In just one month, the price of glyphosate technical shot up from $3,614/MT to $4,066/MT, while glufosinate-ammonium increased from $24,849/MT to $26,355-27,108U/MT, according to China-based firm Siembo Consulting Co. Ltd.
The increase in technical is far ahead than that of previous years; furthermore, many technical products are facing tight supply situations, Siembo stated. However, it isn’t just technical suppliers that are affected: Formulation producers are also facing supply challenges, with some companies cancelling inventory plans for winter.
“Recently, some new formulation companies issued internal notices that required salespeople to restrain customers’ inventory purchasing, once their inventory volume exceeds the company’s supply. Salespeople would then suggest customers to switch to other products. The companies mentioned in the notices that if the total volume from different customers exceeds the available volume that the company can afford, the contract date would prevail, which means the earlier contracts enjoy the priority shipments,” according to Siembo.
Most companies chose payment policy by product type instead of quantity, influenced by the rising technical products’ supply challenges, Siembo said.
Long Yang, general manager from branch office of Beijing Yanhua Yongle Biotechnology Co., Ltd., said it is difficult for companies to price formulation products due to increasing fluctuation of technical products. Tight technical supplies and company relocations complicate the situation. Yanhua Yongle adjusted its policy to include no winter inventory this year.
Siembo noted that prices have been rising since the end of last year, with glyphosate and chlorpyrifos technical soaring 50% or more compared to last year. Supplies of technical have been short since early 2017 but with winter inventory approaching, orders are increasing.
“In September in previous years, companies got supplies prepared, while this year, upstream manufacturers’ operation rate stayed at a low position. Currently the operation rate of technical producers is only 20%, and even formulation companies can’t find supplies,” sales director Linghui Rui in Guangxi Huifeng Biotech Co., Ltd. said.
To prevent this from happening, Guangxi Huifeng remitted payment very early, while delivered goods were only 60%. Although the current inventory is adequate to deal with winter inventory orders, the company won’t accept selling on credit during the period, considering the unpredictable, changing market.
Xianfeng Zeng, vice president of Qingdao Hansen Biologic Science Co., Ltd., said technical companies will choose larger, more stable clients as a priority to maintain solid relationships with older customers. Meanwhile, they will receive some overseas orders to keep the market abroad.
“Nowadays, so many companies are facing the same trouble,” Yannan Gui, deputy general manager of Guangdong Zhenge Biotech Co., Ltd., said. “For now, we use the ‘guarantee on goods instead of pricing,’ meaning payment goes first, and the company delivers the goods according to the status of the payment, with the price going with the market.”