Blind expansion or a new business layout?

The scaling up, intensification and integration of technical, intermediate and formulation are essential for gaining future competitiveness in the pesticide industry.

In 2022, China’s issued the 14th Five-Year Plan of Pesticide Industry Development, which encouraged corporate mergers and acquisitions to make full-range production deployment, to promote agrochemical companies to develop toward grouplization, branding and internationalization. This was done to gradually change the decentralized pattern of pesticide industry made up by a large number of small factories.

This article uses the pesticide and intermediate projects launched in China’s major chemical parks from 2020 to 2022, starting with a brief presentation of China’s new capacity and industrial chain extension involving glufosinate, L-glufosinate, chlorantraniliprole, prothioconazole, sulfentrazone, oxadiazon, oxadiargyl and chloropyridines herbicides, followed by analysis of the industrial chain advantages of the ″Made in China″ agrochemicals.

This article was initially published in AgroPages' 2023 China Pesticide Industry Watch magazine.

Key points of this article:

1.    Chinese pesticide industry is still in a stage of continuous optimization of industry layout and adjustment of industrial structure; the production capacity of pesticides and intermediates in the central and western regions will continue to increase in the short term.

2.    Chinese domestic leading enterprises are expanding production capacity for continued promotion and supply of pesticide technical.

3.    Some enterprises seek to invest in technical production capacity to extend to upstream intermediates, gradually building up an advantageous whole industry chain beyond intermediates.

4.    After the strict overcapacity cut implemented in the past few years, some pesticide varieties have been brought into a new round of rapid capacity expansion, whether it being blind expansion like what was two years ago or a new business layout re-positioned by enterprise, it remains to be seen.

2020-2022 Hot Product for Investment

According to the observation and summary of the new project launches by the domestic enterprises from 2020 to 2022, we have sorted out the top seven pesticide technical products for which enterprises have planned to launch new capacity, including glufosinate, L-glufosinate, chlorantraniliprole, prothioconazole, sulfentrazone, oxadiazon, oxadiargyl and chloropyridines herbicides which include clopyralid, aminopyralid, fluroxypyr and triclopyr.

Glufosinate is the second-largest burndown herbicide in the world and has been the fastest-growing non-selective herbicide variety in recent years. In the past two years, Chinese manufacturers such as Lier Chemical, Shandong Yisheng, Yonon, Veyong and Wynca have begun deployment of production of glufosinate and L-glufosinate, having made reserves of equipment and capacity, as well as making technical research and development to reduce the cost of production. All glufosinate synthesis enterprises have initiated research and development of L-glufosinate, which is an optimization of the control efficacy of conventional glufosinate technical and formulations. Up to now, 57 L-glufosinate registrations have been granted in China, including 17 single agents and eight formulations, held respectively by Lier Chemical, Yonon and Wynca.  

On August 13, 2022, chlorantraniliprole technical came off patent, which was immediately chased after by domestic enterprises in competition for the product, for which technical manufacturers have deployed production capacity, downstream formulators have filed for registration, and terminal sellers have made marketing arrangements. Up to date, there have been 83 available chlorantraniliprole products, 49 mixtures, 34 single agents, including 11 registered technical products. In China, nearly 200 Chinese technical and formulation manufacturers, represented by Youdao Chemical, Zhongshan Chemical, Lianyungang Liben Crop Science, Zhengbang Crop, Lier Chemical, Hailir and Meibang, have stepped into the chlorantraniliprole field.

In the past two years, the development of prothioconazole has advanced rapidly, with increased sale year by year, which has stayed at about US$500 million in the past three years, becoming the youngest pesticide blockbuster product in the global market, as well as a pillar product among the fungicides. There have been 21 prothioconazole registrations in China, including 17 single agents,15 technicals and 4 mixtures. From 2020 to 2022, Jiuyi, Hailir, Rainbow and Xingfa Group have launched nearly 20,000 tons of new capacity of prothioconazole.

Sulfonamide has risen again in the past two years as a major force in addressing the glyphosate-resistant weeds in the United States, whilst China has been one of the central exporting countries of sulfonamide technical. According to China Pesticide Information Network, up to now, there have been 22 available sulfonamide products, including nine technicals. From 2020 to 2022, Rainbow, Heli Technology, Repont Agrochemical and Heyi Chemical launched 8,500 tons of new capacity of sulfonamide.

In the past two years, with Chinese manufacturers’ stable supply and capacity expansion, the overall supply of oxadiazon from China has shown improvement while the price has declined. Currently, China’s oxadiazon manufacturers mainly include Guangxin, KLH, Repont Agrochemical and Lantian Agriculture, with a total production capacity of 7,200 tons. In addition, the market demand for oxadiargyl, which is a derivative of oxadiazon, has also gradually increased. In addition, Oxadiargyl has a broader spectrum over oxadiazon, with a better price performance ratio, seven technical registrations have been granted in China.

In terms of the chloropyridines series, in 2022, Lier Chemical set up its product chain, from Tetrachloropyridine-2-carboxylic acid to picloram through set up of a new pyridine facility in its wholly-owned Sancaitang Chemical. Meanwhile, the 2,3-Dichloropyridine, the pyridine material of Lier Chemical, is a starting raw material for the subsequent chlorantraniliprole technical and cyantraniliprole technical. Through the new launch of the capacity of pyridine intermediates, Lier Chemical has set up its chloropyridine herbicide chain while expanding the product line to the insecticide field, which increases the company’s product portfolio and profitability.

Table 1   2020-2022 Chinese pesticide capacity launch & global demand(Unit: ton/year)

Table 2   Changes in declared capacity launch (Unit: ton/year)

Note: The production capacity information of hot products, the location of the park, and the relationship between investment and construction enterprises and companies in the article are all from the public information such as the government environmental assessment website, the announcement of investment and construction enterprises and companies.

Since 2016, the Chinese pesticide manufacturers have experienced the strict ″overcapacity cut″ campaign. In the past two years, we have noticed the overcapacity problem and the insufficient demand from markets at home and abroad, but all pesticide varieties seem to be moving back into a new round of rapid capacity expansion. In particular, the production capacity of some of the major varieties has increased sharply. For example, according to incomplete statistics from AgroPages, chlorantraniliprole capacity was declared to reach annually 28,950 tons in 2019 – 2020, whilst the 2020Phlip data shows that the global demand for chlorantraniliprole is only 3,000 tons per year; the production capacity of prothioconazole was annually 23,640 tons, whilst its declared new capacity was 1,4000 tons in 2021-2022, far higher than the global demand of 7,000 tons annually. In terms of intermediates, the production capacity of chloropyridine herbicides have shown an obvious growth trend. Whether the capacity expansion is a blind expansion like two years ago or a new business layout as re-positioned by enterprises, let’s wait and see.

If you are interested in this article, please contact the author for further communication and consultation!

☞ Contact information

Author: Nino Wong

Email: Apnino@agropages.com

WeChat：Nino_wong

Time: Jul. 13, 2023-Jul. 14, 2023    Location: Hangzhou, Zhejiang, China

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