Weak glyphosate is still anguishing Chinese producers

Price of the glyphosate from China has ever rebounded to 24,500 Yuan per ton this January, however it has shrunk by 12.4% to 21,500 Yuan in next six month, the herbicide now becomes a painful legacy for Chinese producers.

Jiangsu Yangnong, a leading glyphosate manufacturer in China, posted 16.85% decline of net profit in Q1 and the share has dropped by 15% in past six months. Nantong Jiangshan, pre-announced last Thursday a total loss of 23 million Yuan in the first half of 2011 even though the company retained its 10.7 million Yuan’s revenue in Q2. Anhui Huaxing, suffered huge loss last year, last week reported net loss of 10 to 15 million Yuan in the first six month of 2011, the herbicide encumbered the company with gross margin of -0.12%.

As the most used herbicide, glyphosate has taken up 30% of total global herbicide market and reached its highest price in 2008, but the price has experienced continuing downturn since irrational capacity expansion from Chinese producers such as Wynca, Jiangsu Jiangshan, Anhui Huaxing, Sanonda and Hubei Xingfa. Though China produces most of the glyphosate and exports 80% of the output, the herbicide contributes only 7.55% gross margin to the industry. Weakness in getting market entry and shaping brand products are two major fatalities for the Chinese manufacturers.

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