Tuesday, March 19, 2013

Four of all the 10 listed substitutes have been suggested to replace toluene or dimethyl benzene


According to the Substitute List, among the 81 recommended substitutes, 10 substitutes concern the pesticide industry: two of these belong to the application category; eight belong to the promotion category. The Substitute List indicates that four of all the 10 listed substitutes have been suggested to replace toluene or dimethyl benzene, mainly in the production process of pesticide solvents including EC formulation. As we know, EC formulation is still a main type of pesticide formulation in China.

According to statistics from the Institute for the Control of Agrochemicals, Ministry of Agriculture (ICAMA), the quantity of new EC formulation registrations approved in 2012 reached 346 in China, representing 32.8% of all new insecticide registrations in 2012. According to an insider of Zhejiang Merchants Securities Co., Ltd., as the main raw materials in the production process of EC formulation, organic aromatic solvents such as toluene and dimethyl benzene experienced annual consumption of 300,000-400,000 t/a in recent years. This shows that the market gap in regard to pesticide solvents will be huge for substitutes, if China completely restricts the production of toluene and dimethyl benzene in the future.   Raw material or product adjustments affect upstream enterprises greatly. The release of the Substitute List led to stock price boosts of related listed enterprises in mid-Jan.2013. Shenzhen Noposion Agrochemicals Co., Ltd. (Shenzhen Noposion) which developed one of the listed substitutes, namely turpentine oil solvent, hit its daily limit after the stock market had been open only for a while.

Maoming Petro-Chemical Shihua Co.,Ltd.(Maoming Shihua)—the only listed enterprise producing white mineral oil, and Yip's Chemical Holdings Limited, the largest manufacturer of ester solvents in China, are also expected to enjoy flourishing prospects. However, substitutes' promotion is considered an arduous process in China. Sun Shubao, the leader of China Crop Protection Industry Association (CCPIA), expressed his opinions concerning the Substitute List. He said. At present, the List is just a start and presents some substitutere commendations but has no mandatory policies behind it. The practical promotion of substitutes requires government authorities' efforts to establish mandatory measures concerning the pesticide registration process and issuance of pesticide production licences.

Furthermore, according to Sun Shubao, wide supply sources of toluene and dimethyl benzene are leading to low production rates. In contrast, the high cost of turpentine oil and white mineral oil prevent manufacturers from actively applying for the listed substitutes. Therefore, he advised that governments support manufacturers of the listed substitutes as production materials through taxes and production capital.

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