Glyphosate Struggles on Bottom Line

August 22, 2011, CCM - Glyphosate price in China still floats at such a low level in the first seven months of 2011, even though it sees a relatively stable price trend compared with that in corresponding period of 2009 and 2010, the two years severely affected by the financial crisis. Especially repressed by more expensive material this year, over half of glyphosate manufacturers in China suspended their production due to narrowed profit margin currently. As for the current active glyphosate producers, their production status is characterized by low operating rate at present, according to CCM’s August issue of Herbicides China News.

The average ex-work price of glyphosate 95% technical in first seven months of 2011 is higher than that in 2010 or 2009 on the whole. What's more, its price keeps relatively stable and fluctuates around USD3,500/t during this period.

But it's noteworthy greatly that glyphosate 95% technical price is still at relatively low level, about USD3,400/t-USD3,600t/a averagely during Jan. to July 2011. Weakened by slack season around summer and autumn every year in Chinese herbicide market, it is going to decline in the nearest months.

It could be observed that the price downtrend of glyphosate 95% technical is slight, which is supported by current expensive material. As reported in former issues of Herbicides China News, various factors such as the inflation in domestic market, high price of rude oil, disaster in Japan, etc. drive up the price of basic material in China. Accordingly, the jumping production cost of glyphosate forces Chinese manufacturers to maintain current glyphosate price.

Approaching the bottom line of glyphosate technical production nearly, the low price hurts all glyphosate manufacturers in China. According to CCM International's price monitoring, the unit cost of over USD3,000 in glyphosate technical was touched by glyphosate technical price several times in 2009 and 2010. It means that limited profit room of glyphosate production is being narrowed by high material price at present.

As a result, at present, over half of Chinese glyphosate manufacturers choose to suspend their production in order to avoid risk in the production. What's more, due to regular equipment maintenance check during July to Aug. every year, most Chinese glyphosate manufacturers' production is laid aside except a few leading companies like Zhejiang Wynca Chemical Group Co., Ltd. with strong competitiveness and fixed clients.

Generally speaking, overcapacity in domestic glyphosate manufacture is mainly responsible for the sluggish situation. As the most popular herbicide with the largest consumption volume in the world, glyphosate still faces excessive supply at present, though its demand will continue rising in the future.

With Chinese government's economic regulation and market selection, some surplus glyphosate capacities have been swept out already in China. On the current track, it's sure that glyphosate market in China could restore to balance in the future. But, unfortunately, this process will take a long time, signaling that Chinese glyphosate manufacturers must endure large pain in glyphosate business. In other words, only those who can survive should enjoy brilliant prospect.

Source:  Herbicides China News 1108

http://www.cnchemicals.com/Newsletter/NewsletterDetail_11.html

Content of Herbicides China News 1108:

Lier Chemical witnessed growing net profit in H1 2011

Lianhe Technology achieves planned growth in H1 2011

Nanjing Redsun wins approval for asset reorganization

Vertellus expands pyridine chain in China

CAC Group relocates capacities of asulam and fluorochloridone

Shandong Dacheng relocates 5,000t/a paraquat capacity

Huayang Technology sells chloroacetic acid business

Adverse influences on Chinese herbicide in H1 2011

Glyphosate struggles on bottom line

Supply shortage boasts diuron price in China

Jiangsu Huifeng’s 2,4-D aims at overseas market

Jiangsu Repont constructs 1,000t/a sulfonylurea herbicide project

Amide herbicide supply intense around July

Lier Chemical to run glufosinate-ammonium production in H2 2011

Trifluralin meets price uptrend in July

Herbicides China News, a monthly publication issued by CCM International on 15^th of every month, provides you with the latest occurrences, exclusive analysis on the market trend as well as professional reviews on competitiveness of companies, products and relative industries in China’s herbicide industry.

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