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Glyphosate China Monthly Report Vol.1 Issue 09, 2009

Copyright Š CCM International Limited


Glyphosate China Monthly Report Vol. 1 Issue 09

Publication date: 27 September, 2009

Content ■■ Company Dynamics........................................................................ 1 Yangnong Chemical to expand glyphosate business........................................................................ 1 Hubei Xianlin to launch 20,000t/a EA............................................................................................ 1

■■ Market Analysis..............................................................................2

Who will dominate Chinese glyphosate market?..............................................................................2 Glyphosate producers to upgrade formulation.................................................................................3

■■ Global Dynamics.............................................................................4 Monsanto to shear more employees.................................................................................................4

■■ Price Update...................................................................................4 Glyphosate price to remain low.........................................................................................................4 Transportation ban impacts yellow phosphorous price................................................................... 5

■■ Supply & Demand...........................................................................6 Glyphosate’s position in orchard threatened....................................................................................6

■■ Import/ Export Analysis................................................................. 7

Glyphosate export sees big tumble in July 2009.............................................................................. 7

■■ Regisatration................................................................................. 8 Glyphosate registration situation......................................................................................................8

China Crop Protection Summit 2010 - will be launched in Shanghai China during 18th March and 19th March, 2010. Ready Market Reports: - Outlook for China Glyphosate Industry 2009-2014 - Production & Market of Ethanolamines in China - Edition (3) - World Outlook of Glyphosate 2009-2014  - Survey of Glufosinate in China  - The Survey of 2,4-D in China  - IDAN Survey in China  - Production and Market of Metazachlor in China  Coming Reports: - Crop Protection China Report (update, 2nd edition): 30th Oct, 2009 - Production and Market of Paraquat in China (2nd edition): 18th Sep 2009. - Future of Green Biotechnology in China: Oct 2009

Ready Trade Reports: - Paraquat Production and Export in China 2008-Jun. 2009 - Pendimethalin Production and Export in China 2008-Jun. 2009 - Metamitron Production and Export in China 2008-Jun 2009 - Tebuthiuron Production and Export in China 2008-Jun.2009 - Captan Production and Export in China Jan-Apr. 2009 - Oxyfluorfen Production and Export in China 2008-Jun 2009 - Diuron Production and Export in China 2008-Jun 2009


Vol. 1 Issue 09, 2009

Glyphosate China Monthly Report

Headlines

Editors' words Welcome to the September issue of Glyphosate China Monthly Report published by CCM International, a professional consulting company who has been extensively and intently focusing on dynamics of China’s glyphosate industry. The year of 2009 is definitely a tough time for glyphosate producers. Despite gradual recovering economy, China’s glyphosate industry still stays at its downturn, embodying in export tumble and price slip, both of which have emerged since H2 2008 and are expected to continue this year. Awful environment has also brought Monsanto into trouble, pushing it to announce large-scale job cuts. Grave challenge not only comes from gloomy market, but also from issuance of ban on low-content formulation, which has propelled China’s glyphosate producers to focus on product update and wastewater treatment investment. Being different in strategy development, producers with advantages in clients, technology patent and special products are expected to prevail over intense competition in China’s glyphosate industry.

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• Yangnong Chemical is to expand its glyphosate business through issuing additional shares. • Hubei Xianlin has completed 20,000t/a EA plant construction in Sep. 2009 and will start a trial run by the end of Oct. 2009. • Companies who have plenty of clients, technology patent or special products will dominate Chinese glyphosate market in the future. • Producers are actively updating their products as production of formulation with content lower than 30% will be forbidden in 2010. • Monsanto is planning to cut more employees than previously announced for the sake of cost reduction. • Glyphosate price will not go up in short time. • Price rise of yellow phosphorous in major production bases since early August will end and the price will keep stable by the end of Sep. 2009. • Owing to frequent or incorrect application of glyphosate which leads to negative impacts on orchard, peasants has started to turn to other herbicides, thus hreatening glyphosate’s leading position in orchard weeding. • China’s glyphosate export has experienced big tumble in Jul. 2009, with export volume of 30,770 tonnes, down about 17.4% year on year. • Registration on low AI content has decreased greatly in 2009.

