Chinese Top 20 Agrochemical Enterprises 2015: major products encountered price shock, while glufosinate opportunity rising strongly

Sales of top 20 Chinese agrochemical companies in 2015
2015 （2014）Ranking	Company	Sales of 2015 (Million Yuan)	Sales of 2014 (Million Yuan)	Change %
1（3）	Nanjing Red Sun	3,545	3,547	-0.06
2（1）	Zhejiang Wynca Chemical	3,398	3,805	-10.70
3（2）	Huapont-Nutrichem	3,333	3,737	-10.81
4（8）	Jiangsu Yangnong Chemical	3,050	2,820	8.16
5（4）	Shandong Weifang Rainbow Chemical	2,912	3,097	-5.97
6（12）	Jiangsu Huifeng Agrochemical	2,854	2,321	22.96
7（11）	Lianhe Chemical Technology	2,756	2,570	7.24
8（7）	Sinochem International	2,630	3,009	-12.60
9（13）	Shandong Binnong Technology	2,372	2,255	5.19
10（10）	Zhejiang Zhongshan Chemical	2,007	2,589	-22.48
11（6）	Sanonda	1,922	3,019	-36.34
12（14）	Noposion Agrochemicals	1,899	2,203	-13.80
13（18）	Jiangsu Changqing Agrochemical	1,815	1,801	0.78
14（15）	Nantong Jiangshan Agrochemical & Chemicals	1,789	2,102	-14.89
15（5）	Zhejiang Jinfanda Biochemical	1,663	3,025	-45.02
16（19）	Jiangsu Sevencontinent Green Chemical	1,631	1,486	9.76
17（-）	Jiangsu Changlong Chemicals	1,558	1,340	16.27
18（9）	Sichuan Leshan Fuhua Tongda Agro-chemical Technology	1,495	2,652	-43.63
19（-）	Lier Chemical	1,468	1,317	11.47
20（20）	Shandong Qiaochang Chemical	1,410	1,401	0.64

Need a change – some companies suffering from glyphosate and paraquat downturn

 

The Chinese real economy experienced a downturn in 2015, as the manufacturing sector moved from its “short supply” condition to an “overcapacity” status. The downturn is also reflected in the agrochemical industry, represented by overcapacity and a historic fall in prices of major products. For instance, glyphosate, which brought large profits to the industry in the last several years, is typical of the economy’s problems. Furthermore, Announcement Ref 1745, which prohibits the use of paraquat AS beginning 1st July 2016, has caused a continuous impact on paraquat production. It is clear that the prohibition on using these two products will result in Chinese agrochemical enterprises having significant problems. However, some enterprises have made use of this shock to review their product structures and business strategies, and have created new plans for their future development. Indeed, these enterprises have appeared to be resistant to the general downturn.

 

Jinfanda and Wynca are among the world’s largest manufacturers of glyphosate. The product structure of the two companies is largely based upon single items, as they are quite weak in the ability to resist business risks. In 2015, Jinfanda, whose primary sales are based upon glufosinate technical and formulations, suffered a serious drop of 45.02% in sales. Further, its performance ranking dropped to 15th place from last year’s 5th place.

 

Wynca’s product line includes herbicides, insecticides and fungicides, but its glyphosate technical and formulation still serves as its main products. Additionally, the price of organosilicon material, which is its other core business, also fell. The company’s sales dropped 10.70% compared to last year, and its performance ranking dropped to 2nd place, from last year’s 1st place. Although having a difficult year, Wynca could seize the opportunities available on the domestic market and take measures to change its business model towards becoming a service-oriented business operation. In 2015, Wynca established the “Nongfeike.com” platform to step into the aerial crop protection sector. Their idea was to make use of IT technology and internet applications to establish a “platform + App + terminal + service” based business model. This initiative might assist the company in locating another source for growth.

