CCM: Glyphosate price in China is likely to continue rising in December 2016

After a long period of declining glyphosate prices in China, the current season strengthens the confidence for increasing prices. The main factors can be found in boosting prices of raw materials like glycine and paraformaldehyde and increasing downstream demand. This is what traders and buyers have to expect.

Source: Pixabay

In the middle of November, the ex-works prices of glyphosate TC and glyphosate formulations experienced another rise compared to the last month. The price itself is remaining on a low level compared to previous years’ development, but the continuous price rise shows the trend back up. The prices of glyphosate technical started to rise in August 2016 and are suspected to continue to rise also in December, according to CCM’s analysts.

Ex-works price of glyphosate technical, January – November 2014 - 2016

Source: CCM

The main reason for the recently steady growth of glyphosate price and the expected increasing trend, is the higher price of the raw materials for glyphosates like glycine and paraformaldehyde. Their prices are rising, due to production cuts by governmental orders and supply difficulties in the big snowing winter of China’s north. In fact, 70% of the glyphosate production is based on the glycine process, which requires glycine and paraformaldehyde. Glycine price itself experienced a month on month fall from January to September 2016. Only recently in November, the price climbed remarkably on a 22.45% MoM basis.

The Hebei Province in China is the most important region for glycine and paraformaldehyde producers, with the biggest output of those, accounting for more than half of China’s national total output. This province is also affected by huge pollution problems. Many days endured strong pollution in different Cities of Hebei. As a result, the Ministry of Environmental Protection ordered, that the production of several industry sectors must be cut down. These implementations will prospectively end on 31 December 2016. Therefore, many producers of glycine and paraformaldehyde have reduced their operating rate, which in turn increases the prices due to lower supply and shortage. The leading glycine producers in China, Shijiazhuang Donhua Jiniong, and Linyi Hongtai, already rose their prices for glycine, which represents a trend that is going to be continued, according to CCM.

Ex-works prices of raw materials and intermediates for glyphosate in China, October – November 2016

Source: CCM

The winter in China has two main effects on the glyphosate price at all. First of all, winter is known to be the storage peak season for glyphosate, while many manufacturers only have small quantities of inventories. This higher demand in building a storage is driving prices upwards. Another impact is the heavy snowfall in northern China. The snow causes difficulties in transportation, which also leads to a shortage of raw materials and therefore a higher price of upstream and downstream products. Paraformaldehyde is especially affected by this issue. China’s leading suppliers of paraformaldehyde, Hebei Jin Taida and Hebei Aerospace, both with an output of about 50,000 tons, had to cut down production completely, due to the region’s logistics and transportation being blocked.

Other upstream products of glyphosate, like yellow phosphorus and methyl alcohol, experienced increasing prices up to 30% because of increased coke prices in November, which are traditionally caused by the heating season in China’s cold north. The increasing coke prices, up to 200% compared to early 2016, lead to higher prices of raw materials in China in general.

Who will be the beneficiaries of the rising glyphosate prices? Higher prices are favoring the vendors and industry leaders, such as Sichuan Fuhua, Hubai Taisheng, and Yangnong Chemicals. According to the multiple factors of glyphosate price developing, it can be expected that the price is going to rise at about 20% to 30% soon.

What’s more, in mid of October the 2016 AgriChemEx was held in Shanghai, with all the main Chinese pesticide manufacturers as exhibitors. But what was surprising was, that not one of them did any price quotation at the exhibition. In the beginning of November, several enterprises have already raised the quotations, which led to a stable market for glyphosate by now. The increasing demand of the northern hemisphere, that is taking place right now, will likely affect more price rising of glyphosate TC and formulations in the near future.

About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets.

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