The prices of glyphosate and glufosinate continue to be high, L-glufosinate meet new market opportunity in China

This year, driven by raw material costs and the optimization of industry supply and demand, the price of glyphosate continued to rise from RMB 28,500 per ton at the start of the year to RMB 53,000 per ton in August. Due to the impact of environmental compliance regulations, the supply of glyphosate might become very limited while its price could remain high.

Benefiting from strong downstream demand and the price increases of glyphosate substitutes, the price of glufosinate rose to RMB 250,000 per ton since the end of CAC Shanghai exhibition.

Due to the price rises of glyphosate and glufosinate, L-glufosinate, released just a year ago, quickly seized part of the glyphosate and glufosinate market, attracting widespread attention within the industry. Will L-glufosinate become the next leading product and its market be unsustainable? 

Development history of burndown herbicides

The “big four” burndown herbicides in history

Burndown herbicides, the largest herbicide category, are widely used on uncultivated land, non-tillage land and cropland for weed prevention and control. Glyphosate, paraquat, glufosinate and diquat were considered the “big four” herbicides. In 2016, sales of glyphosate, paraquat and glufosinate jointly amounted to $7.54 billion, according to Phillips McDougall. Among them, paraquat and glyphosate dominated the herbicide market with their cost-effective advantages, limiting the development of glufosinate and diquat.

Glyphosate is the world’s most widely used herbicide, due to its excellent weeding and long-lasting effect combined with its broad herbicidal spectrum. However, it causes harm to the root system of crops through indirect or hidden phytotoxicity, and causes soil plate hardening issues and “deficiency syndrome.” In addition, due to long-term use, glyphosate resistance is increasing yearly.

Paraquat does not cause harm to root systems, being safe for application on row crops. It also does not cause residual soil damage and acts quickly, taking effect in tens of minutes. Furthermore, paraquat is resistant to rain wash. Therefore, farmers can even conduct spraying in the rain. These advantages enabled paraquat to attain a strong market position equal to glyphosate.

Glufosinate on equal footing with glyphosate

Due to paraquat’s extreme toxicity to the human body with no dedicated antidote, its oral poisoning mortality rate reached as high as 90%, Therefore, China banned the sale and use of paraquat AS on 1st July, 2016. During this time, glufosinate entered the market, offering outstanding performance and a stable and long-lasting effect. From 2016 to 2020, the market pattern, with glyphosate and glufosinate leading on equal terms, began to take shape.

Currently, overall market development remains stable, due to the prohibited or restricted use of glyphosate, resistance to the compound and the risk of carcinogenicity, as well as the continuous spread of glyphosate-resistance crops worldwide and the slow release of novel non-selective herbicides.

Glufosinate does not hurt the root system of crops and is safe overall. It is also fast-acting and long-lasting with a broad herbicidal spectrum, being effective in controlling resistant weeds, such as eleusine indica and horseweed herb. In recent years, glufosinate gradually gained a share of glyphosate and paraquat’s market share, becoming the second largest burndown herbicide variety. According to Phillips McDougall, the market value of glufosinate steadily increased over the past 10 years, reaching $1.05 billion in 2020, while CAGR reached 13.2% from 2011 to 2020, making it the fastest growing non-selective herbicide.

With the further promotion and cultivation of glufosinate-resistant crops worldwide, the increased demand for a substitute after the banning of paraquat, the expansion of glyphosate-resistant weeds, as well as the increased cost-effective glufosinate mixture products, it is predicted that the future glufosinate market will grow by up to $2 billion.

Currently, some agrochemical companies are planning to begin producing glufosinate. However, some do not have experience of glufosinate production, while their intended production bases are centralized in one location. In view of this lack of experience, the impact of COVID-19 and the risk of pollution, it is uncertain whether the planned production capacity will run stable or sustainable. 

Effective Global Glufosinate Capacity by End of 2020

Source: Open information from Zhongnong Zongheng and CICC Research Department

L-glufosinate begins a new era

From 26th September, 2020, the Chinese Ministry of Agriculture and Rural Affairs banned the sale and use of paraquat in China, eliminating one of the “big four” in the domestic market. In the same year, Yonon, Japan Meiji Seika and Lier Chemical were granted registration of L-glufosinate technical in China, marking the start of the commercialization of L-glufosinate and beginning its era.

Glufosinate contains a chiral center with two optical isomers, L-isomer and D-isomer, but only L-glufosinate (L-isomer) offers weeding activity. At present, the most available glufosinate on the market is the product D:L = 1:1 racemized. L-glufosinate can convert the ineffective D-isomer in glufosinate into effective L-isomer, which, theoretically, requires 50% less product to be used on every mu of land (1/15 hectare), reducing the cost of processing technical materials, transportation and adjuvants, which will benefit farmers though significant cost reduction. In addition, the use of L-glufosinate instead of glufosinate reduces the discharge of ineffective agents on the soil by 50%, being more environmentally-friendly, in line with China’s policy of “decreasing the use of pesticide and increasing efficiency.”

