Li Jinmei
Supply centre shifts to central and west china
China’s output of technical chemical pesticides dropped to 2 148 kt in 2020 from 3 740 kt in 2016, with the compound annual growth rate (CAGR) at -5.98% during the “13th Five-Year Plan” period. The falling production volume is mainly attributed to environmental protection and safety inspections.
In 2020, the top five provinces in terms of the technical chemical pesticides output are Jiangsu, Sichuan, Shandong, Zhejiang and Anhui. The layout of domestic technical pesticides capacities has concentrated on northwest China, Inner Mongolia and northeast China along with the industry and regional policy development. Many new equipment are expected to start up, with new capacities centring in northwest and northeast China.
As the industry supply centre has been diverting to central and west China, demand is posting limited month-on-month changes, due to the stable planting structure. Steady rigid demand ensures that the industry production and sales enter a virtuous circle.
High prices on tight supply during winter reserve and spring ploughing season
Supply tightened for technical pesticides intermediates and basic petrochemical products during the winter reserve and spring ploughing season in 2020/2021, as affected by the resurgent coronavirus cases in Shijiazhuang, Hebei province and China’s Lunar New Year holiday (February 11-17). Hence, prices hovered high across the industrial chain.
Some severely affected products prices hit years highs on supply crunch. Prices of technical pesticides preparations may hold up high into the second quarter on the back of robust demand at home and aboard in the latter part of the spring buying period.
1. Glyphosate Prices up Sharply
Glyphosate prices moved upwards due to the peak domestic sales season after the Lunar New Year holiday and brisk exports. The market is expected to stay relatively strong in the medium term on stable consumption of technical pesticides, supported by the active herbicide production and sales of reparations producers in March and April.
On the supply side, glyphosate capacity has not fully released. Sichuan Hebang’s IDA-process output decreased slightly in dry season, while the 20 kt/a unit in Inner Mongolia was shut for renovation and potential capacity expansion. It will take some while to start up. Plants on line are operating at high rates. The planned production volume of technical pesticides in March and April has mostly been booked. Domestic glyphosate prices firm on tight supply.
On the demand side, trading sentiment is robust, getting support from ongoing production of spring pesticides preparations, the fulfillment of previous orders of technical pesticides and fresh orders. International agricultural demand is largely stable. Overseas buyers actively built up stocks in view of tight cross-border transport capacity.
In terms of costs, elevated prices of main raw materials glycine, yellow phosphorus, methanol, triethylamine, paraformaldehyde and liquid chlorine pushed up glyphosate prices. Glycine suppliers are likely to raise prices on the back of high acetic acid prices and spiked liquid chlorine prices, which may further shore up prices for glyphosate.
On the macro-economic front, effective prevention of COVID-19 ensures stable production and sales atmosphere both at home and aboard. The glyphosate market may be balanced-to-tight in the short to medium term. Relatively high international crude oil values will lend support to feedstock basic petrochemicals prices. Trading sentiment for technical glyphosate will continue to warm up.
2. Insecticides Prices Tick up
Since the last quarter of 2020, brisk overseas orders for technical insecticides materials reversed the supply-demand situation, for nicotinic insecticides imidacloprid, thiamethoxam and acetamiprid, etc. Increased prices of related upstream products 2-chloro-5-chloromethylpyridine, imidazolidine, 2-chloro-5-chloromethylthiazole, oxadiazine, sodium thiocyanate and DMF on tightened supply pushed up insecticides prices. Pyrethroid products, cyhalothrin and bifenthrin saw their prices rallying from the end of 2020 before stabilising in March 2021. But the overall plants’ operating rate of the industry still needs improving, as restricted by short supply of lambda cyhalthrin acid. Prices of other raw materials ether aldehyde and biphenyl alcohol also hover at high levels.
The resurgent coronavirus infections in Shijiazhuang in late 2020 caused a sharp output reduction of biological pesticides abamectin and emamectin benzoate at Hebei-based plants. Hebei Xingbai and Weiyuan cut output and deliveries. Prices increased on decreased domestic supply. In early March, the prices of abamectin and emamectin benzoate still trended higher on the back of supply crunch.
3. Fungicide Prices Stable-to-Higher
Fungicide prices are stable-to-firmer amid sound supply-demand fundamentals. Orders for tebuconazole were diverted to China from overseas countries, which were hard hit by the COVID-19 outbreak. In November 2020, propiconazole technical and difenoconazole producers signed enough orders for March and April deliveries, as boosted by the price soars of feedstock intermediates hydrazine hydrate and triazole. Prices of triadimefon and tebuconazole were firmer.
Azoxystrobin (AZOX) prices went onto an upward path in December 2020, driven by high feedstock prices and tight supply. Prices of thiophanate-methyl and carbendazim stayed high. Thiophanate-methyl saw prices rising from November 2020, as feedstock sodium thiocyanate costs climbed on supply shortage. Carbendazim prices surged in January, tracking elevated feedstock nitrochlorobenzene costs, as supply was tight.
