(Yicai Global) April 8 -- Authorities in Xiangshui county, Jiangsu province, have shut down a local chemicals park after an explosion killed 78 people and the provincial government looks to cull the number of chemicals firms based in the region.
The local government ordered Xiangshui Industrial Park to temporarily close its doors from April 5, Xiangshui Evening News reported. The shutdown comes just weeks after an explosion at Jiangsu Tianjiayi Chemical on March 21 that killed dozens and left hundreds injured.
Jiangsu is China's leading chemical-making province in terms of factories and is a major source of pesticides, dyes and petrochemicals. But the province plans to cull its list of more than 4,500 chemicals companies to less than 2,000 by the end of next year, and to just 1,000 by the end of 2022.
The March 21 explosion, which preceded another in Jiangsu province just 10 days later, could be a turning point for the Chinese chemical industry, according to Cinda Securities.
Another firm, Founder Securities, expects more industry parks across the province will be shutdown, leading to a supply shortage in certain sectors and impacting prices. Companies will need to focus more on safety and environmental protection, and there will be an impact all along the supply chain, it added.
Henryda Chemical, a unit under Jiangsu Wuzhong Industrial, is one of the companies affected by the Xiangshui closure. It has already ceased production of its organic pigments and dyes, its parent said in a statement yesterday.
Jiangsu Lianhe Chemical Technology and Lianhe Chemical Technology Yancheng, which combined for CNY120 million (USD18 million) in net profit last year, will also have to suspend manufacturing temporarily. The March 21 blast caused two deaths and injured several of the pair's workers, as well as destroying property and equipment.
Other companies hit by the closure include Red Avenue New Materials, Jiangsu Yabang Dye Stuff, and other local firms. None of these suffered casualties as a result of the explosion.
Editor: James Boynton