of STPP from wet-process phosphoric acid enjoys the support of state industrial policies and also has the advantage of low production cost. Guizhou Hongfu Industry Company is the only company with such a process in technology and an economic scale. Other enterprises are yet at the stage of planning. Replacement of the yellow phosphorus process in the STPP production is therefore just beginning in China.
   Soda ash accounts for around 25% of the total production cost of STPP. Most STPP producers in China use soda ash. Starting from the second half of 2006 the price of soda ash increased considerably. With the impact from factors such as natural gas, raw salt, coal and logistics, the price of soda ash is expected to increase further for a period of time, directly affecting the price of STPP.

    (3) Unstable political situation in destinations for exports

China exports slightly more than half of its STPP production. Exports of STPP are mainly shipped to the Middle East (around 28% of the total), where the political situation has been unstable for decades. Political turmoil brings risks to foreign trade.

    (4) Impact from export rebate policy

Starting from July 1st, 2007 the Chinese Government eliminated the 13% export rebate rate for STPP. The policy is intended to protect the little phosphate resources still left, reduce energy consumption, minimize pollution and shut down surplus capacity. It is however another heavy blow to STPP producers. Despite an export price rise of around 13%, the export amount of STTP was quickly reduced from a monthly average of 53 000 tons in the first half of the year to 26 600 tons in August.


2  Problems are being solved

(1) Irreplaceable position of STPP

First of all, STPP has advantages in its application in detergents. In views of washing effect, STPP used