Main Companies mentioned in this issue

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■■ Company Dynamics Yangnong Chemical to expand glyphosate business

Y

angnong Chemical Group Company (Yangnong Chemical), on 12 Sep. 2009, announced that the company has received approval of its additional stock issuance from China Securities Regulatory Commission (CSRC). Yangnong Chemical expects to expand its glyphosate business through this additional stock issuance. Under the requirement of CSRC, Yangnong Chemical is to issue no more than 18 million shares, which is expected to collect about USD66 million (RMB450 million). The raised capital is used for construction of a 30,000t/a glyphosate plant, which is undertaken by Yangnong Chemical’s subsidiary, Jiangsu Youth Chemical Company (Youth Chemical), mainly focused on glyphosate production. Adopting DEA route, the new plant’s construction is still underway. The first stage with capacity of 15,000t/a was completed and launched around Q1 2009, enabling the company’s total glyphosate capacity to reach 25,000t/a, according to Yangnong Chemical’s Q1 financial report. Upon completion of the whole project by the end of 2009, the company’s glyphosate capacity will soar to 45,000t/a

from the original 10,000t/a in 2008. Owing to glyphosate overcapacity and weak global demand, most glyphosate producers, even some big enterprises, have suffered profit tumble in 2009, such as Nantong Jiangshan Agrochemicals & Chemical Company (Nantong Jiangshan), whose net profit decreased about 99.3% in H1 2009 year on year, shown by its semi-annual report. However, Yangnong Chemical has achieved net profit growth in 2009, which is scarce in glyphosate industry this year. According to the company’s semi-annual report, its net profit was about USD17.6 million (RMB120.0 million) in H1 2009, up 2.47% over the previous year, mainly attributed to its launch of new insecticides and stable sales channels for glyphosate. In order to ensure its profit growth, as early as 2008, Yangnong Chemical had signed a long-term supply contract with Syngenta, the world’s top crop protection enterprise. According to the contract, the value of glyphosate supplied by Yangnong Chemical is based on current production cost plus minimum profit.

According to China’s export record of glyphosate, the company accumulatively exported about 8,548 tonnes of glyphosate technical in H1 2009, increasing 77.93% over prior-year period, with total export value of USD 40.5 million in H1 2009. Considering that glyphosate competition will become increasingly intense in the near future, Yangnong Chemical is determined to carry on its expansion project, aiming to grab more market share and to consolidate its position in glyphosate industry. Because of the soaring market in 2007, China’s glyphosate capacity has expanded rapidly, reaching over 600,000 t/a in 2009 with around 50 companies engaged in production, which is severely surplus. Besides, Yangnong Chemical’s additional stock issuance will optimize the company’s financial structure. Upon completion of this issuance, the company’s debt-asset ratio is expected to reduce to 44.49% from the original 53.72% in March 2009.

Hubei Xianlin to launch 20,000t/a EA

H

ubei Xianlin Chemical Company (Hubei Xianlin) has completed its 20,000t/a EA plant construction in Sep. 2009, revealed Mr. Chen, sales manager of Hubei Xianlin. The company is expected to initiate a trial run by the end of Oct. 2009, which will enlarge China’s EA capacity to about 117,000t/a. With total investment of USD11.13 million, the construction of the EA plant was started in H2 2008. The EA plant will introduce the production technology from Zhejiang University of Technology (ZUT), who firstly developed EO ammonolysis method for EA production in China. Currently, ZUT’s EA production technology is most advanced in China. And Jiaxing Jinyan Chemical Company (Jiaxing Jinyan), the largest EA producer in China, also adopts ZUT’s technology. The production process of EO CCM International Limited

ammonolysis method is shown as Figure 1. The main raw materials for EA production are ethylene oxide (EO) and ammonia. For this project, EO will be purchased from Sinopec and ammonia is self supplied. And this EA plant will produce 3 specifications, namely MEA, DEA and TEA, with output proportion of 3:4:3, which indicates that DEA capacity of Hubei Xianlin will be 8,000t/a after this project is finished.

At present, EA production mainly concentrates in Jiangsu Province and Liaoning Province, with their total capacity accounting for about 91.4% of China’s total. South China is the largest surfactant production region in China, and currently there are only one producer, namely Maoming Petro-chemical with capacity

FIGURE 1: ZUT’s EO ammonolysis method for EA production

EO Ammonia

6MPa, 100℃.

Ammonia removal

Evaporation

Vacuum distillation

Tubular reactor

DEA TEA

Source: CCM International

1

MEA

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Glyphosate China Monthly Report

of 8,000t/a, which is far less than the demand (estimated to be about 35,000t/a~60,000t/a in South China). In light of huge market potential, Hubei Xianlin as a newcomer in EA industry is optimistic about the EA market.

end of 2009, Jiaxing Jinyan’s 50,000t/a EA plant and Fushun Baifang’s 50,000t/a plant are expected to be launched, and domestic EA capacity will reach about 217,000t/a, which will basically satisfy the domestic demand.

With gradual economic growth, domestic demand for EA from downstream sectors has grown rapidly in recent years, reaching about 174,000 tonnes in 2008, with CAGR of about 12% in 2004~2008. And it is predicted that the demand will keep increasing with CAGR of over 8% in the next 5 years.

