China’s Pesticide Price Hikes Aggravated by Heating Season Environmental Policy

China provides central heating in northern regions from November 15 to March 15 and large quantities of coal are used during this period, resulting in a lot of fog and haze pollution. To transfer more environmental capacity, a mandatory measure call off-peak production adopted in heating regions. Heavy VOCs emission industries will temporarily halt production at 34 cities in 8 provinces. Hundreds of pesticide and intermediate producers would be disrupted, high prices should continue throughout next year.

China’s Pesticide Price Hikes Aggravated by Heating Season Environmental PolicyAt the start of November 2017, Chinese ministries jointly issued and implemented 2 programs targeting air pollution during the heating season and mandatory off-peak production. The new programs will be adopted in Jing-Jin-Ji region and surrounding areas (Beijing, Tianjin and other 26 municipal cities in Hebei, Shandong, Henan and Shanxi provinces).

Dozens of Shandong pesticide producers have already been ordered to halt operations starting from 15 Nov 2017 to 15 Mar 2018. Moreover, Jilin, Sichuan and Henan provinces have also joined the campaign meaning 34 cities in 8 provinces are now affected. In these regions there are hundreds of pesticide and intermediate producers in various scales so we can expect high prices to continue throughout next year.

In 2016, Glyphosate exportation provided China a revenue of 995 million USD, but in this July and August, central environmental inspectors have been deployed into nearly all production provinces including Zhejiang, Shandong and Sichuan, etc. Overall production remained subdued over the past few months, which has affected supply and ultimately prices. We can expect China to maintain an output of 45,000 to 50,000 tons per month to balance global supply and demand. 66% of the output is synthesized through glycine routing and 0.55 ton of glycine will be required to produce each 1 ton of glyphosate. Thus a minimum of 22,000 tons of glycine will be required each month to maintain production.

Considering glycine production capacity in these regions, there will be at least 4000 tons/month glycine shortfall in the next few months, which will inevitably raise glyphosate prices to higher level.

As for imidacloprid, Shandong Hailier and Sino-Agri United account for 25% of indigenous output, together with other SMEs, the direct capacity loss could be as high as 50%. 2-chloro-chloromethylpyridine (CCMP) is a critical intermediate of imidacloprid and other neonicotinoid insecticides such as acetamiprid and nitenpyram.  CCMP production involves 6 chemical reactions and large numbers of VOCs. Since 66.7% of CCMP is produced in these regions, the impact would be more evident and far-reaching than glyphosate.

Compared with the previous year, insecticide prices grew the greatest amongst the various pesticide categories. Prices of acetamidprid, imidacloprid and emamectin benzoate are more than twice as high as last year. Azoxystrobin price has risen more than 28% over the past month, extending a five-year high. Amides prices increased the most of any herbicide due to disruption in production of intermediates used in their production.

Chinese Domestic Market Quotation

 

Early Nov. 2016
(000 CNY/ton)

Early Oct. 2017
(000 CNY/ton)

Early Nov. 2017
(000 CNY/ton)

Growth
(YOY, %)

Growth
(MoM, %)

Herbicide

glufosinate-ammonium

125

172

205

64.00

19.20

nicosulfuron

170

195

250

47.10

28.20

fluroxypyr-meptyl

100

125

140

40.00

12.00

butachlor

19

19.5

28

47.40

43.60

glyphosate

21.5

27

30

39.50

11.10

oxyfluorfen

135

165

180

33.30

9.09

clethodim

120

130

160

33.30

23.10

atrazine

17.5

21

23

31.40

9.52

metolachlor

24.5

28

32

30.60

14.30

propisochlor

24.5

27

30

22.40

11.10

Insecticide

acetamiprid

110

190

250

127.00

31.60

imidacloprid

110

195

240

118.00

23.10

emamectin benzoate

630

850

1300

106.00

52.90

thiamethoxam

82

110

155

89.00

40.90

chlorpyrifos

28.5

43

50.5

78.20

17.40

cypermethrin

69

110

120

73.90

9.09

lambda-cyhalothrin

140

190

250

78.60

31.60

abamectinpower)

420

650

700

66.70

7.69

bifenthrin

180

245

290

61.60

7.69

phoxim

27

35

42

55.60

20.00

fipronil

400

620

620

55.00

0.00

pymetrozine

135

170

200

48.10

17.60

spirodiclofen

132

145

170

28.80

17.20

carbosulfan

70

77

85

21.40

10.40

pyridaben

76

85

90

18.40

5.88

Fungicide

hexaconazole

95

155

165

73.70

6.45

tebuconazole

75

110

140

86.70

27.30

tricyclazole

45

62

74

64.40

19.40

azoxystrobin

180

250

320

77.80

28.00

difenoconazole

135

173

185

37.00

6.93

kresoxim-methyl

220

280

300

36.40

7.14

propiconazol

105

120

140

23.30

16.70

thiophanate-methyl

29

31

35

20.70

12.90

metalaxyl

92

105

120

30.40

14.30

hexaconazole

21.5

21.5

23

6.98

6.98

tebuconazole

83

90

105

26.50

16.70

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