“This [energy] announcement will have major consequences for [the price of] inputs, especially for glyphosate,” he said.
“China is responsible for 65 percent of global glyphosate production and much of Australia’s glyphosate imports.
“What I’m hearing from colleagues in China is that the production of yellow phosphate, a feedstock for the production of glyphosate, will be reduced by 40 percent, and as a result we expect a large decrease in the level of glyphosate output.”
How long can this go on?
The chairman of the Australian Council of Wool Exporters, Josh Lamb, said Chinese buyers expect possible closures of up to six months.
“Most factories face power constraints during peak season in China, but this is the first time [there are] restrictions outside that period,” he said.
“We are just entering the first part of the season… and things are now starting to come up for auction with growers looking to sell their wool, so it’s not a good timing for us.
“It could put a damper on the market in the next few months if factories can’t run at 100 percent capacity, they’ll be less likely to buy the usual amount they would most weeks.”
Tianyu Wool’s global purchasing manager Angus Hook says the power restrictions have had an immediate impact.
“We didn’t hear about the closure until early in the week,” he said.
“Luckily we have solar power on our top factories so we can work during the day.
Rabobank’s Wes Lefroy said many Chinese pollution restrictions are likely to remain in place at least after the Beijing Winter Olympics in February 2022.