Yangnong Chemical:  Star of Pesticide Industries     

Jiangsu Yangnong Chemical Co., Ltd. (Yangnong Chemical, SH: 600486), headquartered in Yangzhou of Jiangsu province, eastern China, was listed on the Shanghai Stock Exchange in April 2002. Yangnong Chemical's largest shareholder is Jiangsu Yangnong Chemical Group Co., Ltd., holding 40.94% equity, and the second is Yangzhou Fuyuan Chemical Technology Co., Ltd., holding 6.67% equity. The main products of Yangnong Chemical include pyrethrum ester, dicofol, glyphosate and dicamba, with applications in the agriculture and health sectors. Yangnong Chemical reported it currently controls 70% of the domestic hygienic insecticides market, and 30% of the agricultural insecticides market.

Outstanding Achievement was Improved Significantly   

In 2007 Yangnong Chemical posted an operating income of RMB1.416 billion, and a net profit of RMB92.4 million, increasing 31.6% and 90.83% respectively over 2006. The gross margin of its pesticides business reached 13.78%.
   On August 26th the company reported operating income for the first half of 2008 was RMB1.344 billion, an increase of 65%. The unaudited net profit is RMB117 million, an increase of 188% over 2007. Of that total, the operating income of herbicides that include glyphosate and N-phosphono methyl imino diacetic acid, both newly added in the company's portfolio in 2007, is RMB416 million. And the sale of agricultural pyrethroids rose 47.54%.
    The increased margins principally pushed up by volume growth and robust sales after the operation of four new projects and one pilot project as well as decreased corporate income tax rate of Yangnong Chemical that fell from 33% to 25% in 2007.
    In 2007, five organic pesticides with high toxicity were banned from the market, so pesticides with high potency, low toxicity and environmental friendliness, such as pyrethroids will now have nearly 10 000 tons of new market share per year. Since 2007 the demand growth of the permethrin series pesticides has exceeded expectations. Demand for products from Yangnong Chemical exceeds supply. To alleviate the shortfall, Yangnong Chemical raised funds of RMB250 million through non-public issues of stocks in July 2007 to construct five projects in Jiangsu Youshi Chemical Co., Ltd. which is located in Yizheng of Jiangsu province and is controlled by Yangnong Chemical.(CCR2007 No.27) Among the five projects, the 500 t/a trifluoroacetic propenyl dichlorochrysanthemate and beta-cyfluthrin expansion and renovation project, the 2 400 t/a pantenic acid methyl ester/DV-chrysanthemyl chloride renovation project and the 1 000 t/a dicamba and 100 t/a dibromo-ju acid/deltamethrin project were completed and went on stream from September to the end of 2007. The production of intermediates and preparations of pyrethrum ester in Yangnong Chemical is expected to reach more than 5 000 tons in 2008, representing an expected growth of over 50%.

Gains Ability of Independent Innovation   

Yangnong Chemical independently solved the problem of synthesizing intermediates of pyrethroids, reducing the production cost of pyrethroids, which is the firm's greatest advantage over other Chinese pyrethroids manufacturers.
    Yangnong Chemical began to construct glyphosate project in 2003, and the 1 000 t/a glyphosate pilot facilities came on stream in 2007. The company began construction of the 10 000 t/a N-phosphono methyl imino diacetic acid process unit in 2005 and put it into production in the second half of 2007. Yangnong Chemical also has increased investment in research and development year by year, increasing from only RMB690 000 in 2003 to RMB5.63 million in 2006. (CCR2008 No.14)
    Yangnong Chemical, through independent research and development, has mastered the production of glyphosate by air-oxidation of N-phosphono methyl imino diacetic acid, with product yield and purity both reaching the advanced level in the industry. The company adopted the processing method of IDA (iminodiacetic acid) which generates the least pollution. The main raw material that Yangnong Chemical uses, diethanolamine, is all imported and the glyphosate it produces is almost all exported, which can offset the negative impact from currency exchange rate variations and the adjustments of export tax rebates.
    Executives from Yangnong Chemical said that except technology, an economie of scale is also an important factor that enhances the competitiveness of glyphosate. So the company plans to build a 30 000 t/a glyphosate technical project in its branch, Jiangsu Youshi Chemical Co., Ltd. in 2008. The planned investment for the project is RMB590 million, and it is expected to add RMB1.34 billion per year in sales after its completion.
    Yangnong Chemical is also gradually increasing investments in the production of raw materials of chemical pesticides. In August 2008, the company invested RMB6 billion in the Meili Industry Zone of Zhongwei in Ningxia region, western China to construct projects to produce chemical products such as nitrochlorobenzene. The first phase includes nine products such as nitrochlorobenzene and chlorobenzene, with an investment of RMB1.16 billion. The construction will be started in 2008, and will be completed in 2009. The annual sales income will increase RMB6 billion after its completion.
    In addition, Yangnong Chemical is giving attention to handling the pollutants in the production process. It has built a sewage treatment plant with the treated water's COD (chemical oxygen demand)content less than 50 milligram every litter, spending a total of RMB100 million.