Glyphosate China Monthly Report 1608

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Oct 11, 2016, 07:09 ET

LONDON, Oct. 11, 2016 /PRNewswire/ -- Since China banned paraquat AS on 1 July, 2016, the sterilant herbicide market has been in disorder. However, it was very recently discovered that some diquat AS sold on the market had actually been paraquat AS.
While old glufosinate-ammonium manufacturers are making capacity expansion, more and more new comers are entering the glufosinate-ammonium market, including three glyphosate magnates Zhejiang Wynca, Jiangsu Good Harvest-Weien and Sichuan Fuhua.

China's glyphosate industry is likely to develop further in the future due to two reasons. One is that the industrialization of herbicideresistant soybean varieties is very likely to be realized by 2020. The other is that the rising planting areas of soybean will boost the demand for glyphosate.

In recent years, glufosinate-ammonium and dicamba are widely recognized in the herbicide market. However, now their development is hindered and future remains unknown.

Although China's pesticide industry kept sluggish in H1 2016, Hubei Xingfa still made a YoY rise in revenue from glyphosate and glycine, as well as maintained a stable gross profit margin. This reflects that the company's
glyphosate business enjoys competitiveness in the industry.

Nantong Jiangshan's gross profit margin of glyphosate business was negative in H1 2016, which dragged down the net profit. Although the company performed well in other businesses, its profitability still declined.

Zhejiang Wynca recorded a negative net profit in H1 2016, mainly affected by the stagnant glyphosate market. The company also predicted that its accumulative net profit in Q1-Q3 2016 was likely to be negative.

Thanks to well performing main businesses, SunVic Chemical recorded a YoY rise in total revenue and turned loss into gain in gross profit in Q2 2016.

In the first half of Aug. 2016, the ex-works prices of glyphosate TC and formulations still hovered over low levels, with slight MoM falls.

In June 2016, glyphosate TC showed a MoM down of 11.53% in export volume but a MoM rise of 0.72% in export price in China.

In June 2016, both export volume and export value of glyphosate 41% IPA reported MoM falls in China.

In H1 2016, China's glyphosate exports recorded MoM falls in both volume and value.

Paraquat found in diquat for sale following ban on paraquat AS

In the Glyphosate China Monthly Report 1607, CCM analyzed three disorder phenomenon in China's sterilant herbicide market following China's ban on paraquat AS on 1 July, 2016 – price wars in the paraquat substitute market; difficulty for farmers and distributors in choosing substitutes for paraquat AS; fake and inferior substitutes flowing into the market. Recently, another phenomenon has been found, namely that some diquat AS sold on the market had actually been paraquat AS.

On 8 Aug., 2016, the Shandong Institute for the Control of Agrochemicals (SICA) reported that it had detected paraquat in samples of diquat in Shandong Province, a large paraquat-producing region in China. Specifically, the paraquat content in three kinds of diquat 200 g/L AS was 22.50%, 9.40%, 20.70% respectively. In other words, the sampled diquat AS was actually paraquat 20% AS. In addition, paraquat and industrial waste sulfuric acid were also found to have been added to some glyphosate sold on the market.

The SICA found four reasons for this phenomenon:
1. Enterprises that produce paraquat AS for export added paraquat to diquat to sell on the domestic market for profit.
2. In order to reduce losses, after paraquat AS was banned, paraquat manufacturers pulled unsold paraquat AS from stores, repackaged it, and then sold it as diquat AS on the market.
3. Diquat enterprises added paraquat to their products to reduce production costs and increase product efficacy.
4. Unlicensed enterprises illegally produce fake and inferior diquat for higher profit.

The SICA is paying close attention to this phenomenon and will take four major measures to prevent it:
? Enterprises who sell export-oriented paraquat AS on the domestic market, use paraquat to simulate diquat, or add paraquat to diquat, will be punished by the Ministry of Agriculture of the People's Republic of China (MOA) and police departments
? Law enforcement departments will secure paraquat inventories and offer opinions on disposal
? The SICA will confiscate fake and inferior diquat and apply for funding to safely dispose of it; if a large quantity of products are confiscated and have no quality issues, designated reserve units for highly toxic pesticides will dispose of them efficiently as soon as possible according to highly toxic pesticide control regulations, after approval from the MOA
? The SICA will strengthen the supervision on glyphosate sold on the market, and increase the detection index for sulfuric acid. If any problems are found, the SICA will timely inform the province and take action

It is hard to know whether the above phenomenon is occurring in other provinces/ municipalities. There has been no similar reported circumstance of this in Jiangsu Province, another large paraquat-producing region in China.

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