The main end users of EA are agrochemical, surfactant, pharmaceuticals and polyurethane in China, and their total consumption accounts for about 79% of EA market, among which agrochemical is the largest application field, sharing about 38% of

China’s EA market. And among the three EA products, namely MEA, DEA and TEA, DEA has the largest application in China, sharing over 55% of total EA consumption. Hubei Xianlin has been specialized in production of fertilizer and chemical raw materials for about 40 years. Currently, its main products are sulfuric acid (100,000t/a), phosphate fertilizer (200,000t/a), compound fertilizer (100,000t/a) and sodium bisulfite (30,000t/a).

TABLE 1: Main EA producers in China, as of Sep. 2009 Despite strong demand, domestic Current EA is in short supply Company Specification Launch time capacity, by far and thus t/a China imports large Jiaxing Jinyan Chemical Company MEA, DEA,TEA Aug. 2008 50,000 quantities of EA from (Jiaxing Jinyan) overseas market. Fushun Beifang Chemical Company And considering MEA, DEA,TEA 1996 30,000 (Fushun Beifang) increased demand, Maoming Petro-chemical Shihua Company domestic producers MEA, DEA, TEA Mar. 2001 8,000 (Maoming Petro-chemical) are active to expand Source: CCM International the capacity. By the

Capacity by late of 2009, t/a

100,000 80,000 8,000

■■ Market Analysis Who will dominate Chinese glyphosate market?

T

here are over 50 glyphosate technical manufacturers with their total capacity amounting to about 655,400t/ a in China now, but global demand was only about 600,000 tonnes in 2008. When global technical and PMIDA producers are also taken into consideration, it’s obvious that capacity of glyphosate technical production in China is obviously surplus. Limited market both at home and abroad will push many small glyphosate producers to withdraw from the market. So who will dominate Chinese glyphosate market in the future? In August, most glyphosate technical producers suffered loss due to low technical price. From a perspective of comprehensive strengths, only those with advantages in the following three aspects can profit from glyphosate business or suffer less from capital loss, and have the most potential to dominate China’s future glyphosate market. CCM International Limited

Plenty of clients: Typical enterprises are Zhejiang Wynca Chemical Group Company (Zhejiang Wynca), the largest domestic glyphosate producer, and Zhejiang Jinfanda Bio-chemical Company (Zhejiang Jinfanda), top 5 at home. For Zhejiang Wynca, it cooperates with Albaugh, Dow and Nufarm etc., and as for the latter, it has established business relationship with Atanor, Helm, Mey etc. Technology patent or special product: Good examples are Zhejiang Wynca and Jiangsu Good Harvest-Weien Agrochemical Company. (Jiangsu Weien). It is no doubt that Zhejiang Wynca is the leading company in AEA pathway technology, especially in chloromethane recycling. And Jiangsu Weien is the first company to produce 77.7%WSG. Cooperation with MNCs: Nantong Jiangshan Agrochemical & Chemicals

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Company (Nantong Jiangshan) and Jiangsu Yangnong Chemical Group (Jiangsu Yangnong) belong to this type. For example, both Nantong Jiangshan and Jiangsu Yangnong have established cooperative relationship with Syngenta. Though the third advantage can help the company get handsome profit in the short term, the first two are expected to have more power to consolidate the company’s comprehensive strengths in the long run, as there are high risks and uncertainty for the company only equipped with the third kind of strength. Heavy dependence on big clients: The companies’ sales performance is largely subject to big clients’ cooperation intention. If the big clients do not cooperate with them, they even can not sell their products. The biggest problem for them is their weak ability to cope with unexpected market risk effectively. www.cnchemicals.com


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Take Anhui Huaxing as an example, its PMIDA sales value and volume dumped when Atanor, its biggest cooperator, encountered severe fiscal difficulty.

when choosing partner in China, is not domestic companies’ low production cost, but their roles as newcomers, which are easily controlled.

High uncertainty of cooperative relationship with MNC: As there are too many glyphosate technical suppliers in China, MNCs can change their cooperators easily. What’s more, the main consideration for some MNCs

Lack of independent brand: Most of these enterprises adopt OEM, so they have no independent brand to establish their own sales network and make their products known to users, mainly referring to peasants.

Therefore, it is concluded that the companies with plenty of clients, technology patent or special product will dominate Chinese glyphosate market in the future. If companies who only have strengths in international cooperation do not change their strategies, they will be venerable to market risk.

