On
December 22, 2016, CCM and Tranalysis have offered a free webinar about the
recent price trends of China’s glyphosate market, including a forecast for
2017. Now we are sharing the content with all of those, who were not able to
attend the meeting.
This
webinar is enabled by CCM, the leading market intelligence provider for China’s
agrochemicals market and Tranalysis, the solution for detailed import and export
analysis.
In
November 2016, we faced another month of increasing glyphosate prices in China.
Reasons are mainly the air pollution with the regarding production limitation
and rising prices of raw materials. Furthermore, coal and other energy is experiencing
a price boom, which affects the price of glyphosate again.
Source: Customs Data
and Tranalysis
So,
the Glyphosate technical price keeps rising in China and it is likely to get
back to the era of 4,350 USD/t in the short term, like
it was in the year 2014. I am going to share some insight with you on the recent
price trends in China’s glyphosate market and do a forecast for 2017, to help
you monitor the market trend and make your decisions more sustainable.
The agenda in this webinar is the
following:
-
First, I
give a Review on the glyphosate market in China in 2016
-
Then follows
a Review on some Chinese glyphosate manufacturers
-
The Recent
price trend and analysis of glyphosate in China is being illustrated
-
And at last
I do a Forecast on the glyphosate price in China for 2017
First
of all, let’s have a review on the
glyphosate market in China, 2016.
From
January 2016 to July 2016, the average glyphosate technical price remained low
at about USD2,732/t and hit a historical low record in July this year, with the
price of USD2,519/t.
However,
after the bottom, the glyphosate price kept rising. Till Dec. 2016, the
technical price rose to USD3,491/t, up 38.58% compared to the
price in July.
According
to the Chinese Customs data, analyzed and illustrated by Tranalysis, in
Jan.-Oct. 2016, the overall export amount of glyphosate (including technical
and formulations) in China was more than 675 million Kg. The average unit price
was 2.10 USD/Kg, which leads us to the total value of more than 1.4 billion USD
on glyphosate exports.
Looking
at the trend of Quantity and Unit price, we can see, that the unit price was
falling in the first half of the year, while it started rising again in the
second half. The Quantity had the peak from March to May and fall down till
October.
Therefor,
the glyphosate market can be divided into two phases in China in 2016: Falling
price trend in the first half year 2016 and a Rising price trend in the second
half.
In the first half 2016:
The
price of USD3,045/t was basically the bottom limit for glyphosate technical. However,
with the average glyphosate technical price remained low at about USD2,732/t, glyphosate
producers suffered terrible declines.
In
the first half 2016, the glyphosate price, which is easy to be influenced by
supply, demand, and inventory, is still hovering over a low level. However,
since prices of raw materials for glyphosate do not fall along with glyphosate,
glyphosate enterprises experienced net profit declines, and even losses.
The
followings are some leading glyphosate enterprises' financial figures related
to the glyphosate business from January to June 2016.
Henan HDF Chemical Co.,
Ltd.
Hunan
HDF's revenue mainly comes from glyphosate Technical, glyphosate formulations
and fine chemicals. Accordingly, revenue from glyphosate takes up about 71% of
the company's total revenue. In the first half 2016, Hunan HDF's net profit
declined by 75.11% YoY. The company explained, that this was mainly affected by
the depressed glyphosate market and low market price. Notably, revenue and
gross profit of Hunan HDF's glyphosate business both declined.
Sichuan Hebang
Biotechnology Co., Ltd.
Currently,
Sichuan Hebang's 50,000 t/a glyphosate project is under trial production, which
did not create profit to the company in the first half 2016. Affected by the
depressed glyphosate market, Sichuan Hebang's PMIDA business also performed
badly:
Revenue:
USD58.12 milllion, down 34.44% YoY
Cost
of sales: USD38.55 million, down 40.94% YoY
Fortunately
for the company is, that Sichuan Hebang's self-produced raw materials helped
reduce some production costs supported the gross profit margin of PMIDA to rise
by 7.29 percentage points to 33.68%. It is disclosed that Sichuan Hebang is one
of the major PMIDA suppliers in China, with a production capacity given at
135,000 t/a.
Nantong Jiangshan
Agrochemical & Chemical Co., Ltd.
