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ACE: Pesticide TC prices still on the rise, buyers fail to achieve planned purchases
Oct. 20, 2017
This is the 17th session of AgroChemEx. AgroChemEx is an important “window” of Chinese pesticide export which has a considerable influence on international market. Tens of thousands of overseas sourcing agents participated in the exhibition, accounting for 20 percent of the total participating sourcing agents.
The general feedback from the exhibition reveals that “no sell no quote” becomes a catchword for this session of AgroChemEx, the saying is a good summary of the present pesticide technical market. Moreover, some industry specialist has concluded how buyers have felt about this exhibition as follows:
- The promotion of production facility and establishment of smart production workshop serve as a good guidance to the upgrading and rebuilding of pesticide production facilities. With the upgrades of production technology and equipment, Chinese pesticide producers are expected to gradually surpass foreign companies with respect to formula development and formulation processing.
- AgroChemEx has always been a market indicator. Information disclosed there may forecast the price tenancy of pesticide technical. In the past times, September used to be a low-price month. However since the environmental campaign last September, the impact to pesticide industry has lasted till today. Upstream product producers have been running at low capacity, part of medium and small factories have shut down production, resulting in short supply of raw material and intermediates. Hence the prices of pesticide technical have been on the rise all the way, and some product varieties have a price but have no transaction at all.
- In the previous AgroChemEx, quite a lot of formulation producers, export companies and overseas buyers present at the exhibition could easily find what they want, then compare price and determine supplier thus to readily complete their sourcing plan. However lots of buyers are disappointed this year because prices are still rising and some product varieties have a price while some do not have a price and have no stock for supply. Thus buyers could not find desired price or desired product to accomplish sourcing plan as expected.
- Majority of pesticide technical vendors have stopped taking orders while formulation producers would not give a quote for fear of the price rise of technical material which will not be in favor of their performance of contractual obligations. The actual transaction prices of pesticide technical varieties are higher than quoted prices, usually 5 – 10 percent higher, as products would not be made available if buyers insist on quoted prices. With the coming heat-supply winter season, products of most of the factories in north China will be either shut down or put on restriction. Therefore there will be a continued short supply of technical material and prices may still rise. Some of Chinese exporters have turned to India or other regions for sourcing.
- The short supply and price rise of upstream products this time caused by the pesticide supply-side reform, pressure of environmental and safety supervision will bring about an accelerated close down of outdated capacity and some SMEs without core competence, which may prompt more merger and acquisition occurrences.
Before this session of AgroChemEx, industry experts have given the following views and analytical ideas, which are now presented to readers for reference:
1. Market dominance will get back to the hands of upstream product producers.
2. Pesticide pricing power to be put under the control of upstream industry sector.
3. The situation of “supply exceeding demand” will change to “balance between supply and demand”.
4. Formulation producers may fall into difficulties.
5. Close down or merger and acquisition may happen sooner; 40 percent of small and medium factories may be closed down in 5 years ahead.
6. Distributors to be found in a less strong position and proper partnership with upstream vendors becoming crucial.
7. Profit of formulation producers and wholesalers continue to shrink; it is urgent for them to look for new source of growth.
8. Registration of conventional pesticide varieties to be reduced remarkably; customization to become normal.
9. Production capacity to change towards centralization and some factories would engage OEM processing which will become a new source of profitability.
10. With the pesticide price rise tendency moving towards downstream, grower’s cost of pesticide application will go up which will affect earnings of growers.
11. Weak pesticide varieties to die out sooner.
12. Pesticide marketing mode to change thoroughly.
13. Service concept for farming industry to change, growers would look pesticide application with less quantity and less number of applications. Pest and disease-prevented farming measures to become popular.
14. Government to enhance administration and supervision. There will come an era of “good money drives out bad”.
Source: Zhiwen Cai
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