March 31, 2023 by Peter Rogoz – click here to read original post.
Fireworks factories in China have suffered yet another blow to their already challenging 2023 production schedule. On March 28, Chinese officials shut down all chemical plants and fireworks production lines in the Hunan and Jiangxi Provinces that work with perchlorates, a chemical that can cause potentially dangerous contamination to water supplies. Inspectors have been tasked with
assessing the water purification systems in all factories and chemical plants throughout Hunan and oversee the installation of purification systems in those facilities that are lacking.
While inspections have been scheduled for three days, there is no timetable for those factories that fail the inspection and require water purification systems to be installed. Factory closures could last for weeks or even months if significant improvements are needed.
In the short term these closures are expected to greatly affect the production and delivery of outstanding orders for the 2023 July 4th season. Items that are not finished or in production at this time are at high risk of missing the July 4th season. Spirit of ‘76 is working hard to make sure that all customers with outstanding orders are taken care of as best as possible. If you are waiting for products to arrive before the 4th of July, we urge you to buy what you need from our current available stock.
In the long term, these sudden closures are forcing potassium perchlorate prices to rapidly climb. As a common fireworks chemical, this impacts the price of most fireworks products, even those produced outside of Hunan and Jiangxi in provinces like Guangxi.
Perchlorates are most commonly used in the form of potassium perchlorate in fireworks manufacturing. Potassium perchlorate is extremely common as an oxidizer in a significant number of fireworks formulas including strobes, flash powder, and a vast array of colors. Perchlorate free formulas, while possible, are not common and tend to rely on more expensive and less available chemicals.
In recent years, research has found that perchlorates can be dangerous to humans when ingested through contaminated food or water. Since 2017, the FDA has published recommended guidelines for the testing and monitoring of perchlorate levels in USA water supplies. Chinese environmental agencies have adopted a similar approach.
These most recent closures are just one of many that have impacted Chinese fireworks production since the Zero COVID policy was reversed in November of 2022. Unprecedented numbers of COVID cases ripped through the Chinese population in November, December, and January, forcing factories to close as much of the workforce fell ill. These interruptions continued into the Chinese New Year, keeping production lines lean until February.
In February, demand for domestic fireworks skyrocketed as restrictions were removed and Chinese citizens were permitted to publicly celebrate Chinese New Year for the first time since 2019. Fireworks factories throughout China shifted production lines to build for their domestic customers, in some cases even selling fireworks labeled for the American market to local fireworks companies. This unprecedented demand for fireworks has continued to put pressure on factories as Chinese citizens enjoy celebrating weddings, festivals, and other special occasions with fireworks for the first time in years.
In early March, all fireworks production was paused for ten days while the People’s Congress held a meeting in Beijing. Factories resumed operations for just two short weeks before this most recent closure.
Additionally, factories have been struggling to hire and retain labor in recent months as more opportunities become available in a post COVID economy. Much like the USA in 2021 and 2022, labor rates are rapidly rising as workers have expanded options thanks to strong market demand.
Factory shutdowns, labor shortages, material price spikes, and a booming domestic market all indicate a high demand, low supply situation developing in the Chinese fireworks industry going forward . Availability for late 2023 and beyond is expected to be tight and prices are very likely to continue climbing. As always, Spirit of ‘76 advises to buy the fireworks you need and want whenever you have the opportunity to buy them. Please visit shop.76fireworks.com or give us a call at 573-447-1776 to place an order for your 2023 fireworks season. Check out our current discounts at 76fireworks.com/discounts to see how you can save on wholesale fireworks orders.