Mar. 16, 2018
The article is first published in AgroPages business magazine "2018 Chinese Pesticide Suppliers Guide"
To know more about Chinese agrochemical market and doing business with leading export companies, please click: 2018 China Pesticide Exporting Workshop (CPEW)
In 2017, the agrochemical industry of China still in its downturn experienced a round of stringent national environmental inspection and rectification. Pesticide and intermediate companies in all provinces were greatly influenced by this campaign, which in turn functions to accelerate the elimination of backward production capacity in the industry to some extent.
However, the response of the market always lags behind. Many pesticide intermediates and raw material companies were therefore unable to operate at their full capacity, and had to stop or cut production. Some smaller companies were forced to withdraw from the market. This situation affected the downstream pesticide TC segment, and the production capacity expanded rapidly in 2015-2016 dropped drastically. On the end market, a variety of pesticide TCs were in short supply though the prices were soaring and many overseas customers failed to purchase the products from China as planned.
Under such circumstances, some pesticide companies with a complete industrial chain of products seized the opportunity of price rise to achieve performance growth, which fully showed the competitive advantages of industrial chain. According to the overall performance of the industry, the extension of industrial chain has become an important means of sustainable economic development for pesticides, chemicals and other industries and the regional economy.
How to extend the upstream industrial chain of superior products and transform the pressure into opportunities for development has also become the direction that many companies under pressure are paying special attention to and thinking about. In this special column, we invited nine Chinese pesticide companies that have been valuing the supply chain or have made high investments in supply chain in 2017 and discussed with them on the topic of "Industrial Chain".
We also hope that readers will have a deeper and comprehensive understanding of China's agrochemical industry and companies through the following contents.
Shandong Luba Chemical Co., Ltd.
When it comes to the performance of the company in 2017, an executive of Luba Chemical
told AgroPages that Shandong Province, as the key province in the final round of national environmental inspection, received intense attention. All factories of Luba Chemical are located in this province and each one was treated to stringent environmental inspections. Due to the company's continuous high investments in environmental protection and safety production in recent years, the factories under Luba Chemical passed the stringent inspectio. Consequently, Luba Chemical has been able to satisfy the demands of the market. Though the factories were unable to operate at full capacity, the export and domestic sales goals of the company were successfully achieved this year.
Luba Chemical is a leading pyridine producer in China, and devotes itself to the development and expansion of pyridine industrial chain for 10 years. From July 1, 2016, the use of paraquat was banned in China and the event had a certain impact on the business of Luba Chemical. However, based on its mature sales channels all over the country and a competent sales team, the company was able to make up the market share and maintain the market by enriching its product mix and actively exploring the business opportunities in other products.
When talking about the specific building of pyridine industrial chain, the executive said, "We have taken positive measures to expand new downstream demand for pyridine, of which the most important is the pyridine and 3-methylpyridine chlorination project under construction. It is estimated that after the project is put into production, the supply and demand of the global pyridine industry will be greatly balanced. At the same time, more green pesticides and pharmaceutical intermediates will be manufactured. Most of these products will be supplied to the market and some of them will be for the use of the company".
According to its strategy of production, reservation and research & development simultaneously, Luba Chemical, while taking pyridine as its main product, is actively engaged in the R&D and reservation of some popular products on the market such as pyraclostrobin, penoxsulam and fluopicolol, which will be launched on the market when it is the right time.
Lier Chemical Co., Ltd.
In 2017, the industry witnessed the rapid growth of Lier
because of glufosinate. The net profit of the company rose by 69.65% YoY in the first three quarters. In the interview with AgroPages, Lier Chemical said the company has been attaching great importance to environmental protection and invested a lot in environmental protection facilities and equipment. Lier Chemical has been following the requirements of discharge. Therefore, in this round of environmental inspection, Lier Chemical's production remained normal and efficient, and both production and sales were thriving. The international sales of the company this year was satisfactory and compared with the same period of last year, the sales increased by above 30%.
Lier Chemical mainly focuses on the layout of products for GM crops, glyphosate
resistance and alternative need for paraquat. Lier Chemical has strong competitiveness in phosphine-containing non-selective herbicides represented by glufosinate-ammonium; picloram, clopyralid, fluroxypyr-meptyl, triclopyr; chloropyridines herbicides represented by clodinafop-propargyl; diuron, isoproturon, chlorotoluron and fluometatol; and the rice herbicides including mefenacet and bensulfuron-methyl.