Glyphosate producers to upgrade formulation

C

hina's glyphosate 10%SL manufacturers are actively to upgrade their products, driven by government’s regulation issued on 25 Feb. 2009, stating that glyphosate producers who produce formulation with a.i. content lower than 30% (mainly 10%SL) should change their registrations on active ingredient content before 31 Dec. 2009. China is the only producer and user of 10%SL in the world. With its low price and easy application, 10%SL shares about 90% of China’s glyphosate market by sales volume. In 2008, there are 152 10%SL producers producing about 630,000 tonnes of 10%SL in China. It is thus predicted that after 10%SL withdraws from the market, a huge market gap of about 30,000 tonnes glyphosate technical will be left. In order to gain more market share, producers of 10%SL and other low content formulation are taking urgent measures to upgrade their products. According to incomplete statistics, over 180 glyphosate manufacturers are working hard to change formulation content, such as Hubei Sanonda Company (Hubei Sanonda) and Jiangsu Taicang Pesticide Factory Company (Jiangsu Taicang).

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‘Our company has changed the registration on low-content formulations, and now we are designing new package of 30%WP and preparing to promote it as soon as possible,’ said head of the Market Development Department of Fujian Sannong Group Company (Fujian Sannong). Mr. Lu from Sales Department of Jiangsu Taicang said ‘the company is now promoting the new products, mainly 41%IPA, and in order to encourage peasants to apply new products, the company will provide them some for free as an elementary means of promotion.’ Apart from product update, many enterprises have stated to initiate advertising campaigns to get a slice of the huge market gap, such as Jiangsu Good Harvest-Weien Agrochemical Company (Jiangsu Weien) and Anhui Huaxing Chemical Industry Company (Anhui Huaxing). ‘We are strengthening promotion activities as there is a big promising market brought by the ban on low content formulation production,’ said sales from Anhui Huaxing. Currently, there are various formulations with different formulation type and

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content in market, such as 30%SP/ WP, 41%IPA, 50%SP/WP, 65%SP/ WP, 62%IPA, 74.7%WSG, 75.7%WSG, 77.7% WSG, 88.8% WSG and 95%WSG etc. Glyphosate enterprises may shift to produce these formulations after 10%SL withdraws from market. In global market, Monsanto’s Roundup (41%IPA) is the most popular glyphosate formulation which accounts for above 50% the world’s market share. In China, 41%IPA is also the largest formulation except 10%SL, suggesting 41%IPA’s huge potential to substitute 10%SL in glyphosate formulation market. For other formulations, market opportunity still exists. ‘It is too early to estimate which formulation will dominate China’s glyphosate market. But there is no doubt that peasants will pay more attention to quality and efficacy of the products,’ said Mr. Zhang, pesticide salesman in an agrochemical chain supermarket in Fujian Province, ‘In addition, salesmen’s effort in promotion, as well as agricultural technicians’ instruction to peasants on product application are needed to capture market needs.’

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Glyphosate China Monthly Report

■■ Global Dynamics Monsanto to shear more employees

M

onsanto, the world's leading glyphosate producer, announced on 10 Sep. 2009, that it would cut more employees than what is planned previously. It is reported that about 8% of its employees across the world, related to 1,800 jobs, will be sheared. Most of the planned laid-off employees come from the unit that produces Roundup, as Roundup business has suffered big profit loss compared with last year. Early in June, Monsanto proclaimed to shear about 4% of its staff, about 900 jobs. Now, it has set a new target of 8%, according to spokeswoman Kelli Powers from the headquarters, who also disclosed that most of the employees working in the U.S. have already been informed of the job cut. Monanto predicted that its 2009 sales income would touch the lowest point of its income forecast, due to the company’s weakening sales performance in businesses of Roundup and other

herbicides. The most direct reason of this slip is that farmers in the world have reduced herbicide application under global economic downturn and competitors in China seize the opportunity to introduce cheaper glyphosate-based herbicide. In response to profit slip, Monsanto has started to reshuffle the company. On one hand, it streamlined the Roundup business by allocating a small division to take charge of Roundup sales; on the other hand, it continued to primarily focus on its most profitable business, namely genetically modified seeds for which Monsanto has applied patent. The job cut is part of Monsanto’s restructuring plan, from which Monsanto estimates that it could save between USD550 million and USD600 million. The company expects the restructuring will save between USD220 million to USD250 million annually, with one third to be realized in fiscal 2010 and fully

realized in 2011. It said that it expects full-year ongoing earnings per share for this year to be at the low end of its previously announced range of $4.40 to $4.50. Expected results will be achieved with the help of a lower tax rate, cost savings and strong demand for seeds, according to Monsanto. Partially due to the deteriorating sales of Roundup, the company’s shares tumbled USD4.18, or 5 %, to close at USD79.30 on 10 Sep this year. The job axe this year is in line with Monsanto’s future expansion strategy on GM seeds sales, which will promote profitability of its shares. For 2010 fiscal year, Monsanto expects sales income ranging from USD3.10 to USD3.30 per share while analysts expect USD4.08 per share. In 2012, Monsanto expects to achieve double gross profit of fiscal 2007, given the strong demand for GM seeds.

