Analysis on China’s pesticide industry in H1 2016 10-10-2016

In H1 2016, with the slowdown China’s economy, continuous RMB devaluation, and cautious purchase from the international market, the performance of pesticide output, import and export still met the expectation and need of agricultural products in China anyway.



Source: Internet

 

Rise in both revenue and profit of pesticide industry in China

 

According to China’s National Bureau of Statistics (NBS), in H1 2016, the total revenue of pesticide industry reached RMB163.029 billion in China, up 5.4% YoY, with the profit of RMB11.428 billion, up 4.7% YoY. Regarding the pesticide structure development, the revenue and profit of biochemical and microbial pesticide increased over 10% YoY, which was important to stabilize the whole pesticide industry.

 

The revenue and profit of biochemical and microbial pesticide increased 14.3% and 27.4% respectively, with the growth much faster than chemical pesticide.

 

Based on the performance of China pesticide industry in H1 2016, the biochemical and microbial pesticide kept an upward trend in development, which contributed a lot to the increase of revenue and price in the pesticide industry.

 

In the past few years, new types of biochemical and microbial pesticide have kept emerging. There were about 24 kinds of pesticides that were newly registered in the global and among the new registrations, 18 of them were microbial pesticides. It could be predicted that the biochemical and microbial pesticide would capture more market share in pesticide industry while the usage of chemical pesticide would decrease in the near future.

 

However, in the crop protection market, biochemical and microbial pesticide would not replace chemical pesticide in a short term.


 


Slight fluctuation on supply of three major pesticides in China

 

Supply of pesticides kept a low increase due to weak demand from domestic and international market, high inventory and environmental pressure from the Chinese government. According to NBS, the total output of pesticide was 1.8842 million tonnes in Jan.-June 2016, up 4.3% YoY. Specifically, the output of herbicide and fungicide increased while that of insecticide went down. The output of herbicide was 938,500 tonnes, up 6.5% YoY, accounting for 49.8% of the total pesticide output. The output of fungicide was 99,800 tonnes, up 6.74% YoY, accounting for 5.3% of the total pesticide output. While the output of insecticide was 228,900 tonnes, down 7.96% YoY, accounting for 12.15% of the total pesticide output. 

 

Output of pesticide in China, Jan.-June 2016, Unit: 10 thousand tonnes, %

Type

Output in Jan.-June 2016

Output in Jan.-June 2015

YoY change

Pesticide technical

188.42

180.31

4.32

Insecticide technical

22.89

24.86

-7.96

Fungicide technical

9.98

9.35

6.74

Herbicide technical

93.85

88.10

6.52

Source: China Customs

 

In H1 2016, top three provinces in China in producing pesticides remained the same as what it was in the past, and the total pesticide output of the top three provinces accounted for 63.21% of the total pesticide output in China.

 

Jiangsu Province produced the most pesticide in China, with the volume of 583,072 tonnes, up 14.6% YoY. Shandong Province followed, with the output of 458,617 tonnes, down 2.8% YoY. As for Zhejiang Province, the output of pesticide was 149,893 tonnes, up 8.7%.


Analysis and prospect in pesticide trading in China

 

The performance of pesticide industry in China met the expectation in H1 2016, according to China Customs.

 

-          On import and export

 

In H1 2016, the total trading volume of pesticide was 789,000 tonnes in China. 735,000 tonnes pesticide was exported, up 6.3% YoY, with the export value of USD1.96 billion, down 5.9% YoY. Specifically, the export volume of insecticide was 127,000 tonnes, up 11.3%, with the export value of USD452 million, down 1%; that of fungicide was 51,000 tonnes, up 20.4% YoY, with the export value of USD250 million, up 8.5% YoY. As for the export volume of herbicide, it was 531,000 tonnes, up 10.5%, with the export value of USD1.197 billion, down 10.5% YoY.