In
first half 2016, weak market demand and continuously low price of glyphosate
posed negative impact on Nantong Jiangshan's financial performance. Except for
glyphosate, the gross profit of the company's other products achieved a YoY
rise of 25.67%. Sales volumes and revenue of amide herbicides and fine
chemicals all showed dramatical increases. The major financial figures of
glyphosate are:
Revenue:
USD115.10 million, down 9.71% YoY
Cost
of sales: USD123.20 million, down 3.14% YoY
Gross
profit margin: -9.71%, down 7.27 percentage points YoY
Hubei Xingfa Chemicals
Group Co., Ltd.
Although
Hubei Xingfa's 60,000 t/a glyphosate project has been put into production, it
did not obviously improve the company's financial performance. Regarding the
glyphosate and glycine business, financial figures were:
Revenue:
USD175.63 million, up 34.13% YoY
Cost
of sales: USD152.24 million, up 35.20% YoY
Gross
profit margin: 13.31%, down 0.69 percentage point
Zhejiang Wynca Chemical
Industry Group Co., Ltd.
The
company described their business as “Affected by the fierce market competition
in H1 2016, glyphosate price remained low and dragged down our pesticide
business”. Major financial figures of pesticides are:
Revenue:
USD212.76 million, down 22.57% YoY
Cost
of sales: USD194.85 million, down 22.24% YoY
Gross
profit margin: 8.41%, down 0.40 percentage point YoY
Jiangsu Yangnong
Chemical Co., Ltd.
Jiangsu
Yangnong, as one of the major glyphosate enterprises in China, was inevitably
impacted by the depressed glyphosate market. The Glyphosate price pulled down
financial performance of its herbicide business in H1 2016:
Revenue:
USD81.62 million, down 21.91% YoY
Cost
of sales: USD62.46 million, down 20.48% YoY
Gross
profit margin: 23.48%, down 1.38 percentage points YoY
Lets
also have a quick look on the top Chinese Glyphosate players with the data from
China customs, analyzed by Tranalysis. The leading exporter for Glyphosate from
January till October 2016 was Fuhua Tongda Agro-chemical Technology. Their
total export value was more than USD223 million. The second biggest player was Shandong
Weifang Rainbow Chemical. They achieved, an export value of more than USD143
million, while having a higher unit price during the year. The third place is
taken by Nantong Jiangshan Agrochemical & Chemical. Barely having half of Fuhua
Tongda’s value and quantity of export.
In H2 2016:
When
entering H2 2016, the glyphosate price began to rise. The glyphosate technical quotation
has been raised up from USD3,400/t to USD3,750/t in China in Dec. 2016.
The
most important provinces, according to Tranalysis, are hereby Jiangsu province,
Zhejiang Province, and Hubei Province.
Source: Customs Data
and Tranalysis
The analysis for the
price rise
With
the approaching of peak sale season for glyphosate, all glyphosate enterprises
in both upstream and downstream markets hope to make impressive profits.
In
fact, after experiencing market depression for such a long time, many
enterprises are at loss and are in an urgent need of raising prices to balance
out these losses.
Buyers
usually have their enquiries in Jan. and actual orders in Feb. and March.
Currently, most of the glyphosate enterprises are producing more glyphosate to
prepare for the coming peak season.
Nowadays,
Africa has increasing demand for glyphosate AS; however, the demand for glyphosate
technical still depends on the demand from Europe, the USA and South-east Asia.
A
Staff member from Nantong Jiangshan Agrochemical & Chemical disclosed to
CCM that, the inventory of glyphosate is still high in glyphosate enterprises
now. Although the order has already begun to increase, the demand will only
increase much more after one month.
Rising costs of raw
materials
Rising
costs of raw materials, in some way, support the increasing price for
glyphosate. Currently, the prices of raw materials for glyphosate, namely
glycine, PMIDA etc. showed different degrees of rises.
Glycine price rise
The
ex-works price of glycine increased to USD1,862/t in Dec., up 73.53% compared
to that in Sept. Also the lowest price this year.
The
main two reasons for the soaring price are: Glycine has tight supply due to
production suspension and the heavy winter in northern China
In
Nov. 2016, the Shijiazhuang (Hebei) government decided to take measures on
controlling the environment pollution in all the chemicals industry in
Shijiazhuang, including pesticide productions, concrete industry, pharmacy
industry, steel industry and so on. All
the enterprises and producers in the said industries should suspend their
production from Nov.7 2016 up to Dec. 31 2016.
The
winter in China has two main effects on the glyphosate price at all. First of
all, winter is known to be the storage peak season for glyphosate, while many
manufacturers only have small quantities of inventories. This higher demand in building
a storage is driving prices upwards. Another impact is the heavy snowfall in
northern China. The snow causes difficulties in transportation, which also
leads to a shortage of raw materials and therefore a higher price of upstream
and downstream products.