■■ Price Update Glyphosate price to remain low

G

lyphosate price now is still staying at a very low level and will not go up in short time.

upcoming bright market for glyphosate. But after a very short period of flourish, the price dumped again from April and has remained sluggish up to now.

In the first half of this September, glyphosate technical price lingered at a low level, down to only USD2,914/t (RMB19,900/t).

4,500 4,000 3,500 3,000 2,500

Ja n J a 1~1 n 16 5 Fe ~ 3 b 1 Fe 1~ b 15 16 M ~ 28 ar M 1~ ar 1 16 5 ~ Ap 3 r 1 Ap 1~ r 1 15 6 M ~3 ay 0 M 1~ ay 1 1 5 J u 6~ n 31 J u e 1~ ne 1 16 5 Ju ~3 ly 0 J u 1~ ly 15 1 Au 6~3 1 g Au 1~ g 15 16 Se ~3 p 1 1~ 15

Glyphosate price up-thrust for the moment had encouraged many manufacturers and experts to expect an

For one thing, Chinese glyphosate

FIGURE 2: Glyphosate technical price, 2009

Price: USD/t

Gyphosate technical price rose up from January this year, reaching the highest in March up to now, from USD3,294/ t in 1-15 January to USD4,100/t in 1-15 March, which caused Chinese glyphosate technical producers to clear out their inventory during that period.

Overcapacity will not be relieved in the short term.

Source: CCM International

CCM International Limited

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Glyphosate China Monthly Report

technical production capacity has soared to 655,400t/a currently, but global glyphosate demand was only about 600,000 tonnes in 2008. When taking PMIDA capacity into account, the overcapacity will become more severe in China. For another thing, many small producers have suspended their glyphosate production, as the price is too low to gain profit. And when the price rebound to a normal level, suspended glyphosate producers will resume production, which will lead to low price in return. • Capacity concentration needs long time Capacity concentration, namely to clear out small companies, is helpful for healthy development of glyphosate industry, but it takes a long time to realize. Generally, there are two driving force for glyphosate capacity concentration: one is the national environmental protection policy, which restricts the development of small-scale enterprises and finally squeezes their market share; the other is the continued gloomy industry, which will force them to withdraw from the market. These two forces currently are taking effect but both of them need long time. • Gloomy market Because domestic consumption of glyphosate technical is very limited compared with its capacity, only about 34,000 tonnes in 2008, 90% of China’s glyphosate technical (taking PMIDA into account) is exported. But affected by global financial crisis, overseas demand is shrinking, especially in South America, one of China’s key export destinations of

glyphosate.

money to buy pesticide.

For one thing, Argentina’s biggest PMIDA user Atanor has encountered fiscal difficulties since last year, which directly led to low import volume of PMIDA.

• Zhejiang Wynca’s price drop will cause copy-cat effect

For another, Argentina government is considering forbidding glyphosate use nationwide, mainly considering food safety and environmental protection, which has posed great pressures on local distributors in Argentina and thus they dare not enlarge glyphosate import volume from China. Furthermore, in light of local big inventory and sluggish economy, Argentina has declined the import volume from China since last October. Meanwhile, Argentina’s farmers under economic downturn have little

Zhejiang Wynca Chemical Group Company (Zhejiang Wynca) began to lower its price to less than USD2,782/ t (RMB19,000/t) after 2009 FCI Trade Summit, held in Argentina. As the leading glyphosate producer in China, Zhejiang Wynca’s price drop, without doubt, will induce price slip among glyphosate producers nationwide. The only chance for the price rise this year may occur in Q 4, in view of expected price rise of crude oil, as well as distributors to increase stock as preparations for next year’s pesticide production peak season.

TABLE 2: Ex-factory prices of glyphosate products and the raw materials, Sep. 2009 Product

USD/t

Glyphosate technical

2,914

19,900

-0.50%

315

2,150

-6.52%

41% IPA

1,508

10,300

-1.90%

62% IPA

1,801

12,300

-2.38%

50% WP

2,167

14,800

-1.33%

75.7%WP

10% SL Glyphosate formulations

Price change over last month

RMB/t

3,221

22,000

-5.58%

PMIDA

1,786

12,200

-1.61%

Yellow phosphorus

1,698

11,600

2.65%

198

1,350

8.00%

Chlorine DEA*

1,596

10,900

3.81%

Glycine

1,464

10,000

2.04%

IDAN

1,391

9,500

-1.04%

Formaldehyde DMP PCl3

158

1,080

8.00%

1,054

7,200

0.00%

673

4,600

9.52%

Source: CCM International Note:* the quotation of imported DEA

Transportation ban impacts yellow phosphorous price

T

he price rise of yellow phosphorous in major production bases early August will come to an end and the price will keep stable by the end of this Sep., as the downstream companies have suspended purchase, due to the ban on transportation of hazardous materials from 15 Sep-9 Oct. for the sake of China’s National Day.