According to incomplete statistics, just one year after the market release of L-glufosinate, it captured 8% of market share. In the coming years, L-glufosinate will gradually replace glufosinate. According to expert predictions, from 2023 to 2025, a large volume of L-glufosinate is expected to be released in the market, and manufacturers who can make the first moves will win.

L-glufosinate status quo in China

L-glufosinate technical and formulation registrations

According to China Pesticide Registration Watch, So far, besides Meiji Seika, eight L-glufosinate registrations are held by six Chinese manufacturers. Among them, L-glufosinate technical registration owners include Lier Chemical, Yonon（YongNong BioSciences） and Shandong Luba. Yonon was granted registration of L-glufosinate technical 91% in August 2018, while Lier Chemical was granted registration of L-glufosinate 90% in November 2020.

Formulation registration owners include Lier Chemical, Lier Crop Science, Yonon and Shandong Kesaijinong. Yonon was granted registration of L-glufosinate 10% solution in April 2020; Shandong Kesaijinong was also granted registration of L-glufosinate 10% solution; while Lier Crop Science was granted registration of L-glufosinate 15 % solution and 20% solution in June 2021 at same time. To be added to the most recent L-glufosinate 10% solution publicized for public feedback on 2nd August, Lier Group now supposedly holds three L-glufosinate formulation registrations, giving it a leading advantage. 

The Lier Group (Lier Chemical, Guang’an Lier, Lier Crop Science, Lier Biological and Jiangsu Kuaida) is reportedly currently working on increasing its registrations of L-glufosinate single agent and formulations in the Chinese market, as well as making arrangements for registrations in overseas markets, which will make it the largest L-glufosinate manufacturer with the most registrations and complete product varieties. 

Source: China's Institute for the Control of Agrochemicals, Ministry of Agriculture (ICAMA)

Technology and process 

The synthesis of L-glufosinate is quite difficult, where the technology has been monopolized by international companies. According to Web of Science, there are three reported methods of synthesis of L-glufosinate - asymmetric synthesis, splitting and conversion, chemical asymmetric synthesis. Industrialization of L-glufosinate by chemical asymmetric synthesis is relatively easier, which however takes longer steps of reaction and harder condition of reaction, resulting in a higher cost. At present, the company reserves the asymmetric method of synthesis of L-glufosinate, i.e., Lier Chemical has filed for a patent on the use of the chiral material L-homoserine as precursor for synthesis of L-glufosinate.

Conversion method: with the help of enzyme or chiral auxiliary, the glufosinate racemized D-glufosinate is converted into L-glufosinate via a two-step reaction. The conversion method has the advantages of mild reaction, high stereoselectivity and high yield, being a major trend for industrialized synthesis of L-glufosinate. BASF's acquired Glu-L technology is a process based upon enzyme catalytic conversion which converts D-glufosinate into L-glufosinate. Moreover, Lier Chemical is now in good command of the process and has achieved industrialized production.

Completed capacity or under construction in China

L-glufosinate capacity in China up to end of 2020

Source: announcements of each of the above company and CICC Research Department 

At present, Lier Chemical and Yonon have achieved commercialized production of L-glufosinate, of which Lier Chemical is planning running of a 10,000-ton L-glufosinate capacity. According to its environmental impact assessment, in 2020 Lier Chemical announced launch of a 10,000-ton and 30,000-ton L-glufosinate capacity in its Mianyang base. Meanwhile, a 3,000-ton L-glufosinate capacity will be built in Guang’an base.

In view of the successful development of Lier Chemical’s available asymmetric synthesis and conversion synthesis, Lier Chemical is expected to become the new industry leader in Chinese L-glufosinate industry, as backed up by its existing advantage of capacity of glufosinate.

Products brand in China's terminal market

So far, there have been two L-glufosinate brands having been launched, respectively by two manufacturers in China including Yonon’s Jinbaisu (L-glufosinate ammonium salt 10% and the most recent Jinxianniu, L-glufosinate ammonium salt 15% (first one in China) released to market by Sichuan Lier Crop Science in June 2021. Regarding L-glufosinate formulation product promotion, Lier says that its efforts are focused on shaping the brand image of Jinxianniu brand.

Selecting the right people to do the right thing

The history of development of burndown herbicides, including paraquat and glyphosate, tells us that when there is a new chance of development, selection of manufacturers that have an advantage of technicals capacity, well-established brand and market operation experience will enable grasp of opportunities of development, which will put ourselves in a stronger position on the market.

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