Chlorothalonil: Prices Spike in China as Demand Outstrips Supply

Ex-works price of 98% chlorothalonil technical in China, January 2014-July 2015; source: CCM

Chlorothalonil prices have risen over 30% in China so far this year and are continuing to increase as domestic supplies struggle to keep pace with increasing overseas orders, according to agrochemicals market analysts CCM.

Advertisement

Prices for the broad-spectrum fungicide skyrocketed during the summer reaching $5,558/t by the end of July, a 31% increase over prices in January and the largest price rise in the past two years, according to CCM’s data.

The strong demand for chlorothalonil from buyers in the U.S. and the Netherlands is a welcome bright spark amid the generally gloomy outlook for China’s struggling pesticide market.

Increasing overseas orders

Chlorothalonil’s main strength is that fungi cells show a low level of resistance to it, according to research by the China Pesticide Industry Association.

However, the sudden rise in overseas orders for chlorothalonil is mainly a result of problems elsewhere, according to industry insiders:

“Most of the foreign clients are turning to China to purchase chlorothalonil because of the decreased overseas supply,” said an insider at CAC Shanghai Group Co., Ltd., an agrochemicals producer. “Since the second half of 2014, our production lines have been working at full capacity.”

CAC Shanghai Group is not the only producer struggling to keep up with orders. Insiders at Limin Chemical Co., Ltd. also reported working at full capacity and having a full quota of orders up to the fourth quarter.

Jiangyin Suli Chemical Co., Ltd., Jiangsu Weunite Fine Chemical Co., Ltd. and Jiangsu Xinhe Agrochemical Co., Ltd., meanwhile, all expected to continue producing at full capacity up to the end of this year or even into 2016 just to fulfil their current orders.

Producers caught off guard

The severity of the price spike is also a result of producers being unprepared for the rise in demand, according to Yang Gan, analyst at Chinese data portal sci99.com:

“The increasing number of new orders overseas is not the only reason for the tight supplies. Producers’ limited chlorothalonil inventories accounts for the current situation, too,” commented Yang. “The producers didn’t expect such huge demand before, so they didn’t stock large amounts of chlorothalonil.”

This is confirmed by Zhou Xiao, editor of Fungicides China News:

“In previous years, chlorothalonil prices have rarely seen a rise of more than 10%, according to CCM’s data,” said Zhou. “Actually, chlorothalonil supplies have been tight and prices have been rising slightly since H2 2014, but this small earlier rise could not help producers predict the much bigger rises in the second half of this year.”

Prices to stabilize shortly

However, the good news for buyers is that the price spike is unlikely to continue much longer.

“The rapid rise in chlorothalonil prices in China in H1 2015 was beyond insiders’ expectations. But its price is unlikely to continue increasing significantly for a long period, as has happened in the past with glyphosate, because chlorothalonil is not a staple pesticide,” predicted the insider at CAC Shanghai Group.

Zhou concurred with this forecast:

“Chlorothalonil prices may even begin to decrease shortly,” he stated. “The slack season of the pesticide market is approaching, which will lead gradually to decreasing demand and an easing of the supply situation.”

 

For more information about CCM and our coverage of pesticides in China, please visit www.cnchemicals.com or get in touch directly by emailing [email protected] or calling +86-20-37616606.