China: Rebound in 2,4-D Prices Unlikely in the Short Run

2,4-D technical prices in China have fallen 12% since late March, but a combination of headwinds is making a price rebound unlikely in the short run, according to analysts CCM.

Prices rose as high as USD2,724/t in April when seasonal demand was at its peak, according to CCM’s price monitoring data. But by June this figure had dropped to USD2,516/t and 2,4-D manufacturers such as Zhejiang Jingma Chemicals Co., Ltd., CAC Shanghai Chemical Co., Ltd. and Shandong Keyuan Chemical Industry Co., Ltd. all reported lowering prices.

A number of factors are contributing to the fall in prices. Firstly, June to August is the traditional slack season for China’s 2,4-D industry, when domestic demand is usually at its lowest.

But this year demand from overseas is also low, making it impossible for manufacturers to mitigate slow domestic sales through exports. Industry insiders have reported that demand from South America and Africa is currently very weak.

The insiders also disclosed that India has re-entered the 2,4-D technical market and is offering lower prices than China. If this is true, this could put Chinese traders under pressure.

What’s more, Changzhou Wintafone Chemical Co., Ltd. will resume production of 2,4-D later this month after completing the relocation of its plant, which will increase supplies and put further downward pressure on prices.

And the 2,4-D industry as a whole has been affected to a certain extent by the IARC’s report classifying the herbicide as ‘possibly’ carcinogenic to humans.

Currently, supply and demand is being kept relatively balanced by the low operating rates in China’s 2,4-D industry as producers struggle to cope with the much stricter environmental regulations introduced this year. Several large-scale manufacturers have had to shut down production completely as a result of the policy, according to CCM’s research.

When and how many of these producers are able to resume production will also have an impact on future prices.

CCM will continue posting regular updates on this story in E-Journal, our real-time intelligence service for China’s agrochemicals market.

For more information about CCM and our coverage of China’s agrochemicals market, please visit www.cnchemicals.com, or get in touch directly by emailing econtact@cnchemicals.com or calling +86-20-37616606.

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