Price of Glyphosate to Remain Low in China – CCM

By CCM

China’s glyphosate market will still be in the doldrums in 2016 due to the overcapacity in the industry and the spread of negative news on glyphosate. The market price is predicted to continue to drop and might and even reach its lowest level yet, according to analysts CCM.

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Recently, glyphosate TC was priced at about $2,780/ton (RMB 18,250/t) after experiencing a few slight fluctuations in 2015. Glyphosate prices are expected rise slightly, as the busy season for formulation processing nears. However, the rise will be only temporary.

“Since (the second half of) 2014, the company has received few orders of glyphosate,” said Mr. Song, a highly experienced manager in glyphosate exports in Shanghai. “At present, some companies continue to sell at low prices. Prices of glyphosate are likely to decline further, and some medium- and small-sized enterprises have already been unprofitable.”

Serious Overcapacity

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The serious overcapacity of glyphosate in China burdens the whole industry, especially when there is not enough demand from the downstream market.

In 2012 and 2013, China’s glyphosate industry performed very well. The price of glyphosate kept rising, reaching $6,252.64/t (RMB 40,000/t), which looked extremely attractive to the manufacturers. The lure of those high profits triggered capacity expansion. Large enterprises entered into the glyphosate industry, which led to the current serious overcapacity.

During that time, Sichuan Fuhua Tongda Agrochemical increased glyphosate production 50,000t/a in 2013. Other companies followed suit. Jiangsu Good Harvest-Weien Agrochemical, for example, increased 15,000t/a. Henan HDF Chemical Co., Ltd also increased capacity by 15,000t/a.

CCM estimates the total glyphosate production capacity (existing idle capacities, newly-expanded capacities, and the capacities that are planned) at about 800,000 t/a. As an export-oriented product in China, glyphosate has an export volume of only at around 400,000 tonnes in 2014 and 2015 while the domestic consumption is less than 60,000 tonnes. This means that nearly half of the capacity is idle.

In addition, most of the competing enterprises, owning large capacities, appear unwilling to reduce their capacities, exacerbating overcapacity within the industry.

“It is difficult for the glyphosate price to greatly increase in the short term because the insufficient demand cannot keep pace with the capacity expansion of glyphosate,” stated Xing Yi, Editor of Glyphosate China Monthly Report. “The price of glyphosate TC will only fluctuate at low levels.”

The Good and the Bad News

Adding to the price challenges is the negative perception many around the word hold that glyphosate threatens human health. The sentiment will intensify the decline of the glyphosate market.

Since 2015, the safety of glyphosate has faced ongoing questioning. In March 2015, the International Agency for Research on Cancer, an agency affiliated to the World Health Organization, concluded that glyphosate may cause cancer to humans, which made headlines globally.

Earlier, in June, Sri Lankan President Maithripala Sirisena announced it would ban the import and sales of glyphosate including the sale of products that had already been imported. Sirisena blamed the rapidly increasing number of kidney patients in Sri Lanka on glyphosate.

“Glyphosate is facing very significant challenges. If other countries follow the move of Sri Lanka, it will be a disaster for the glyphosate industry,” commented Wang Jianwo, Secretary-General of Hunan Pesticide Industry Association.

It’s not all bad news, however. In November 2015, good news came in the form of the European Food Safety Agency and the member countries of the European Union (EU) when they completed their reappraisal on glyphosate. They released a report showing glyphosate is unlikely to cause cancer to humans. At the same time, they put forward some new safety measures to control the glyphosate residue in food.

This conclusion will be an important reference for the EU committee to decide whether to approve the application of glyphosate. The member countries of the EU will also reappraise the safety of glyphosate based on this conclusion. However,even with such positive news, the glyphosate market in China still performs poorly in its exporting.

In China, glyphosate TC enterprises are finding it difficult to resume large-scale production  because of the poor demand from downstream markets. Also, the summer overhaul period has just passed.

There is the concern that if the transaction price declines further, it is could actually  drop below the costs of production. If purchasers hold a wait-and-see attitude, the transaction price of glyphosate TC will struggle to rise.

 

Editor’s Note:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.

For more information about CCM, please visit www.cnchemicals.com or get in touch with us directly by emailing [email protected] or calling +86-20-37616606.

 

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