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The price rise of yellow phosphorous since this Aug. is mainly driven by increasing demand from pesticide industry. Usually, annual peak season for pesticide production starts from October, but with ban on transportation of hazardous chemical materials, most pesticide companies advance the purchase

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period for raw materials, including yellow phosphorous, which has pushed up yellow phosphorous price. Since the ban was implemented, most pesticide companies have suspended the purchase, causing the raw material prices to keep stable. The change of yellow phosphorus price has little impacts on glyphosate industry,

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as currently glyphosate production has a rather low operating rate due to gloomy market. The ban is mainly implemented in Beijing and its surrounding regions, including Tianjin City, Hebei Province, Inner Mongolia Autonomous Region, Liaoning Province, Shanxi Province and Shandong Province. Besides, Sichuan Province will suspend approval of highway transportation of hazardous materials cross cities and provinces during 30 Sep. to 9 Oct. this year. Transportation of hazardous materials by waterway will be limited from 1-8 Oct.

season for pesticide production. However, the period is rainless in most parts of China, which means that electricity supply will fall short of demand in major yellow phosphorus production regions, whose electricity is mainly hydropower,

FIGURE 3: Ex-factory price of yellow phosphorous in China, Jan. -Sep. 2009 2,000 1,950 1,900 1,850 1,800 1,750 1,700 1,650 1,600

In China, yellow phosphorus capacity mainly concentrates in Yunnan (52%), Guizhou (20%), Sichuan & Chongqing (12%) and Hubei (8%). Yellow phosphorous price usually stays at a high level from January to April with its increasing demand, as this period is hot

so operating rate of yellow phosphorous production is rather low, which leads to insufficient supply of yellow phosphorous.

1,550 1,500 15 -J an 31 -J an 15 -F eb 28 -F eb 15 -M ar 31 -M ar 15 -A pr 30 -A pr 15 -M ay 31 -M ay 15 -J un 30 -J un 15 -J ul 31 -J ul 15 -A ug 31 -A ug 15 -S ep

1,450

Source: CCM International

■■ Supply & Demand Glyphosate’s position in orchard threatened

O

wing to frequent or incorrect use of glyphosate, negative impacts have occurred in orchard, such as soil erosion, which prompts peasants to turn to other herbicides, such as paraquat. This indicates that glyphosate’s leading position in orchard weeding has got greatly threatened, as orchard is the largest consumer of glyphosate in China. The negative impacts mainly include: • Glyphosate will kill the weed’s roots, which is unfavorable to protecting water and land in orchard.

facing decreasing market share. The situation mainly happens to orchards of apple and pear. In Shandong Province, the second largest origin of apple, peasants used to apply glyphosate to control weeds in orchard, but currently, the application times and area have greatly declined. According to a peasant interviewed, in view of glyphosate’ damages on orchard, he reduced the application frequency to once every 3 years from original twice to three times every year. Hebei Province, the largest origin of pear and whose orchard area ranks the first in China, has encountered similar

FIGURE 4: Consumption structure of glyphosate in China, 2008

• Some symptoms of malnutrition occur in fruit trees, such as small leaves, rolled leaves, etc., because phosphate ions, glyphosate’s main degradation product, tends to combine with ions of iron, zinc, etc, and form phosphates, which hinders fruit trees to absorb iron and zinc.

25%

35%

8% 32%

• Glyphosate has phytotoxicity on fruit trees. As Orchard Traditional crops Tea, rubber and sugarcane Others glyphosate takes a long time to lose its activity in soil, it could be absorbed by fruit root and transmitted across different parts of the fruit trees, which can baffle the growth of fruit tree’s roots and leaves. Long- Note: Traditional crops mainly include wheat, rice, cotton, soybean, corn, etc; term and successive use of glyphosate will aggravate Others mainly include wasteland reclamation, non-agriculture use, etc. the phytotoxicity. Source: CCM International Because of above negative impacts, glyphosate is CCM International Limited

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to be cleared out with other herbicides, and when the fruit trees grow slowly thus uneasily suffering from glyphosate’s phytotoxicity.

situation. Though this adverse situation just emerges in several provinces, it may extend to more regions in the near future, because of glyphosate’s inevitable phytotoxicity.

In 2008, orchard has consumed about 11,200 tonnes of glyphosate (calculated by AI), accounting for 35% of the total consumption in China. In 2004-2008, glyphosate application in orchard increased with CAGR of about 30.5%, almost equal to the growth rate of overall

According to professors’ suggestions, paraquat used in orchard weeding is applied in spring and summer when crops are in blooming period and weeds start to grow, while glyphosate is applied in autumn when the weeds are difficult

consumption of glyphosate in China. In the next 5 years, the growth of glyphosate consumption in orchard is definitely to slow down and will be lower than the overall growth of glyphosate consumption in China, due to its inevitable phytotoxicity.

