CCM: How long can the price rise of glyphosate last in China 11-02-2016

The ex-works price of glyphosate 95% TC averaged USD2,793/t in mid-Oct. 2016, a raise of 9.85% over the USD2,519/t of mid-July, which is the biggest rebound since when the glyphosate industry remained depressed for two years. What’s driving the price rise and how long will it last? Analyst CCM has the answers…


Source: Bing

After that Sichuan Fuhua Tongda Agro-chemical Technology Co., Ltd., a leading glyphosate enterprise in China, raised its glyphosate price at the end of Aug. 2016, several other glyphosate enterprises followed the trend to increase the quotations of glyphosate.


According to CCM's price monitoring, in mid-Oct. 2016, China's glyphosate price still showed a steady uptrend. The ex-works price of glyphosate 95% TC averaged USD2,793/t, a raise of 9.85% over the USD2,519/t of mid-July, which is considered the biggest rebound since when the glyphosate industry remained depressed for two years. However, the price was still low when compared with the same period last year.


Ex-works price of glyphosate 95% TC in China, Oct. 2015-Oct. 2016

 Source: CCM


What's the reason for this constantly raising price of glyphosate and for how long will it keep raising? Chen Zaoqun, chief editor of Herbicides China News, gave her insights on the questions.


Peak season for glyphosate


With the approaching of peak sale season for glyphosate, all glyphosate enterprises in both upstream and downstream hope to make impressive profits.


In fact, after experiencing market depression for such a long time, many enterprises are at loss and are in an urgent need of raising prices to relieve these losses.


"Some domestic glyphosate enterprises have already received enquiries from the African market," disclosed an industry insider to CCM.


Rising costs of raw materials


Rising costs of raw materials in some way support the increasing price for glyphosate. Currently, the prices of raw materials for glyphosate, namely glycine, PMIDA etc. showed different degrees of rises.



The quotation of glycine in East China increased to USD1,313.28/t-USD1,343.12/t in mid-Oct. and the ex-works price was about USD1,101/t, up 2.8% MoM.


As for PMIDA, in mid-Oct., both the quotation and transaction price were up a little bit MoM, with the quotation of USD1716.21/t-USD1790.83/t and the ex-works price of USD1,602/t, up 0.94% MoM.


In addition, on 21 Sept., the Management Regulations on Overloaded Transportation Vehicle issued by China's Ministry of Transport and Ministry of Public Security was implemented, the most significant regulation to tackle the illegal overload in China.


“With the implementation of the new regulation, it is possible to push up the transportation cost of bulk commodities, which may affect the cost of the downstream products,” said Chen.


Price support from environmental pressure


Affected by the 2016 G20 summit held in Sept., glyphosate enterprises in Zhejiang Province and the surrounding areas significantly reduced the operating rate, leading to a fall in the market supply.


On 19 Sept., the 2016 Glyphosate Collaborative Group Work Conference was held in Beijing, during which the first draft of the Glyphosate Industry Hazardous Wastes Disposal and Treatment Control Technical Specifications (Outline) was explained and it revealed how the costs of waste water disposal would further increase the production cost of glyphosate.


In addition, there are rumors that the second batch of environmental inspection team will be stationed in major glyphosate producing provinces including Sichuan and Hubei. When the time comes, the production of enterprises within these areas may be affected, and therefore market supply would be largely reduced.


“Environmental pressure from the Chinese government helps increase the production cost of glyphosate while the suspension on production in most of medium- and small-scale glyphosate enterprises will hugely affect the supply of glyphosate, which it is a good chance for the enterprises to rise their quotations,” stated Chen.


Glyphosate price to keep rising?


As for whether the price of glyphosate will keep rising in the short term, some industry insiders are still quite optimistic. Thanks to the AgroChemEx 2016 held in Shanghai in 16-18 Oct., it is believed that it would boost the transaction and price of glyphosate.


However, some insiders are doubtful on the rising trend of glyphosate price.


Firstly, although glyphosate enterprises are bearing environmental pressure, there are no new environmental policies issued for the glyphosate industry, in other words, large glyphosate enterprises still maintain high operating rate, and market supply won't be greatly reduced.


Secondly, the price rises in Sept. boosted the operating rate of some enterprises and increased market supply, which also indicated that the price support in the coming future was lessened to some extent.


Thirdly, according to CCM's research, Jan.-July 2016 witnessed a YoY rise in China's export volume of glyphosate, but the figure is likely to slide in Aug.-Dec., given the present slack in the global demand.

“Whether the glyphosate price will increase or fall mainly depends on the market. However, it is very likely that the price will keep going with a small range of increase in short term,” added Chen.

Looking for more information on glyphosate market in China? Want to monitor the price trend of glyphosate? CCM Online Platform is here to help you! An infinitive database, covering the whole agriculture industry in China, gives you real-time access to CCM’s over 15-year data and intelligence.


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