Monday, January 27, 2014

Top 8 features of Chinese glyphosate industry in 2013

1. The environmental protection inspection against glyphosate industry was unprecedentedly stringent.
On one hand, the environmental protection policy of large-scale inspections on the glyphosate industry was released for the first time. On 21 May, 2013, the Ministry of Environmental Protection of the People's Republic of China released a document——Notice Regarding the Environmental Protection Inspection against Glyphosate (PMIDA) Manufacturers, and the inspection will last to 2015. This means that the glyphostate industry will be tightly regulated and monitored for environmental protection purposes for about two years and six months.

On the other hand, the environmental monitoring against the glyphosate industry was unprecedentedly stringent. Zhejiang Wynca Chemical Industry Group Co., Ltd. (Zhejian Wynca) and Zhejiang Jinfanda Bio-Chemical Co., Ltd. (Zhejiang Jiafanda) were both involved in a court case over various environmental pollution offences. Zhejiang Jinfanda's general manager Pu, its deputy general manager Du and Zhejiang Wynca's safety and environmental protection department manager Gu have been arrested by the Zhejiang Provincial Public Security Department. So far, there is no news about the final judgment. Given the current situation, the final judgment is unlikely to be positive for the suspects.

2. Glyphosate prices hit new peaks.
Glyphosate technical and formulations' ex-works prices in 2013 all represented new peaks since 2009. Specifically, the glyphosate technical average ex-works price in 2013 was USD5,988/t (RMB36,708/t), up by 27% over 2012. The average ex-works prices of glyphosate 41% IPA, glyphosate 50% SP, glyphosate 62% IPA and glyphosate 75.7% WSG in 2013 respectively were USD2,792/t (RMB17,113/t), USD3,310/t (RMB20,292/t), USD3,428/t (RMB21,013/t) and USD5,245/t (RMB32,153/t), up by about 27%, 26%, 23% and 28% over 2012.

3. Glyphosate output and export volume increased significantly.
The environmental monitoring against the glyphosate industry was strict in 2013. However, this did not prevent China's glyphosate technical output from increasing. The total output was approximately 480,000 tonnes in 2013, up by 10% over 2012. Besides, the export volume of glyphosate A.I. was about 360,000 tonnes in the first eleven months of 2013. The total export volume of glyphosate A.I. is estimated to be about 400,000 tonnes in 2013. Thus, the export volume in 2013 will increase about 29% over 2012.

4. Production capacity continued to expand.
On one hand, Sichuan Fuhua Tongda Agro-chemical Technology Co., Ltd. (Sichuan Fuhua) became the largest glyphosate manufacturer in Asia, with a 120,000t/a production capacity. There are also many other companies trying to construct glyphosate production capacity. This includes Sichuan Hebang Co. Ltd. (Sichuan Hebang) and Lier Chemical Co., Ltd. (Lier Chemical).

Sichuan Hebang, whose main products are soda ash and ammonium chloride, planned to spend one year to construct a 50,000t/a glyphosate production project with a total budget of USD81.81 million (RMB501 million). At present, Sichuan Hebang is still preparing funds for the construction. Unlike Sichuan Hebang, which has not started construction of its glyphosate project, Lier Chemical claimed that in Nov. 2013 its subsidiary——Jiangsu Kuaida Agrochemical Co., Ltd. was trialling its 10,000t/a glyphosate production line, and that this line was expected to be launched in the beginning of 2014.

5. Almost every glyphosate manufacturer made a full-year profit in 2013.
Because of the prosperous glyphosate market in 2013, almost every Chinese glyphosate manufacturer made a full-year profit in 2013. The performances of the following three companies exemplify the strength of the glyphosate industry. The operating profit in the first nine months of 2013 of Zhejiang Wynca Chemical Industry Group Co., Ltd. (Zhejiang Wynca), Nantong Jiangshan Agrochemical & Chemicals Co., Ltd. and Anhui Huaxing Chemical Industry Co., Ltd. respectively were USD74.36 million (RMB455.35 million), USD48.20 million (RMB295.16 million) and USD5.22 million (RMB31.91 million). These three companies' operating performances in Q4 2013 mean that they will certainly record high full-year profits for 2013.

6. Chinese glyphosate companies not to have engaged in dumping conduct in Australia.
On 24 June, 2013, the Australia Customs and Border Protection Service released Notice No. 2013/51, showing that the China's glyphosate companies that exported glyphosate formulations to Australia were judged not to have dumped their products into Australia. Subsequently, Australia terminated the anti-dumping investigation that had been resumed on 16 Nov., 2012. This decision would help China's glyphosate companies develop in Australia's glyphosate market. Apart from Australia, China's glyphosate companies have had anti-dumping investigations in other foreign countries. The EU started to levy a 48% anti-dumping duty on Chinese glyphosate in 2000, and subsequently carried out anti-dumping investigations on multiple occasions against China's glyphosate. However, China eventually won this anti-dumping case in July, 2012.

7. Some Chinese pesticide companies continued to expand their overseas glyphosate market.
Sinochem Group replaced Nufarm and took over the exclusive distribution rights. Nufarm Limited (Nufarm)'s exclusive distribution rights for Roundup branded glyphosate in Australia and New Zealand were terminated on 28 Aug., 2013. Given the huge glyphosate market in Australia and New Zealand, this represents a huge step for Sinochem Group in its strategy to enlarge its overseas glyphosate market. In addition, Shandong Binnong Technology Co., Ltd. achieved a glyphosate registration in Australia in 2013.

8. Some Chinese glyphosate companies attempted to expand their business scope.
Anhui Huaxing Chemical Industry Co., Ltd. intends to set foot into the natural gas business. It will receive a total of USD358.83 million (RMB2.20 billion) from CEFC Shanghai Oil Group Co., Ltd., Shanghai Daiwah Group International Trade Co., Ltd. and Dasheng Commercial Co., Ltd., and will use these funds to enter into the natural gas industry. Zhejiang Wynca Chemical Industry Group Co., Ltd. continued to achieve progress on its overseas mining business. Zhejiang Wynca's holding subsidiary–Akoko Gold Fields–has successfully obtained mining rights, covering 28.07 km2 of territory, in Ghana in Sept. 2013.Source: Glyphosate China Monthly Report issued by CCM in January.

Glyphosate plays important role in Nufarm's strong operating performance for 2013 fiscal year
Zhejiang Wynca and Zhejiang Jinfanda involved in environmental pollution case
Review of China's glyphosate industry in 2013
Top 8 features of Chinese glyphosate industry in 2013
Stock performance comparison of Zhejiang Wynca, Nantong Jiangshan and Anhui Huaxing in 2013
List of first batch glyphosate manufacturers passing environmental protection inspection fails to release in 2013
Outlook of China's glyphosate industry in 2014
Solid glyphosate ammonium salt still the most registered glyphosate product in 2013 in China
Ex-work price of glyphosate technical in Jan. 2014 up 4.17% MoM
Export volume of glyphosate technical increases 44.10% in Nov. 2013

Glyphosate China Monthly Report, a monthly publication issued by CCM on 20th, will keep track of latest dynamics, hotspots and competitiveness analysis, and forecasts on market trends of China’s glyphosate industry.

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