■■ Import/ Export Analysis Glyphosate export sees big tumble in July 2009

A

360.7%, while for 62% IPA and technical, their export volume dropped 61.9% and 22.8%.

ccording to China Customs, in Jul. 2009, with export value of USD77.77 million, China’s glyphosate export has experienced big tumble in Jul. 2009, with export volume of 30,770 tonnes, down about 17.4% year on year.

FIGURE 5: Glyphosate export situation, Jul. 2009 and Jul. 2008 25,000

As of Jul. 2009, China has accumulatively exported about 258,417 tonnes of glyphosate products this year, up about 4.4% over prior year. But calculated by AI, the accumulative export volume in 2009 has decreased by 2.5% over the same period of last year.

20,000 15,000 10,000 5,000 0 41%IPA

Compared with Jul. 2008, the export volume of 41% IPA and 75.7% WP has significantly increased in Jul. 2009, with respective growth rate of 50.4% and

62%IPA Jul. 2009

Jan.~ Jul. 2009

US

Value

Jan.~ Jul. 2008 Volume

Destination

Value

Volume

260.19

82,109

US

616.48

58,313

Argentina

78.12

23,734

Argentina

333.83

29,482

Brazil

63.76

17,831

Australia

130.61

14,177

Malaysia

28.41

9,796

Singapore

129.05

12,872

Thailand

27.13

12,683

Thailand

103.81

18,741

Indonesia

17.93

6,870

Malaysia

87.87

8,484

Australia

15.25

4,836

Uruguay

64.48

8,843

Ghana

15.09

7,961

Belgium

64.16

5,747

Uruguay

13.68

6,871

Indonesia

60.80

7,818

Vietnam

13.67

8,225

Taiwan

58.70

5,347

Top 10

533.24

180,916

Top 10

1,649.79

169,824

Top 10 share

74.8%

70.0%

75.7%

68.6%

Top 10 share

Source: CCM International

CCM International Limited

75.7% WP

Technical

Jul. 2008

Source: CCM International

TABLE 3: Top 10 glyphosate destinations, Jan.-Jul. 2009 and Jan.-Jul. 2008 (Value: million USD, Volume: tonne)

Destination

In the first seven months of 2009, the top 10 glyphosate export destinations by

7

value are US, Argentina, Brazil, Malaysia, Thailand, Indonesia, Australia, Ghana, Uruguay and Vietnam, with total export value of USD533.24 million, sharing about 74.8% of China’s total. However, the value of glyphosate products exported to top 10 destinations was reduced by 67.7% than the previous year. As the largest destination of China’s glyphosate, the volume to US has accounted for about 36.5% of the total as of Jul. 2009. In Sep. 2009, the operating rate in glyphosate industry still keeps at a very low level, about 30%-50%. Besides, some producers still hold large quantities of stock, which indicates that glyphosate market is still in its downturn. It is predicted that the export volume in H2 2009 will decrease compared with previous year and accumulative export volume for full-year 2009 will decline. www.cnchemicals.com


Vol. 1 Issue 09, 2009

Glyphosate China Monthly Report

■■ Regisatration Glyphosate registration situation

A

s of 1 Sep. 2009, there have been 689 active registrations for glyphosate products owned by 334 companies, including 198 temporary, 478 formal and 13 repacking. Among 689 active registrations, about 182 are glyphosate formulations with AI content lower than 30%, accounting for 26.42% of China’s total active registrations of formulations. And glyphosate SL registration still dominates the Chinese market, accounting for 63.6% of China’s total active registrations of formulations. Among 198 temporary registrations, 121 registrations, 61.1% of the total, are for glyphosate SL, 16 registrations are for glyphosate technical and the remaining 61 belong to registrations of SP and WSG. Most of the formal registrations are for glyphosate SL and technical. Among 478 formal registrations, 306 registrations are for glyphosate SL (accounting for 64.0% of the total formal), 113 for technical (23.6%), and the rest 59 for SP and WSG. What’s more, among the total 478, about 120 are formulations with content lower than 30%, sharing about 25.1% of total formal registrations or about 62.1% of China’s total glyphosate formulation under 30%, both formal and temporary.

CCM International Limited

As for the 13 repacking, 12 registrations are for SL and 1 for WSG. Registration volume for 10% SL and 41% SL is 4 for each. The companies registering glyphosate products mainly concentrate in 4 provinces, namely Jiangsu (50), Shandong (34), Guangxi (30) and Zhejiang (22), with their total active registrations accounting for about 40.7% of the total as of Sep. 2009.