The announcement shows that currently Lier Chemical has the production capacity of 10,000 t/a glufosinate-ammonium, 5,000 t/a diquat, 3,000 t/a fluroxypyr-meptyl, 3,000 t/a triclopyr, 2,000 t/a epoxiconazol, 1,000 t/a flumioxazin, 1,000 t/a clodinafop-propargyl and chloropyridines in Guangan.
In terms of industrial chain building, Lier Chemical, on the one hand, controls the sources of important raw materials such as chlor-alkali through mergers or cooperation, and signs long-term cooperation agreements with key raw material suppliers to fully guarantee the supply; on the other hand, all intermediates needed are made by Lier itself to guarantee the production. The company intends to acquire Hebi Saike for the purpose of further strengthening the supply of key raw materials and developing related chemical products. In addition, the company acquired Bide Chemical in Hunan province and added new facilities to Lier in Guangan to boost its production capacity.
Zhejiang Zhongshan Chemical Industry Group Co., Ltd.
The leading products of Zhejiang Zhongshan
include atrazine, ametryn, bentazone, mesotrione, metribuzuron, simazine and terbutaline. The company has superior production capacity, high market share and ranks first in export of similar products for many years. Li Dan, general manager of the company, told AgroPages that Zhongshan Chemical was not influenced in this round of environmental inspection, but did feel the impact of insufficient supply of upstream raw materials. Zhongshan Chemical's exports in 2017 amounted to US$160 million, an increase of 30% over last year.
Li believes that the government's environmental protection policies will expedite the concentration of production capacity. A TC manufacturer can maintain its vitality and competitiveness in the future only with the secured supply of raw materials and intermediates. According to Li, Zhejiang Zhongshan has supporting core raw materials for bentazone and mesotrione, and corresponding considerations will be given to triazines. The company plan to provide all TCs with supporting intermediates in the future.
At present, the production capacity of Zhongshan's main products is as follows: 9,000t/a mesotrione, 6,000t/a bentazon, 20,000t/a S-metolachlor, 20,000t/a metolachlor, 2,000t/a isoxaflutole, 2,000t/a picoxystrobin, and 200t/a penoxsulam. The company has developed a detailed product plan and will soon launch the projects for the production of tembotrione, diclosulam, sulfentrazone, prothioconazole, cyproconazole and dinotefuran.
CAC Nantong Chemical Co., Ltd.
is one of the most professional 2,4-D suppliers in China. The Marketing Department of the company said that in this round of out of stock due to production stoppage, CAC Nantong maintained a sustained and stable production capacity on strength of its clean technology and raw materials supply, and the sales was not impacted basically. It is expected the company's international sales in 2017 will have a substantial growth than in 2016.
CAC Nantong has developed and improved its advanced clean 2,4-D manufacturing process, integrated the local chlor-alkali factories, and built Jiangxi Tianyu Chemical with an annual output of 20,000 tons of products. The supporting raw materials and core intermediates guarantees the company is able to keep a steady and continuous supply when raw materials are short on the market.
In recent years, CAC Nantong continues to improve its investment and layout in supply chain. The Marketing Department of the company added that CAC Nantong has attached great importance to cooperation. "We form strategic cooperation with like-minded suppliers and make use of the advantages of both sides to make up for each other's strengths to achieve win-win. At the same time, for some intermediates of which we have core technologies or resources, and some raw materials in shortage or with unstable supply, we will take a self-supporting strategy to ensure the dominance of our products. "
As the second development phase of the company, CAC Nantong will expand its 2,4-D production capacity in 2018 to reach an annual production capacity of 50,000 tons. In the coming years, the company will be devoted to providing stable supply of high-quality 2,4-D to more partners to cope with the current intense situation of growing demand for 2,4-D.
In addition to improving the production capacity and competitiveness of the above products, CAC Nantong will, based on its core products, attach more importance to the rapid growing opportunities of off-patent proprietary products, develop and project in the products of which the term of patent is about to expire. The company will explore the advantages from technology development, industrialization, and supporting raw materials and intermediates, hoping to create more core products in the coming 2-3 years.
Nanjing Red Sun Co., Ltd.
Relying on the successful innovation and transformation, Red Sun
extends its advantageous industrial chain, enriches its core product mix, and takes the lead among its Chinese peers in realizing the historical transformation from traditional chemical pesticides into biochemical agro-ecosystem. After the downturn in 2016, the price of the company's major products including pyridine, paraquat, diquat and chlorpyrifos kept at high level in the first three quarters of 2017, which greatly increased the operating results of the company. The chemicals industry recorded an average revenue growth of 37.09% and an average net profit growth of 41.05% in the first three quarters of 2017.
