Tight Supply of Chinese Glycine Pushes Up Glyphosate Prices

China’s announcement that it will conduct further pollution inspections in 2018 and 2019 is constraining the supply of glycine, the main intermediate for glyphosate production, according to market intelligence firm CCM.

Glycine is a free-flowing crystalline material, produced at varying levels of purity and is used as a sweetener or taste enhancer, a buffering agent, re-absorbable amino acid, or as a chemical intermediate, especially in the production of the famous herbicide glyphosate. To sum it up, glycine is an important raw material which is widely used in industries of pesticides, pharmaceuticals, foods and feed. Particularly, it is very important in producing glyphosate as most glyphosate in China is produced by glycine method.

China’s glycine producers are mainly located in Hebei and Shandong provinces. Some glyphosate producers in Sichuan and Hubei provinces also have their own glycine capacity.

Due to the production chain of glyphosate, the markets of glycine and glyphosate are interdependent on each other. Accordingly, supply and demand for glycine can significantly influence operating rate of glycine-based glyphosate. In 2017, Hebei and Shandong were the main targets of the country’s environmental inspections. Production cuts there spur overall glycine prices across the country, and glyphosate prices also rose. Currently, environmental inspections are being carried out on a regular basis, and may become even more stringent in 2018. In this context, glycine supply will continue to be tight, pushing up market prices and restraining the downstream glyphosate operating rate, says CCM.

New Environmental Pollution Inspection Announcements

Recently the Ministry of Environmental Protection of the People’s Republic of China announced that it plans to launch a second round of central environmental inspections in 2019. The first round was held from the end of 2015 to the end of 2017, which involved 31 provinces and solved many outstanding issues. According to CCM, pollution prevention and control will continue being the focus in the next three years, particularly significant reduction of PM2.5 concentration. It is known that besides Beijing-Tianjin-Hebei Region and its surroundings and Yangtze River Delta Region, the Fenhe-Weihe Plain will also be listed in the key regions for air pollution control. Industry insiders widely believe that this will keep spurring up chemical prices. In 2016–2017, affected by environmental inspection, PMIDA, glycine and glyphosate technical saw rises of 22.70%, 33.11% and 37.11% respectively. Currently, many provinces are eliminating chemical companies that cause environmental pollution.

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