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Chinese pesticide industry, agrochemical multinationals to start inventory replenishment to boost importsqrcode

Feb. 10, 2017

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Feb. 10, 2017
The total stocks of the Chinese pesticide industry were worth 3.016 billion yuan ($438.46 million) in the first 10 months of 2016, which was a slight dip in value over the previous months. The stock value for the whole year is also expected to go down when compared to 2015. The stocks of major Chinese agrochemical enterprises have been dropping continuously in 2016. To this end, the Chinese pesticide industry is completing reduction of its stocks and will start inventory replenishment.
 
Figure 1 shows the business performance of the 11 Chinese public companies specializing in the pesticide business. A study of their inventory days reveals increased stocks for four consecutive years since 2012 and improved inventory days since the second quarter of 2016. Although there was a slight bounce in the third quarter, the improvement to inventory days remained unchanged.
 
The examples of the two companies Yangnong Chemical and Lianhetech, which have been growing or transforming their businesses, () illustrate that their inventory days have stayed on the rise, while all other companies appeared on the downward trend. According to the data of inventory days, the end of 2015 and the beginning of 2016 appeared to be the high inventory period for Chinese pesticide industry, which started to improve from the second quarter of 2016. The reduction of stocks has come to an end and business operation of the pesticide enterprises has started to bounce.
 
Figure 1: Change of Inventory Turnover of 11 Chinese Pesticide Public Companies 
 
Agrochemical multinationals are expected to initiate a new round of inventory replenishment. Taking the examples of inventory of agrochemical multinationals, Syngenta’s year-end stocks dropped continuously since 2013, down to $4.345 billion at the end of 2015, and was shown as down to $3.945 billion in its 2016 semiannual report. Monsanto’s quarter-end stocks dropped for three consecutive quarters since the end of 2015, down to $3.241 billion at the end of 2016, which is, so far, a new low since November 2013. DuPont’s stocks dropped down to $4.756 billion in the second quarter of 2016, which is currently the new lowest level since January 2012. The stocks of Bayer CropScience at the end of the second quarter of 2016 dropped down to $8.89705 billion, 5.62 percent down year on year. The stocks of BASF at the end of 2015 dropped down to $10.591 billion, which was at the lowest level in the past four years. After the over two-year period of reduction of stocks, agrochemical multinationals will begin a new round of inventory replenishment, which is expected to generate demand for pesticides and boost their imports from China.
 
Source: AgroNews

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