Chinese pesticides has entered into an era of costly production

Though pesticides sales in the off-season, most of the staple products has experienced price rise in the beginning of 2011, the quoted price for glyphosate, cyhalothrin, cypermethrin, chlorpyrifos were 24500 Yuan/ton, 170000-175000 Yuan/ton, 97000-98000 Yuan/ton, 34000-35000 Yuan/ton respectively. According to the statistic, 80% of the staple pesticides have raised their price in China.

The higher prices of pesticides were the result of many factors. The main reason for these price rises was the increasing cost of the raw materials. Intrinsically vulnerable to its upstream industries, the commodity price fluctuated with the price of chemical raw materials. Large price increases of organic solvent and yellow phosphorus has led to nearly 10 inflation of the organophosphorus like chlorpyrifos, Dichlorvos and profenofos. The remaining high price of Acetonitrile from last year could push already-high nitenpyram prices even higher. The production cost of the oversupplied glyphosate is rising at the same time due to the climbing price of paraformaldehyde, natural gas and crude oil.

The cost of environmental remediation and implementation of the “energy saving and emission reduction” policy became another drain on pesticide producers. Too much involved in the OPPS, the pesticide industry is the most supervised industry. As government’s raising requirements on wastes treatment, increased funds were invested on pollutant discharge. Yet the Chinese producers are unaccustomed to spend such funds on environmental investment as their overseas rivalries larger proportion of their total investments, approximately 30-40%.Thus pollutant discharge becomes the chief determinants in the future survival for the Chinese companies.

The increasingly frequent trade friction between Chinese companies and foreign players has driven up the cost as well. Oversupply on some products forced the Chinese companies to release their capacities to the international markets. Large sums of money were spent on gaining market access. Not to mention the registration fees in the developed countries, the charge for one brand are $ 20,000 and $100,000 in Africa and Russia respectively. Moreover, rapid export growth of the products and relatively low price have incurred many anti-dumping investigations in some countries such as the United State, Australia, Brazil, Argentina, India, etc. In dealing with such conflict against China, many Chinese companies have spent much cost in international lawsuits.

In the short term, the Chinese producers will experience the predicament of the pressure of rising cost and market downturn.

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