Oct. 31, 2017
November and December is the peak time each year for Chinese enterprises to place orders for the needs of winter storage.
Usually, purchasers would have published their purchasing notices one after another during this time of the year. However the winter-storage fair this year is seeing a slow market, where most of the formulation enterprises have chosen an “ordering without quantity” policy in light of the price rise of technical material and the difficulty experienced in sourcing.
Prices of technical materials started going up since the end of last year. Prices of the Glyphosate technical and Chlorpyrifos technical rose over 50 percent, while some others doubled or are even found in a “no quote no supply” status.
The scarcity of technical material has existed since early this year, which now appears more serious when the needs of winter storage come closer and demand increases while suppliers are not fully ready yet. Based on the present prices of technical materials, a 20 to 30 percent increase is foreseen, which will at least last till the end of the spring ploughing next year.
According to information, this year has seen a 30 percent increase, whether in technical material, packaging material or in adjuvants. The price rise may eventually be passed on to mid-stream and down-stream service providers.
Famers normally accept a price rise of around 10 percent, beyond which farmers will adopt a wait-and-see attitude and farmers in low-profit crop production regions may even refuse to use pesticide or just use a little. Distributors and retailers will fight a price war to compete for the sales of stock, therefore a more difficult market situation may be experienced next year.
An agrochemical industry analyst states that supplantation of outdated capacity, small and medium players without core competence would happen more quickly, thus to drive occurrence of more industry mergers and acquisitions. It is said that “a further 40 percent of small and medium factories will be phased out in the five years ahead.”