Prices of cyhalofop-butyl technical and its upstream raw materials on the rise, future trend after Chinese Spring Festival unforeseeable

At the start of 2021, AgroPages issued a report, titled, “Cyhalofop-butyl Industry Watch - Why did Price of Cyhalofop-butyl Technical Declined below Cost in 2020?”.

During that time, the price of cyhalofop-butyl was only Yuan130,000 to 140,000 per ton, but this suddenly rose to Yuan250,000 to 260,000 per ton  in 2021. The current price fell to Yuan200,000 to 220,000 per ton, but with fewer transactions being made. In general, there is a “wait-and-see attitude” from the production side, but some formulators could no longer wait and started to sell at reduced prices. The future trend after the Chinese Spring Festival is complicated and difficult to judge. 

Spring ploughing requires supplies of agricultural inputs in advance. Therefore, the majority of farmers have now begun to make purchases of seeds and fertilizers, but the prices of agricultural inputs, including cyhalofop-butyl, have appeared astonishing. Spring plowing will take place right after the Spring Festival, but will the prices of upstream raw materials of agricultural inputs rise, fall or remain stable? Will the previous increases in raw material prices be passed on to growers in 2022? How much pressure did farmers bear in 2021? With these questions in mind, the author conducted research into the latest market situation of cyhalofop-butyl, which is the largest herbicide variety for application on rice, hoping this will provide some useful references.

Trends in cyhalofop-butyl technical and formulation

According to the distribution data of cyhalofop-butyl, its sales in the entire Chinese market in 2021 was roughly 2,800 tons, remaining relatively stable compared to 2020. A major manufacturer said the cyhalofop-butyl market has become stable, and it has included metamifop in its product portfolio as a supplement to the cyhalofop-butyl solution for barnyard grass, having predicted sales of 100 tons of metamifop in 2021-2022.

The growing market does not hide the current herbicide price crisis. Due to rising prices driven by raw materials, farmer’s prevention costs and control costs are rising. On the other hand, weed resistance has been growing over the past two years, while the control effects of ACCase products (cyhalofop-butyl and metamifop) and ALS products (penoxsulam) declined rapidly, especially in 2021. This have created an opportunity for novel rice herbicides, where KingAgroot’s product, Daoyu, with its active ingredient being Tripyrasulfone, is designed to solve the problems of resistant Leptochloa chinensis and barnyard grass in the Yangtze River Basin, as well as resistant paddy grass. The product has won the trust and acceptance of distributors and farmers, therefore, becoming a new hot product.

Manufacturers generally believe the price of cyhalofop-butyl formulations will rise to a certain extent after the 2022 Spring Festival. Taking 40% Tripyrasulfone as an example, the price increase may be around Yuan10,000 per ton.

Trends of cyhalofop-butyl upstream raw materials and intermediates

Some industry professionals predict the price of cyhalofop-butyl technical may rise after the Spring Festival and a price drop is impossible unless prices of key upstream intermediates collapse, currently a very low probability. Because of the short supply of DHPPA, Heze Jinchen has been forced to stop production its till March; Jinzhou Sihai is still producing at full capaxity for supply but only for large purchase orders; Jiangxi Tianshu is not producing regularly; and Huimeng needs more time to release its newly increased capacity. Most cyhalofop-butyl technical manufacturers are waiting for DHPPA, but there are no current signs of an improvement to the situation.

In addition, DHPPA’s upstream key material, hydroquinone, does not show signs of improvement in terms of short supply, with the mainstream price being at Yuan75,000 per ton, which is slightly lower than the record high price of Yuan80,000 per ton but matches DHPPA’s previous market price. At present, DHPPA price rose to Yuan165,000 yuan per ton, with its highest price once reaching Yuan180,000 per ton.

As well as DHPPA, the price of another key intermediate, 3,4-Difluorobenzonitrile, has stayed relatively stable at Yuan145,000 per ton. In addition, bromobutane price has been stable, staying at Yuan50,000-55,000 per ton. The cost of the materials of mainstream manufacturers, Zhongxun, Yongkai, Flagchem and Weixun, are between Yuan170,000 to 180,000 per ton. Based on current market prices of Yuan200,000-225,000 per ton, the product does not give distributors much profit margin. Although a news report suggested a new capacity of 3,000 tons for 3,4-difluorobenzonitrile will be brought on stream, this is not a key factor that can influence the cyhalofop-butyl market.

In light of current raw material prices, the procurement cost of manufacturers rose significantly, which also imposes considerable financial pressure on them. The purchase of 200 tons of DHPPA now costs Yuan33 million, which is Yuan15 million more than the procurement funding in 2020. This part of the financing cost is not yet being calculated and included in the cost of production.

The current situation is that high prices at the upstream of the industry cannot be reduced while prices at the downstream of the industry cannot be increased. In the meantime, the paddy rice planting season is imminent in April, so not much time is available to distributors. 

