Glyphosate price up nearly 200%, 3 companies achieving surged market performance

From below Yuan28,000 per ton at the beginning of the year, the price of glyphosate rose to above RMB80,000 per ton in this October, which is a nearly 200% price rise. 

As a result, the listed companies in this industry sector have shown a bright performance in the 3rd quarter. Among these companies, Hebang’s three-quarter net profit exceeded the total net profit of the past three years. Xingfa, Wynca and Jiangshan have all achieved multiplied net profit increase in the first three quarters.

“Purchase orders in lots of companies have been scheduled for production up to the end of the year. As there has been almost no new capacity being launched this year, the glyphosate price is expected to rise further, driven by the cost increase and the strong demand from downstream overseas,” said a staff member of a listed glyphosate technical manufacturer.  

Glyphosate price expected to remain high

Industry professionals believe that the skyrocketing price of glyphosate is mainly due to the limited production capacity and increased demand, which exceeds supply. 

At the supply side, the current global glyphosate production capacity is about 1.1 million tons per year. Besides Monsanto’s 380,000-ton yearly capacity situated overseas, the remaining 700,000-ton annual capacity is located in China, more than 80% of which is exported to GMO planting countries, mainly Brazil, the United States and Argentina.

On the demand side, since 2020, all countries have paid attention to food security due to the extreme weather globally and the impact of COVID-19,. Hence, food prices are hiked; planting area is growing, and highly toxic pesticides such as paraquat are being replaced. In this circumstance, the glyphosate prices could keep rising. 

The 4th quarter is a high season for pesticide export. Glyphosate manufacturers are receiving more orders this year, while restrictions in power supply and environmental compliance regulations have restricted the production load of enterprises. Thus, glyphosate prices could stay high.

Leading enterprises achieving bright performance in the 3rd quarter

Chinese prime glyphosate manufacturers include Xingfa, Jiangshan, Fuhua, Wynca and Hebang. As a benefit from the booming of the major product glyphosate, the 3-quarter performance of these listed companies increased significantly.

Among the listed glyphosate manufacturers, Hebang led the business growth in the first three quarters. Due to the surging price of glyphosate, Hebang’s gross margin reached 40.44% in the first three quarters, up 20.92% year-on-year. In the first three quarters of the year, Hebang achieved an operating income of RMB7.068 billion, up 81.52% year on year. Net profit attributable to shareholders reached Yaun2.013 billion, which turned to gains from the loss status last year. Finally, net profit after non-recurring profit and loss increased 11 times year-on-year, of which, the net profit attributable to shareholders in the third quarter reached RMB1.099 billion, having exceeded the total net profit of the past three years. The company expressed at the investor platform that its planned glyphosate production capacity will be 58,000 tons this year.

Xingfa and Wynca are both “silicon and phosphorus”-based enterprises, whose profitability significantly increased in the first three quarters of this year, driven by the booming of phosphorus chemical and silicone industries.

As the largest glyphosate manufacturer in China, Xingfa now possesses an annual 180,000-ton glyphosate production capacity. According to the company’s third-quarter performance report, its operating income in the first three quarters reached RMB16.58 billion, up 8.93% year-on-year. The net profit attributable to shareholders reached RMB2.488 billion, up nearly six times year-on-year, of which, net profit attributable to shareholders reached RMB1.347 billion in the third quarter, up 506.88% year-on-year and 71.37% month on month. 

The third-quarter performance report published by Wynca revealed the company’s operating income of RMB13.32 billion in the first three quarters, up 41.1% year-on-year. The net profit attributable to shareholders reached RMB1.6 billion, up 713.7% year-on-year, of which, the net profit attributable to shareholders in the third quarter reached RMB756 million, up 562.9% year-on-year. The company’s existing glyphosate production capacity is reported to be 80,000 tons per year, with an annual output of about 85,000 tons. The company purchases more than 10,000 tons of technicals annually for formulation production, and its annual sales of glyphosate technical is nearly 100,000 tons converted at 100% content.

Jiangshan achieved an operating income of RMB4.793 billion in the first three quarters, up 27.22% year-on-year. The net profit attributable to shareholders reached RMB525 million, which is a doubled growth year-on-year, of which, the net profit in the third quarter was RMB218 million, a three-time increase year-on-year. Earlier, the company said at an investor platform that the consolidation with Fuhua is underway and would be completed after auditing and evaluation. It would be followed by a board meeting for review of transaction-related matters. After completion of consolidation, the company will have a pesticide technical capacity of no less than 295,000 tons annually, of which the glyphosate technical capacity will reach 223,000 tons per year.

On 2021 China Pesticide Exporting Workshop, experts from Xingfa Group, CAC Group and Lier Crop Science made discussion on supply, price trends and future market development of China's non-selective pesticide products. Watch the dialogue video: