Over 40 percent of glyphosate in the market faces suspension due to China’s special troubleshooting campaign for three phosphorus 09-24-2019

The 2-year special troubleshooting campaign for "three phosphorus"- phosphorus ore, phosphorus chemical, and phosphorus gypsum - in China eventually came to an end in early September 2019. The large-scale inspection covers 7 Chinese provinces and regions, such as Hubei, Sichuan, Guizhou, Yunnan, Hunan and Jiangsu provinces, as well as Chongqing Municipality along the Yangtze River Economic Zone.


Six glyphosate enterprises are likely to be suspended for overhauls because of unqualified glyphosate products, whose capacity reaches 310,000 tonnes, accounting for 43% of the industry’s gross capacity in 2018. Currently, relevant solutions have been put forward by the Chinese government. Companies that fail to meet standards will be closed, renovated, or upgraded by the local governments. In other words, these six glyphosate enterprises will face a suspension of production. Among the top 6 glyphosate producers in China, only two A-share listed companies have not been impacted. Market insiders predict that the production capacity of glyphosate TC will be reduced to nearly 40% of the market.

 

Two top Chinese glyphosate producers: Xingfa and Xin’an have a narrow escape from suspension

 The 2 A-share Chinese listed companies that are not affected by the suspension of production include respectively Hubei Xingfa Chemical Group Co., Ltd. (Xingfa Group) and Zhejiang Xin'an Chemical Group Co., Ltd. (Xin’an Group). Xingfa Group stands in the first place in the Chinese glyphosate industry, while Xin’an Group is ranked in the second.


Xingfa Group owns a patent on its cleaning technology concerning the production of yellow phosphorus and glyphosate. This technology is successfully exported to developed countries and regions, such as Korea, Japan, and Singapore.  Besides, Xingfa Group becomes the first company that has conducted an R&D project on black glyphosate with Institutes of Advanced Technology, Chinese Academy of Sciences. The achievement of this research takes a leading position in China.


Xin’an Group focuses on the crop protection industry and silicone materials industry. The company’s main products consist of glyphosate TC, pesticides and fungicides. Apart from that, the company has a complete industrial chain concerning silicone, from which silicone rubber, silicone oil, silicone resin and silane can be produced.

 

EPA stops approving warning labels for glyphosate

According to the U.S. Environmental Protection Agency (EPA), warning labels for the suspected cancer-causing glyphosate will no longer be approved.  In 2015, glyphosate was classified in Group 2A (probable carcinogens) by the International Agency for Research on Cancer (IARC). However, EPA has recently drawn a conclusion that glyphosate would not cause cancer, after a large-scale assessment of its safety since 2017.

 

The price of Chinese glyphosate is likely to soar in the next quarter

It is reported that glyphosate has the best export volume in China among all pesticides. With the third quarter of 2019 coming to an end, the Chinese glyphosate industry is entering into a peak period of exports. Some market insiders think that an increase in prices of glyphosate will appear, together with high volumes of transactions. Compared with the same period of last year, prices of glyphosate tend to experience a sharp growth from late August to December.


For more information about China’s glyphosate market, please have a look at our monthly newsletter Glyphosate China Monthly Report.

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