Cyhalofop-butyl importation

In the international market, the import price of cyhalofop-butyl technical is also rising at the same time. In 2021, the importation situations of cyhalofop-butyl in India, Vietnam and Indonesia were as follows:

1. India

In 2021, India’s total importation of cyhalofop-butyl technical was 51.9 tons without formulations, up 100% year-on-year. In 2020, India’s total import of cyhalofop-butyl (converted to technical) was 25.6 tons. In 2019, India’s total import of cyhalofop-butyl (converted to technical) was 35 tons. In 2018, India’s total import of cyhalofop-butyl (converted to technical) was 12 tons.

In 2021, Dow (India) imported 46.4 tons of cyhalofop-butyl technical 96% from the US at an average price of $56,500 per ton, without formulations. Crystal imported 5.5 tons of cyhalofop-butyl technical 97.4% from China, at an average price of $29,500 per ton, having become the first local Indian enterprise to import cyhalofop-butyl. In November 2021, India’s Meghmani Industries obtained a registration certificate for the export of cyhalofop-butyl technical 96%.

2. Vietnam

In 2021, Vietnam imported 267 tons of cyhalofop-butyl technical 97%, down 10% year-on-year, at an average price of $23,800 per ton, up 9.2% year-on-year. According to the single transaction price, the price of cyhalofop-butyl technical was constantly rising, from $20,000 per ton in December 2020 to $32,500 per ton in December 2021, an increase of 62.5%. Vietnam imported 296 tons in 2020, and 229 tons in 2019.

3. Indonesia

From January to September 2021, Indonesia imported 41.4 tons of cyhalofop-butyl technical, with the transaction price rising from $20,500 per ton to $29,800 per ton. Chinese companies supplied 38 tons. Dow (US) supplied 3.4 tons, which was a sharp decrease. From January to September 2020, Indonesia imported 38.2 tons, compared to 78.8 tons in the whole of 2020. Major suppliers include Chinese enterprises that supplied 43 tons, and Dow (US) that supplied 35.8 tons.

The sharp increase in the prices of agricultural inputs is eating up farmer’s earnings

Rice has the largest grain allocation in China. In 2021, China’s rice planting area was 29.9212 million hectares, accounting for some 25% of total food grain area. Cyhalofop-butyl is the mainstream herbicide selected for application on Chinese rice fields. It is currently difficult to judge whether the rising prices of upstream raw materials and intermediates can be further passed on to terminal products after the 2022 Spring Festival.

The price rise of cyhalofop-butyl is one example of the price rise of many agricultural inputs. According to a market survey conducted by AgroPages, the prices of many agricultural inputs have risen significantly. Taking urea as an example, the current domestic market price is around Yuan2,500 to Yuan2,600 per ton, but this was only Yuan1,600 per ton, having increased 56%, while phosphoric acid 98% is quoted at Yuan11,600 per ton; diamonium phosphate 64% from prime manufactures was quoted at Yuan3,550 to Yuan3,700 per ton, which used to be Yuan2,150 to Yuan2,200 per ton in 2020, an increase of 65%. The domestic market price of potash fertilizer, which is called the “king of price rises,” was around Yuan2,000 per ton at the start of 2021, which rose to Yuan3,810 per ton at the end of 2021, an increase of 90.5%. The price is still rising since the beginning of 2022.

With regards to staple herbicides, the price of glyphosate price from Yuan20,000 per ton to its maximum of Yuan85,000 per ton, which has fallen back to Yuan75,000 per ton at this moment, but there are quotations at Yuan73,000 per ton on the market; Diquat rose from Yuan35,000 to Yuan60,000 per ton; Pretilachlor rose from Yuan30,000 to Yuan60,000 per ton; and Butachlor rose from Yuan25,000 to Yuan50,000 per ton. The price rise of these products all exceeded 100%, undoubtedly adding to farmers’ production cost and squeezing their profitability. Taking Anhui Province as an example, the rice purchase price is still Yuan2.4 per kg while the rising prices of fertilizers, seeds and pesticides added 15% to farmers’ costs. Also, there was continuous rain in June and July 2021 in Anhui, which resulted in the lodging of 40% of the planted paddy rice, leading to much lower incomes for farmers, who say the average income per mu (1 mu = 1/15 hectares) is generally less than Yuan200. In 2022, if fertilizer and pesticide prices continue to rise while the rice purchase price remains unchanged, farmers’ enthusiasm about rice growing will run out.

A stable supply of agricultural inputs plays an important role in maintaining farmers’ enthusiasm in agricultural production, which contributes to the nation’s food security strategy. It is hoped the prices of agricultural inputs can return to normal as early as possible and remain stable, so food security and farmers’ vital interests can be safeguarded on a long-term basis.

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Email: erwin@agropages.com 

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