After a long period of declining glyphosate prices in China, the current season is strengthening confidence for a rebound. The main factors can be found in rising prices of raw materials like glycine and paraformaldehyde and increasing downstream demand. This is what traders and buyers can expect.
In the middle of November, the ex-works prices of glyphosate TC and glyphosate formulations experienced another rise compared to the last month. The price itself is remaining at a low level compared to previous years, but the continuous price rise shows the trend back up. The price of glyphosate technical started to rise in August 2016 and is suspected to continue to rise in December, according to CCM’s analysts.
The main reason for the recently steady growth and the expected increasing trend is the higher price of the raw materials including glycine and paraformaldehyde. The prices are rising due to production cuts by governmental orders and supply difficulties in China’s north, which has experienced heavy snows. In fact, 70% of glyphosate production is based on the glycine process, which requires glycine and paraformaldehyde. Glycine prices experienced a month-on-month fall from January to September 2016. Only recently in November the price climbed sharply on a 22.45% MoM basis.
The Hebei Province in China is the most important region for glycine and paraformaldehyde producers, with the biggest accounting for more than half of China’s national total output. This province is also affected by huge pollution problems. As a result, the Ministry of Environmental Protection ordered that the production of several industry sectors must be cut down. These implementations will prospectively end on 31 Dec. 2016. Therefore, many producers of glycine and paraformaldehyde have reduced their operating rate, which in turn increases the prices due to lower supply and shortage. The leading glycine producers in China, Shijiazhuang Donhua Jiniong, and Linyi Hongtai, already increased their prices for glycine, which represents an ongoing trend, according to CCM.