Wednesday, January 18, 2012

Overview of China's Insecticide Industry in 2011--Challenges

The year of 2011 is a hard time for insecticide players in China. The occurrence of insect pests was not so serious as expected; companies faced a year of weak insecticide demand again. Besides, they had to meet severe challenges such as overcapacity and intense competition from foreign products. As insecticide is the most important segment of domestic crop protection market, its bad performance had led most of domestic formulation players to a tough year in 2011, according to CCM International’s January issue of Insecticides China News.

China's insecticide output from Jan. to Nov. 2011 totaled 629,500 tonnes, up 15% over the same period last year. Many insecticides, such as chlorpyrifos, abamectin, imidacloprid and triazophos, have witnessed marked output increase, according to China Crop Protection Industry Association. However, the demand in domestic market was about 124,900 tonnes in 2011, down about 1.4% year on year mainly attributed to the reduced demand for rice insecticides.  

In the whole year of 2011, the occurrence of insect pests in China was less frequent over 2010, according to National Agricultural Technology Extension and Service Center. In the first half of 2011, most insecticides suffered decline in sales volume over last year; some even tumbled. The major reason for a significant decline lies in the drought early this year, which directly postponed the start of the peak sales season till June. As investigated, the demand for some largely consumed insecticides like abamectin and chlorpyrifos remained weak in H1 2011, especially from Jan. to May. Entering June, insecticide market began to recover as the rainfall brought about severe occurrence of insect pests on rice, cotton and corn, which lasted till August.
As of Sept. 2011, the occurrence of rice plant hopper in total planting areas of late rice except Hunan Province was less frequent over last year. And the occurrence of rice stem borer in most planting areas is similar to that in 2010. Therefore, domestic demand for insecticides wasn't so high as expected in the whole year. 

Besides, overseas companies introduced a lot of products to Chinese market, which intensified the competition in domestic insecticide industry. Some products were widely applied by farmers, such as DuPont's Kangkuan (20% chlorantraniliprole SC), Bayer CropScience's Daoteng (10% flubendiamide • abamectin SC) and Syngenta's Virtako (40% chlorantraniliprole • thiamethoxam WG). As reported, imported insecticides enjoyed a good performance in high-end rice insecticide market, while Chinese products witnessed a year-on-year (YoY) decline of about 20% in sales volume. 

Despite the sluggish insecticide market in 2011, the market prices of most insecticides have seen a YoY growth of around 15% due to the rise in both raw material cost and export volume and value. Take 95% chlorpyrifos technical and 95% imidacloprid technical for example, their ex-factory prices increased from USD5,231/t and USD17,297/t in Jan. 2011 to USD6,580/t and USD20,473/t in Dec. 2011, with a YoY growth of 21% and 16% respectively. On the contrary, some insecticides' market prices declined due to slack market demand and overcapacity. For example, the ex-factory price of 95% abamectin technical has kept decreasing since March 2011, dropping from USD80,621/t in March 2011 to USD78,886/t in Dec. 2011. It even reached USD78,629/t in Oct. 2011, the lowest since 2008. 

In 2011, the Chinese government continued to eliminate highly toxic pesticides. According to the No.1586 Announcement released by the Ministry of Agriculture in 2011, the registration and production license of ten highly toxic pesticides shall be revoked from 31 Oct., 2011, while their sales and application shall be banned from 31 Oct., 2013. Among these ten pesticides, six are insecticides: phosfolanmethyl, fonofos, magnesium phosphide, coumaphos, sulfotep and terbufos. Besides these six insecticides, another 12 insecticides are on their way to be banned in the future.
As most highly toxic pesticides to be banned are insecticides, the implementation of the No.1586 Announcement should have some impact on insecticide industry. With the withdrawal of these 18 highly toxic insecticides, especially some largely consumed ones like omethoate, phorate and methomyl, the insecticide market will experience some changes, as the market share left should be filled by other insecticides. Recommended substitutes like bio-insecticides and lowly toxic insecticides will fight for the market share.         

Source: Insecticides China News 1201

Main content of Insecticides China News 1201:
Overview of China's insecticide industry in 2011--challenges
China to strengthen development of GM cotton and corn
Qilu Pharmaceutical finishes contructing 800t/a abamectin technical production line
Jiangsu Huifeng sets up a subsidiary in the US
Nantong Reilly finishes building 10,000t/a 3-cyanopyridine production line
Jiangsu Pesticide develops breakthrough seed dressing slow-releasing technology
0.4% chlorantraniliprole GR possibly to enter Chinese market in 2012
Henan Haonianjing first registers 2% imidacloprid controlled-release GR
Hebei Sanlen: first domestic owner of fosthiazate technical registration
Chlorpyrifos and imidacloprid possibly to be restricted on vegetables
… …

Insecticides China News, a monthly publication issued by CCM International on 10th of every month, provides the latest and influential analysis on insecticide industry for you, including company dynamics, supply and demand, price analysis, policy, raw material and intermediate.

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