Summary: In March, the operating rates of major glycine producers in China presented a downtrend, mainly due to production restrictions, rising costs and sluggish demand. The decline exerted a negative impact on the glycine supply, which was, however, not tight for the low demand. Ex-works prices for glycine were relatively stable in March.

In March, the operating rates of major glycine producers in China presented a downtrend, including Hebei Donghua Jiheng Chemical Co., Ltd. (Donghua Jiheng), Shijiazhuang Donghua Jinlong Chemical Co., Ltd. (SDJC) and Yuanshi Xinhongsheng Pharmaceutical Technology Co., Ltd.; Linyin Hongtai Chemical Co., Ltd. (Linyin Hongtai) even entered a temporary shutdown in mid-March and is expected to resume in May, with a little stock available. The top 3 producers in glycine production capacities are as follows:

• Hebei Donghua Chemical Group Co., Ltd.: its two subsidiaries SDJC and Donghua Jiheng own a combined glycine capacity of 192,000 t/a;
• Hubei Trisun Chemicals Co., Ltd. (Hubei Trisun): it has a glycine capacity of 100,000 t/a;
• Linyin Hongtai: the company operates 4 glycine production lines with a total capacity of 70,000 t/a.

 

The decline in their operating rates affected the glycine supply to a certain extent. However, the supply was not tight owing to the low demand. Ex-works prices for glycine were also relatively stable in March. The main reasons for the decline in the operating rates are as follows:

• Production restriction policy: Northern China experienced severe air pollution sourced from sand and dust, with respirable PM10 as the main pollutant. Glycine production in Hebei Province has been restricted under production restrictions by local governments, to reduce pollution emissions;
• Shrinking profit margins: Glycine producers had a low production motivation, as the profit margin narrowed. In March, although the ex-works prices of raw materials like liquid chlorine and ammonia fell, both sales volumes and transaction prices of glycine showed a decline amid low downstream demand, resulting in lower profits;
• Sluggish downstream demand: The downstream glyphosate TC market was cold and the demand for glycine is reduced, leading to a decreasing output of glycine producers.