Up to now, Red Sun has built up 10 product chains uniquely in China with independent innovation technologies that focus on bio-chemical pesticides, biochemical animal nutrition, and biomass new energy. These chains consist of the biochemical pyridine-based circular economy industrial chain, biochemical VB3 industrial chain, series of biochemical imidacloprid circular economy industrial chains, paraquat gel industrial chain, biochemical diquat industrial chain, biochemical L-glufosinate and glufosinate recycling economy industrial chain, chlorpyrifos recycling economy industrial chain, pyrethroid industrial chain, prothioconazole industrial chain, pyraclostrobin and prochloraz "double" disease prevention and treatment fungicides industrial chain.
Yang Shouhai, chairman of Red Sun Group, pointed out that in the future, Red Sun will take the opportunity of establishment and improvement of the new pyridine industrial chain (at Nanjing Biochemical, a subsidiary of Red Sun), chlorpyrifos industrial chain (at Chongqing Huage, a subsidiary of Red Sun) and the chloropyridine industrial chain to deeply cover the entire industrial chain. At the same time, the company will play the advantages of the industrial chain flexibly to maintain the market and exert the advantages of low-cost products.
Jingma Chemical Co., Ltd.
Jingma Chemical, with glyphosate as its leading product, is one of the three companies taking the lead in the production of glyphosate in China. It is also the owner of more than a dozen of patents regarding glyphosate production. The company has three production bases with strong production capacity of hydrogenation reduction, phosgenation, nitration, chlorination and oxidation. The company has been granted the certificates of ISO9000 quality system and ISO14000 environment system and fully complies with the requirements of international safety, health and environmental protection standards for production.
Wang Wen, general manager of Jingma Chemical, expressed to AgroPages that the sales of Jingma Chemical was really impacted by the large-scale production limitation or stoppage in 2017. However, with the support of key intermediates, the sales still increased by 30% YoY. Wang said, "The key intermediates for core products are made by ourselves. For example, the key intermediate PMIDA for the production of glyphosate using IDA process is made by Jingma; for 2,4-D acid, we buy phenol and produce 2,4-dichlorophenol by ourselves; for trifluralin, we produce p-chlorotoluene until p-chlorobenzotrifluoride. We purchase other raw materials from three reliable suppliers to safeguard the supply."
As the company mainly produces bulk traditional products, there is no technical barrier that can be depended on and the enhancement of competitiveness is the only way to win in the market. Wang believes that in the era of homogenization, only the superiority in cost can provide the opportunity to win. To extend the industrial chain is a very effective way and functions decisively to keep the long-term, stable development of the company. Jingma Chemical will continuously optimize the production technologies, improve the management level and equipment level, and attach importance to cleaner production, to lay the foundation for the company's long-term development. According to Wang, the production capacity of Jingma Chemical will have a greater breakthrough in the coming two years.
Limin Chemical Co., Ltd.
is the leading fungicide company and the largest mancozeb producer in China. At present, its main production capacity includes 25,000 t/a mancozeb, 2,000 t/a cymoxanil, 5,000 t/a fosethy-Al, 1,000 t/a pyrimethanil and 5,000 t/a trimaton, with both the capacity and the output ranking the first in China. In the first three quarters of 2017, Limin Chemical achieved a net profit of RMB 111 million, an growth of 60.3% YoY, due to the increase in prices of its major products, the continuous fulfillment of overseas orders and the acquisition of Hebei Shuangji Chemical.
In 2017, Limin Chemical made a major decision on investment. In June, Limin Chemical acquired Shuangji Chemical and completed the largest acquisition in the EBDC fungicide industry of China.After the acquisition, the EBDC fungicide production capacity of Limin Chemical is rapidly expanded by 10,000 t/a and the total capacity reaches 40,000 t/a, accounting for over 70% of the country, and the dominant role of the company in the market is further strengthened. Sun Jingquan, general manager of Limin Chemical and chairman of Shuangji Chemical, said, "After the two sides join hands, we will achieve resource sharing, technology complementing, management integration and efficiency improvement."
