China’s Glyphosate Industry Deteriorates

Guangzhou China, July 29, 2011 - The July issue of Glyphsoate China Monthly Report reveals that RMB appreciation and the rising interest rate aggravate glyphosate industry in China.

Chinese glyphosate industry suffers a lot from the decreased USD exchange rate against RMB, also called  RMB appreciation.

On July 20, 2011, the central parity exchange rate between USD and RMB dropped to 6.4592, compared with that of 6.7812 in July 20, 2010. Providing glyphosate technical price is RMB22,000/t, and the difference of one tonne of glyphosate technical is USD161.73 (22,000/6.4592 - 22,000/6.7812) when computed by the exchange rate of 6.7812 and 6.4592.

Overseas buyers are unwilling to completely burden the Chinese glyphosate exporters' loss caused by RMB appreciation or USD depreciation, and thus the loss would only be shouldered by both exporters and importers or completely burdened by the domestic manufacturers.

What’s worse, on July 6, 2011, Chinese government raised the loan interest for the third time this year, which means the production cost of glyphosate will be increased.

Providing the investment in glycine route glyphosate with capacity of 10,000t/a is USD10 million (Investment in IDAN route will be higher), and the loan interest will increase by USD0.111 million (10, 000,000 * (7.05%.-5.94)). Calculated by the current operating rate of 30%, the increased cost of one tonne of glyphosate technical caused by the increased loan interest rate could reach USD37 (111,000/3,000).

The RMB appreciation and raised loan interest rate have posed much pressure to glyphosate industry, making glyphosate technical producers harder to survive.

You will find more news about the industrial trend, company dynamics, market price, and future forecast in the latest issue of Glyphsoate China Monthly Report.

The following highlights are covered in the latest issue of Glyphsoate China Monthly Report:

- Nantong Jiangshan preannounced its preliminarily estimated profit, reporting a profit loss of USD3.64 million (RMB23.5 million).-Zhejiang Wynca's endless technology innovation secures its leading position in glyphosate industry-Monsanto's Roundup incentive program is under investigation by the U.S. Security and Exchange Commission.-The deadline for ChemChina's acquisition to MAI has been extended to the end of September 2011.-APG is considered as a promising substitution of tallow amine adjuvant.-Chinese company recommends the joint application of glyphosate and paraquat-RMB appreciation and heightened interest rate aggravate glyphosate industry.
-Glycine destiny is tied up with glyphosate for its high dependence on glyphosate consumption.-Glyphosate price slightly decreases in July 2011 due to the slack season in overseas market.-Glyphosate export volume decreases in May 2011, reflecting the stagnant overseas market.

About CCM

CCM is dedicated to market research in China, Asia-Pacific Rim and global market. With a staff of more than 150 dedicated highly-educated professionals. CCM offers Market Data, Analysis, Reports, Newsletters, Buyer-Trader Information, Import/Export Analysis all through its new proprietary product ValoTracer.
Please visit http://www.cnchemicals.com for more information or contact econtact@cnchemicals.com

CCM International Ltd.
Guangzhou CCM Information Science & Technology Co., Ltd.
17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou 510070, China

RMB Appreciation and Heightened Interest Rate Aggravate Glyphosate Industry

July 29, 2011, CCM - The vulnerable Chinese glyphosate industry has been suffering from the increasing cost in financing and the loss caused by the RMB appreciation, and many glyphosate producers are on the edge of survival, according to CCM’s July issue of Glyphsoate China Monthly Report.

On July 6, 2011, People's Bank of China announced the decision of implementing new interest rate from July 7, 2011, which is the third time for China to heighten interest rate this year. The purpose of the third consecutive raise in interest rate is to control inflation and soaring CPI.

According to the new interest rate, the loan interest rate of long-term loan (more than five years) reaches 7.05% annually, up 18.69% over the corresponding period last year (5.94%).

Obviously, the increased loan interest rate will heighten the cost of glyphosate. Providing the investment in 10,000t/a glycine route glyphosate is USD10 million (Investment in IDAN route will be higher), and the loan interest will increase by USD0.111 million (10, 000,000 * (7.05%.-5.94)). Calculated by the current operating rate of 30%, the increased cost of one tonne of glyphosate technical caused by the increased loan interest rate could reach USD37 (111,000/3,000).

The decreased USD exchange rate against RMB, or so-called RMB appreciation, has also exerted great pressure on Chinese glyphosate industry at present.

RMB exchange rate against USD had seen a sharp uptrend in the past one year. On July 20, 2011, the central parity exchange rate between USD and RMB dropped to 6.4592, compared with that of 6.7812 in July 20, 2010.

Providing glyphosate technical price is RMB22,000/t, and the difference of one tonne of glyphosate technical is USD161.73 (22,000/6.4592 - 22,000/6.7812) when computed by the exchange rate of 6.7812 and 6.4592.

Obviously, oversea buyers are unwilling to completely burden the Chinese glyphosate exporters' loss caused by RMB appreciation or USD depreciation, and thus the loss would only be shouldered by both exporters and importers or completely burdened by domestic manufacturers.
   
Therefore, compared with the corresponding period last year,

glyphosate technical manufacturers may shoulder increased cost of about USD162 and USD37 caused by RMB appreciation and raised loan interest rate respectively in selling one tonne of glyphosate technical.

Now the glyphosate price is undervalued; the RMB appreciation and raised loan interest rate have posed much pressure to glyphosate industry, let alone the increasing cost in raw material and manpower. As for the current glyphosate technical producers, any other raised cost may become the last straw that break the camel's back.

Source: Glyphsoate China Monthly Report July 2011

http://www.cnchemicals.com/Newsletter/NewsletterDetail_14.html

Content of Glyphsoate China Monthly Report July 2011:

Nantong Jiangshan suffers from profit loss in H1 2011
Zhejiang Wynca: Endless technology innovation secures its leading position in glyphosate industry
Monsanto's Roundup incentive program under investigation by SEC
ChemChina to complete its acquisition to MAI in September 2011
APG considered as promising substitution of tallow amine adjuvant
Joint application of glyphosate and paraquat
RMB appreciation and heightened interest rate aggravate glyphosate industry
Glycine destiny tied up with glyphosate
Glyphosate price slightly decreases in July 2011
Glyphosate export volume decreases in May 2011

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

About CCM

CCM is dedicated to market research in China, Asia-Pacific Rim and global market. With a staff of more than 150 dedicated highly-educated professionals. CCM offers Market Data, Analysis, Reports, Newsletters, Buyer-Trader Information, Import/Export Analysis all through its new proprietary product ValoTracer.
Please visit http://www.cnchemicals.com for more information or contact econtact@cnchemicals.com

CCM International Ltd.
Guangzhou CCM Information Science & Technology Co., Ltd.
17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou 510070, China