Regarding
to the raw material route for glyphosate in China, 70% of the production
capacity belongs to glycine capacity. As for Shijiazhuang, the most important
supply and production base for glycine and paraformaldehyde, takes up 50% and
60% of the total raw material supply in China respectively.
Due
to the production limitation at this time, two major glycine suppliers from Hebei:
Shijiazhuang Donghua Jinlong Chemical (with 90,000 t/a glycine capacity) and
Hebei Donghua Yiheng Fine Chemical (also with 90,000 t/a glycine capacity) had
both suspended their productions. It is predicted that the productions of
200,000 t/a glycine capacity will be suspended and limited in the coming weeks.
As
for PMIDA, in Dec., the ex-works price of USD1,840/t, went up 34.2% compared to
that in Jan 2016.
Importing countries and
their share
The
three biggest importing countries of China’s glyphosate from January to October
have been Brazil, Australia, and Argentina. Together, they have about two-third
of the share for the 10 biggest importing countries together. For a deeper
analysis on Glyphosate export, contact our trade exports for a customized
report.
Price support from
environmental pressure
Affected
by the 2016 G20 summit held in Sept., glyphosate enterprises in Zhejiang
Province and the surrounding areas significantly reduced the operating rate,
leading to a fall in the market supply.
On
19 Sept., the 2016 Glyphosate Collaborative Group Work Conference was held in
Beijing, during which the first draft of the Glyphosate Industry Hazardous
Wastes Disposal and Treatment Control Technical Specifications (Outline) was
explained and it revealed how the costs of waste water disposal would further
increase the production cost of glyphosate.
In
addition, the second batch of environmental inspection team will be stationed
in major glyphosate producing provinces including Sichuan and Hubei. When the
time comes, the production of enterprises within these areas may be affected,
and therefore market supply would be largely reduced.
Environmental
pressure from the Chinese government helps increase the production cost of
glyphosate while the suspension on production in most of medium- and
small-scale glyphosate enterprises will hugely affect the supply of glyphosate,
which it is a good chance for the enterprises to rise their quotations.
Forecast with CCM
online platform
According
to the price index calculated on CCM’s Online Platform, the glyphosate price
would keep rising in short term in China, with USD140/t in the price growth.
The
reasons for the increasing, according to CCM, results from the tight glycine
supply due to the production suspension in Hebei.
Under
the high environment pressure from the Chinese government in Hebei, the glycine
producers are facing long-time limitation in their production. Thus, the short
supply is only the beginning.
With
the approaching of the peak season for glyphosate, the demand from the buyers
has already increased. Though some glyphosate enterprises still have some raw
materials that were stored before, the raw material inventory is limited and it
is predicted that it will run out in late Dec.
Reasons of the
glyphosate price in China in 2017
The
Glyphosate technical price is expected to get back to the era of USD4,350/t in
China, according to CCM’s analysts. The rising price will therefore improve the
profits of the Chinese glyphosate enterprises.
During
the peak season for glyphosate, with the intense environmental pressure from
the Chinese government, the supply of raw material will be tighter and the
glyphosate price is expected to increase, which helps to improve the
performance of glyphosate producers, especially those producers with the production
lines of glycine.
Regarding
to the purchasing, as for China’s producers of aqueous solutions, with the exit
of paraquat AS in July this year, they are actively in purchasing the
glyphosate to fill the left market of paraquat AS. Thus, they are quite
acceptable for the rising price of glyphosate.
As
for overseas buyers, though they had a wait-and-see attitude towards the price
rise of glyphosate in the AgroChemEx held in Shanghai in October this year, now
most of the China glyphosate suppliers are all raising the quotations and the
overseas buyers have no choice but to accept the price.
As
for domestic traders, they encourage the glyphosate price to rise actively to
make more profits on the one hand; and to clear out their inventory to speed up
their cash flow when the producers are pushing up the prices on the other hand.
As
for glyphosate producers since August 2016, they finally began to make profits.
To increase the price is the major way to get more profits.
As
CCM gathered all the information inside our pesticide online platform, CCM is
offering a 7-day free trial for you to entirely access the information you
want.
You
could monitor much more than glyphosate price trends by yourselves and receive
all the relative and valuable information in our new CCM Online Platform.
For
the trade data and analysis of Glyphosate and much more Pesticides, ask our
experts at Tranalysis for a consult.
