Herbicides China News 1508(12 issues per year)

Date: 2015-09

“China’s pesticide industry depressed in H1 2015

Summary: In H1 2015, China’s pesticide industry suffered from overcapacity, constantly depressed market and fierce competition amongst companies, resulting in slow profit growth. Especially, the coming slack season of herbicide drove down the trading volume and prices of related products.

In H1 2015, the profit growth of China’s whole pesticide industry was slow, affected by overcapacity, continued sluggish market and sharp competition among companies. In this period, the transaction price of pesticide technical still fluctuated at low levels. For instance, the prices of glyphosate, paraquat and other bulk pesticides continued declining in China. The weak market demand forced most of manufacturers to reduce operating rates and even to suspend production. In especial, after the sharp ups and downs, glyphosate price still remained sluggish, mainly because in the earlier stage, glyphosate price was forced up by the market and the forecast on the demand and supply in the later period was not comprehensive enough. Therefore, the glyphosate prices of many manufacturers were closed to the cost price and even lower. With the coming hot weather, many manufacturers also suspended production for overhaul. Besides, the slack season of herbicides led to declining trading volume and price in herbicide market. Besides glypohsate, the transaction prices of many herbicide technical including paraquat, acetochlor and atrazine all decreased. Under the strengthened environmental pressure, increasing production cost and depressed market, some enterprises suffered from losses. Even part of small-sized enterprises had to go out of business.

According to China Crop Protection Industry Association, in Jan.-May 2015, the revenue from main business of China’s pesticide industry reached USD20.46 billion (RMB125.13 billion), up 8.7% year on year; total profits reached USD1.41 billion (RMB8.62 billion), up 2.8% year on year. Of this, the profit growth was mainly attributed by the sharp YoY rise in the profit from biochemical pesticides and microbial pesticides, being 27.4%. While the YoY rise in the profit of chemical pesticides (the main part in pesticide business) was only 0.5%. It is worth noting that in Jan.-May 2015, the number of pesticide enterprises at loss recorded YoY rise of 13.1%, with a total loss by value being USD96.62 million (RMB591 million), soaring by 112.4% year on year. And the loss by scale (Loss by scale=number of enterprise at loss/total number of enterprise) increased by 1.1 percentage points year on year.

In fact, in H1 2015, many positive factors sprang up in China’s pesticide industry.

Firstly, some pesticide enterprises was successfully listed enhanced the strength of pesticide industry:
 Sichuan Guoguang Agrochemical Co., Ltd. and Limin Chemical Co., Ltd. successfully listed on the small and medium-sized enterprises board of Shenzhen Stock Exchange;
 Anhui Guangxin Agrochemical Co., Ltd. listed on Shanghai Stock Exchange;
 Zhejiang Xinnong Chemical Co., Ltd. entered the New Third Board, the pilot national share transfer system for small and medium-sized enterprises;
 Jiangsu Tuoqiu Agrochemicals Co., Ltd. listed on the Q board, the equity quotation system for small and medium-sized enterprises.

Secondly, the establishment, development and promotion of e-commerce enterprises related to agricultural means of production and the to-be-promote quick response code (QR code) policy boosted the informationization development of pesticide industry. Now, China’s pesticide industry is moving towards modernization, informationization, diversification and networking.

Nevertheless, the weak international market demand for pesticide also brought about downtrend to the industry. For instance, the exports of China’s pesticide behaved badly. Data from China Customs show that in Jan.-May 2015, China’s total import & export value was USD2.17 billion, down 8.4% year on year; and the trade surplus was USD1.39 billion, a YoY decline of 12.8%. Thereinto, except that the import & export value of fungicide industry achieved growth, that of herbicide and insecticide both recorded two-digit decline. Although the export volume of pesticide realized a small rise, its export value was down by 10.2% year on year. Of this, the export volume and export value of fungicide increased to some extent while that of insecticide showed a downtrend. The export volume of herbicide increased by 4.7% year on year, while the export value decreased by 14.4% year on year.

It is predicted China’s pesticide industry especially the herbicide industry will be depressed still in July and Aug. because of the hot weather and slack season of demand.

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