China’s Pesticide Prices Fell in 2015

By Zhang Qisheng, Tianjin Petrochemical Co., Ltd.

The China Agrochemical Price Index (CAPI) reached 72.68 in December 2015, down 2.40% MoM or 17.51% YoY, according to statistics from the China Crop Protection Industry Association (CCPIA). In general, the CAPI slid in 2015, being relatively higher in January, March and April, all exceeding 84.0, as seen in Fig.1. The CAPI fell to new lows in 4Q 2015, down below 75.0, because of overcapacity, weak demand, low operating rates and players’ concerns about the sector’s future development.
The CAPI of herbicides has been staying at the lowest level of any pesticide variety, fluctuating 62.5-78.5, down 5.20% MoM or 25.20% YoY to the lowest of 62.71 in December 2015. Transaction prices of most herbicide technical products were way down in December 2015: paraquat, glyphosate, butachlor, acetochlor and atrazine prices all fell more than 4.0% MoM. This dragged the herbicide CAPI down by 3.45 percentage points.
The actual sale prices of glyphosate technical went down 5.95% MoM in December 2015 to RMB17 400/t, not only the lowest number in 2015 but also the lowest since 2007. Most glyphosate technical manufacturers are suffering losses; small and medium-size enterprises have generally quit producing the product. Glyphosate makers are forecast to adjust continually in 2016. However, small and medium-sized firms are being shaken out of the market, given weak demand, greater environmental protection pressure, and higher production costs, giving rise to more concentrated capacity to some degree. Glyphosate prices fluctuated more modestly in 2015 than in 2013 and 2014, hovering at RMB17 000-22 000/t (close to the production cost), and the glyphosate CAPI fluctuated 54.0-63.6.
Paraquat enterprises face greater challenges in 2016: 1) The world’s demand for paraquat is shrinking, as its usage is increasingly forbidden or restricted; 2) China will stop marketing and using paraquat aqueous solution domestically, effective July 1, 2016.The prices of paraquat technical concentrate have been falling, down 4.18% MoM in December 2015, but they are forecast to stabilize gradually.
In general, the CAPI of insecticides fell in 2015, staying in the range77.4-95.0. It approached the year’s peak (95.98) in April, hit the year’s bottom (77.42) in October, and was at 81.99 in December,up 1.78% MoM but down 9.73% YoY. More specifically, transaction prices of fipronil technical, lambda-cyhalothrin technical and acephate technical all fell in December 2015, down MoM by 1.27%, 6.97% and 2.26%, respectively, driving down the insecticide CAPI by 0.73 percentage points. In contrast, imidacloprid, chlorpyrifos, profenofos, abamectin and emamectin benzoate sold at higher prices, propelling the insecticide CAPI by 2.08 percentage points.
The CAPI of bactericides fluctuated 96.0-100.1 in 2015, reaching the lowest level (96.01) in March and the highest (100.06) in June. In December 2015, the bactericide CAPI was 97.95, down 0.58% MoM or 2.25% YoY. More specifically, actual selling prices of mancozeb technical, thiophanate-methyl technical, kresoxim-methyl technical and propiconazole technical fell 6.58% MoM, 2.23% MoM, 1.91% MoM and 0.45% MoM, respectively, lowering the bactericide CAPI by 0.89 percentage points. Prices of other bactericide products were basically the same as in the previous month.
The domestic pesticide industry is striving to upgrade and innovate. It may remain financially weak in 2016, in view of falling prices of principal products, China’s policies on zero growth of pesticide usage, stricter environmental protection rules, etc. M&As, frequently involving multinational corporations and state-owned firms, are rampant, in efforts to cope with the world’s economic slowdown. This favors industry upgrade.