Potassium Perchlorate Shortage Affects Fireworks Production

The Chinese government's latest Drinking Water Standards, which came into effect on April 1, have tightened the testing of perchlorate, leading to the suspension of production of potassium perchlorate, the raw material for fireworks. In addition, the main production areas of fireworks (Liuyang, Liling, Jiangxi) have also stopped production of the environmental policy. At present, only a few fireworks factories have completed rectification and resumed operation.

Due to plant shutdown, potassium perchlorate is in short supply at present. Since March, the price of potassium perchlorate has risen several times, and increase exceeds RMB 3,000/ton. Because of the rising cost and the shortage of raw materials, the production of many fireworks has been greatly affected.

Inventory in the firework producing areas is expected to remain low in the first half of this year due to tight supply and rising prices of key raw materials, as well as the shutdown of fireworks factories. If the raw materials problem is not resolved after the High-Temperature Holiday, fireworks prices may continue to rise.

In March, Hunan Province issued policies to support the technological transformation and international market development of the fireworks industry, which was interpreted as a positive official attitude towards the fireworks industry.