2009 include 18 temporary registrations owned by 18 companies and 187 formal ones owned by 150 companies. Among the 18 temporary registrations, 9 are for glyphosate SP, 6 for WSG and 3 for SL. It seems that registration volume of glyphosate SP and WSG are springing up in China. Among the 187 formal, 30 are for glyphosate SP, 6 for WSG, 113 for SL, 1 for SC and 37 for technical. In the near future, SL registration will keep its dominating position and that of WP and WSG will grow rapidly, attributed to the exit of glyphosate formulations with low AI content, mainly 10% SL. Besides, new registration of glyphosate technical will become increasingly difficult for glyphosate companies, as the Chinese Government pay more and more attention to environmental protection.

Owing to the ban, registration on low AI content has decreased greatly in 2009. As of Sep. 2009, there are 205 registrations of glyphosate products registered for the first time by 158 companies in 2009, including 29 for formulations with low AI content, sharing14.1% of the total new registrations in 2009 TABLE 4: Active registration for glyphosate products in China, as of Sep.2009 (Including Glyphosate products these new Item formal <30% ≥30% registration Technical / 129 license Single formulation 178 356 changed from temporary Mixed 4 22 registration). Total 182 507 The new registrations in

Source: CCM International

8

www.cnchemicals.com


Vol. 1 Issue 09, 2009

Glyphosate China Monthly Report

TABLE 5: First registrations of glyphosate products, 2009

Formulation

SL

Registration volume

Main specification (Registration volume)

Main Companies

41% IPA (61)

Zhejiang Wynca Chemical Group Company; Shandong Binnong Technology Company; Zhejiang Changxing No.1 Chemical Company; Shandong Qiaochang Chemical Company; Zhejiang Biok Kaipu Chemical Company; Shanghai Shenglian Chemical Company; Shandong Kesaiji Agrochemical Company; Anhui Huaxing Chemical Company; Shandong Weifang Runfeng Chemical Company; Jiangsu Youth Chemical Company

62% IPA (8)

Jiangsu Anpon Electrochemical Company ; Zhejiang Linghua Industry Company; Anhui Huaxing Chemical Company; Jiangsu Rotam Chemical Company; Jiangsu Jingma Chemical Company; Zhejiang Jinfanda Biochemcial Company

111

Shandong Qiaochang Chemical Company; Anhui Zhongshan Chemical Company; Shandong Jinan Lubang Chemical Company; Zhejiang Changxing No. 1 Chemical Company; Jiangxi Bobang Biology & Medicine Company; Hubei Tianmen Yipule Agrochemical

10% (23)

Company

75.7% (3); 88.8% (2)

Shanghai Shenglian Chemical Company; Jiangsu Nantong Feitian Chemical Company; Zhejiang Jinfanda Biochemical Company; Guangdong Ruidefeng Biotechnology Company; Jiangsu Good Harvest-Weien Agrochemical Company; Anhui Zhongshan Chemical Company; Jiangsu Ruibang Pesticide Company; Zhejiang Wynca Chemical Group Company

50% (16); 30% (6)

Jiangsu Nantong Feitian Chemical Company; Jiangxi Zhengbang Biochemcial Company; Guangdong Ruidefeng Biotechnology Company; Chongqing Shuangfeng Chemical Company; Sichuan Beier Industry Company; Shanghai Shenglian Chemical Company; Lier Chemical Company; Guangxi Yiduoshou Biotechnology Company; Lier Chemical Company; Jiangsu Institute of Ecomones Company

37

95% (36)

Shandong Dacheng Pesticide Company; Jiangsu Kesheng Group Company; Anhui Zhongshan Chemical Company; Hunan Yongzhou Guangfeng Agrochemical Company; Zhejiang Leji Chemical Company; Jiangsu Tenglong Biological & Medicinal Company; Jiangsu Lianyungang Liben Pesticide Chemical Company; Shandong Weifang Kesai Agrochemical Company; Henan Hebi Agriculture &Forestry Pharmaceutical Company

Mixture

15

33%/44%/46%(MCPA+Glyphosate) SL /WP (6); 20% (Dicamba+glyphosate) SL (2)

Total

205

\

SG

SP

TC

11

31

Zhejiang Wynca Chemical Group Company; Shandong Qiaochang Chemical Company; Shanghai Taihe (Group) Company; Shanghai East (Zhengzhou) Pesticide Company; Shandong Qiaochang Chemical Company; Jiangsu Tongzhou Zhengda Pesticide & Chemical Company; Nantong Xinhua Pesticide Company; Chongqing Yongchuan Chemical Company \

Source: CCM International's stastical data from ICAMA

CCM International Limited

9

www.cnchemicals.com


CCM International Limited Address: 17th Floor, Huihua Commercial & Trade Building, No.80 Xianlie Zhong Road Guangzhou, 510070, P.R.China Tel: +86-20-37616606 Fax: +86-20-37616968 Email: econtact@cnchemicals.com Website: www.cnchemicals.com

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