 

As for import, China imported 54,000 tonnes of pesticide in H1 2016, up 4.4%, with the import value of USD438 million, down 1.9% YoY. Specifically, the import volume of insecticide was 7,000 tonnes, up 13.1%, with the import value of USD108 million, up 21.7%; that of fungicide was 18,000 tonnes, up 9.4% YoY, with the import value of USD174 million, down 3.8% YoY. As for the import volume of herbicide, it was 15,000 tonnes, down 10.5%, with the import value of USD89 million, down 19.1% YoY.

 

Association of Southeast Asian Nations (ASEAN), Latin America and Africa were the major export destinations in China in H1 2016. The total export volume of these three areas accounted for 65.86% of total export volume in China.

 

In the meanwhile, ASEAN and European Union were two major import destinations in China. The total import volume of these two areas accounted for 62.48% of total import volume in China in H1 2016.

 

-          On differentiation of import and export structure

 

1.       Differentiation on import and export price

 

The pesticide import increased in both volume and price in H1 2016 with the average import price of USD8105.93/t. The average import price of insecticide even reached USD15,460/t.

 

The pesticide export increased in volume and was stable in price in H1 2016 with the average export price of USD2,666.82/t, over 60% less than the average import price. The export prices were quite different among three major types of pesticides, with the average import price of fungicide even reaching USD4,937.06/t; that of insecticide, USD3,562.83/t; and that of herbicide, USD2,253.94/t.

 

2.       Trading differentiation on three major pesticides in China

 

Fungicide was exported the most in China in H1 2016 while the export of insecticide was the highlight of this year, with the increase on both its volume and price. As for import, the performance of fungicide and insecticide were much better than that of herbicide in import volume and price, especially those fungicide and disinfectant products which increased in both its import price and volume.

 

3.       New situations on import and export of China’s pesticide industry

 

Situation 1: Down in both price and volume stop

 

The price and volume of pesticide in import and export increased for a short time in Mar. 2016, which was mainly due to the beneficial effects from demand from international market and currency. In short term, the down in both price and volume of import and export has been stopped and it is predicted that both the price and volume would increase slightly.

 

Situation 2: Export increased again in slack season

 

In Mar. 2016, with the beneficial effect from the demand from international market, the export of pesticide in China performed well in both price and volume. Currently, it is slack season for pesticide in both China and international market. In China, the domestic producers have suspended productions for maintenance; thus the supply of pesticides weakens. However, the increase of pesticide in export volume and value in June 2016 showed stability among the pesticide producers.

 

Situation 3: Proportion of herbicide trading value goes down

 

In H1 2016, the total trading value of China’s pesticide was USD2.398 billion, down 5.2% YoY. Specifically, the total trading value of insecticide was USD561 million, up 5.2% YoY; that of fungicide, USD426 million, up 3.1%; while that of herbicide, USD1.286 billion, down 11.2%.

 

In the structure of trading value of pesticide in China in H1 2016, that of herbicide took up 53.63%; fungicide and insecticide, 17.76% and 23.4% respectively. We could see that the proportion of total trading value of herbicide is decreasing while those of fungicide and insecticide are increasing.

 

Trading value of pesticide in China, Jan.-June 2016 Unit: USD 10 thousand; %

Type

Jan.-June 2016

Jan.-June 2015

YoY change

Pesticide

239783

252958

-5.2

Insecticide

56070

54597

2.7

Fungicide

42571

42177

3.1

Herbicide

128606

14477

-11.2

 Source: China Customs

 

Situation 4: Differentiation of trading structure

 

At the end of last century, the usage of insecticide took up more than 70% of the total usage of pesticide in China. In the past few years, with the ban on highly toxic pesticide and overcapacity in the pesticide industry, the current usage of insecticide only accounted for about 27% of the total usage of pesticide in China.

 

In addition, with the serious diseases and pests on rice, higher possibility of potato late blight disease, and diseases and pests on corn, it is beneficial for the demand of insecticide and fungicide in China.

 

In H1 2016, the import and export volume of insecticide and fungicide both increased over 10% YoY while herbicide suffered from overcapacity, high inventory and vicious price competition in China.

 

In all, the import and export of insecticide and fungicide would be much better than that of herbicide in China in the near future.




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Tag: herbicide, fungicide, insecticide


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