After then, Limin Chemical took a non-stop bid for Shandong Damin, a producer of propineb, and included its 3,000 t/a diaminopropane (a key raw material for propineb) production capacity under its control. These two rapid horizontal integration and vertical extension of industrial chain will further help the development of Limin as a leading global EBDC fungicides.
Limin Chemical revealed that at present, the 1,000 t/a pyraclostrobin and 35,000 t/a complexed mancozeb projects are pending for environmental impact assessment, and a 500 t/a difenoconazole project is on the agenda. The three projects are expected to be completed and put into operation in the second half of 2018 and the first half of 2019.
In terms of international market development, Limin Chemical will speed up the pace of self-registration, promote its own brands in key markets and regions such as Southeast Asia and Africa, and implement a strategy of high quality and preferential price. In the future, the company will continue to exert its advantages in the field of fungicides and continue to expand its fungicide segment.
Lianyungang Liben Crop Science and Technology Co., Ltd.
Liben Crop Science
is a Hong Kong company based in Lianyungang, and its most competitive products include chlorpyrifos, phoxim, nitenpyram, etc. The company has completed and commissioned a number of pesticide synthesis production lines, with an annual output of 100,000 tons of pesticides and 30,000 tons of chemical products. When it comes to the performance of the company in 2017, Geng Lifei, head of the company, disclosed to AgroPages that this year, thanks to the supply advantages of the Group's industrial chain, Liben Crop Science achieved a substantial increase both in international and domestic sales in the circumstance of intensified environmental supervision as well as price rising and shortage of raw materials. The sales of Liben Crop Science in 2017 is doubled from RMB1.96 billion in 2016 to RMB 3.56 billion.
Geng said that as the first process of pesticide industry, the pesticide TCs have a great influence on the development of pesticide market. A company which has reliable TC supply can have a say on the market. This situation has strengthened the company's decisions to have the main supporting raw materials of its own and constantly improve and develop the advantages of the industrial chain, to enhance the company's competitiveness in the industry.
At present, the main production capacity of the company is: 1,000t/a nitenpyram, 6,000 t/a phoxim, 20,000 t/a ethyl chloride, 2,000 t/a azoxystrobin, 20,000 t/a paraquat, 50,000 t/a glyphosate , 80,000 t/a atrazine, 20,000 t/a ametryn, prometryn, simetryn and terbutryn respectively.
When talking about the new product plan, Geng said, "We plan to expand the production capacity of azoxystrobin, chlorpyrifos, ametryn, prometryn, simetryn and terbutryn in the coming one to two years. The 3,000 t/a pyraclostrobin project will be started recently, and the current production capacity of penoxsulam (100 t/a) will be expanded. In addition, we are also concerned about the development prospects of the off-patent proprietary products. We will strive to become the leading company in the agro-chemicals industry in the coming three to five years."
Dalian Join King Fine Chemical Co., Ltd.
Dalian Join King is mainly engaged in the research, development and production of fine chemicals such as pesticides and pharmaceutical intermediates. The company provides R&D and production services to many world's top 500 chemical companies and has established more than 10 years of business strategic partnership with DuPont, Dow, Bayer and other companies. It is undoubted Join King is an important player in the upstream industrial chain. At present, Join King's pesticide production is concentrated on CTC/FTF, the core intermediate of picoxystrobin, and has obtained the registration of new chemical substances of kiloton level. In 2018, the company will obtain the registration of the TC for picoxystrobin.
Inner Mongolia Jiaruimi Fine Chemical Co., Ltd., a wholly-owned subsidiary of Dalian Join King, is mainly engaged in the production and sales of pesticides and pharmaceutical intermediates. Jiaruimi is capable of producing 2,000 tons of DCTF annually, which is the core intermediate of the downstream pesticide products such as highly efficient haloxyfop-P and fluazinam. In 2017, Jiaruimi highly exerted its advantages in chlorofluoropyridine, and achieved a year-on-year increase of 30% in performance, with some core products having more than 60% growth YoY.
Xiao Lifeng, deputy general manager of the company believes that for a production-oriented company, it is the trend to integrate the upstream and downstream supply chain segments and enlarge the production capacity of individual products. Dalian Join King will exert its superiority in intermediate production to become bigger and stronger, and actively participate in mergers and acquisitions of the industry to seek greater development. In the future, the company will continue to exert its technological superiority to enhance the chlorofluorination capacity of pyridine products and improve the industrial supply chain, strengthen the product registration and market development efforts, make a proper breakthrough downstream the TCs and formulations, and get closer to the market.