 

Meanwhile, glyphosate-based Fuhua Tongda experienced a 43.63% decrease in 2015. In the negative market environment, the company tried various approaches to find a way to recover. What is different from Wynca’s transformation is that Fuhua Tongda focused on extended industry chains of glyphosate to cover glyphosate raw material production and waste recovery for reuse, which links upstream and downstream businesses. The effort enabled the establishment of its own intellectual property and product line, including glycine, waste heat power generation, ionic membrane caustic soda, brine and chlor alkali. In its future product line, Fuhua Tongda is prepared to further develop glyphosate into a manufacturing platform for Fuhua Tongda.

 

 

Among the 10% growing enterprises on the top 20 list, the three fastest growing companies include Huifeng Agrochemical, Jiangsu Changlong and Lier Chemical, achieving growth of 22.96%, 16.27% and 11.47%. Among the three, Huifeng Agrochemical reported above 20% growth, which enabled Lier Chemical to enter the top 20, which is no doubt attributable to the sales of glufosinate. In 2015, glufosinate technical market demand increased above 50%, which benefited enterprises that had prepared to sell this product.

 

Of note, Lier Chemical, which was not listed among the top 20 last year, entered the top 20 this year. Lier Chemical achieved 11.47% growth during an adverse climate, ranking No.19 on the list. Due to the downturn of glyphosate, the company focused on distribution of glufosinate. In 2015, Lier Chemical completed the glufosinate technical upgrade project, which expanded its supply capacity. So far, the company’s capacity of glufosinate technical has reached 3,000 tons per year, and plans call to increase the present glyphosate production capacity to 5,000 tons per year to ensure future supply capacity.

 

Similarly, as benefited by the glufosinate deployment, Huifeng Agrochemical achieved growth of 22.96%, jumping to No.6 from last year’s 12th place. In order to strengthen its ability to control risks during the present situation, in June 2015 Huifeng Agrochemical acquired a 51% stake of Shijiazhuang Ruikai Chemical at cost of Yuan 269 million. Ruikai Chemical has specialized in production of glufosinate technical, which is a good supplement to the existing product line of Huifeng Agrochemical. After the acquisition, Ruikai Chemical became a quality supplier and important production base of Huifeng Agrochemical, enabling Huifeng Agrochemical to capture a larger share in the herbicide market.

 

However, Huifeng Agrochemical is not receiving significant returns yet from its investment in the agricultural material e-commerce Nongyiwang (http://www.16899.com), for which Huifeng Chemical is currently developing publicity and brand promotions. Therefore, the “Nongyiwang” of Huifeng Agrochemical suffered serious losses, but this is the first year of Huifeng Agrochemical’s engagement in China’s “Internet +” initiative. It is expected that, at a later period, the advantages and benefits of the internet based platform will become apparent.

 

 

In 2015, the global agrochemical industry experienced many mergers and acquisitions, in which multinationals were looking for collaboration with each other in the hope of surviving difficult times, which also caused an impact in the Chinese agrochemical industry. This new round of industry restructuring, mergers and acquisitions between multinationals brought about the appearance of quality assets and distribution channels, which became available to Chinese enterprises that had the opportunity to participate in the industry restructuring.  

 

In November 2015, Nutrichem announced the acquisition of Dow AgroSciences’ global oxyfluorfen business. Oxyfluorfen is a high-efficient selective pre-emergence and post-emergence broad spectrum herbicide. In June 2016, Nutrichem once again took over Dow AgroSciences’ global tebuthiuron business. Tebuthiuron is a non-selective phenyl urea herbicide. The acquisitions are not only beneficial to the existing technical material production of Nutrichem, but also enriched its product portfolio. Although Nutrichem could not survive negative sales growth in 2015, its takeover of the mature resources of multinationals might create a strong foundation for future development on a long-term basis.

 

 

In general, 2015 saw weak demand in the Chinese pesticide market and prices fell to their lowest. Some enterprises may still need more time for transformations to explore potentials for growth. With the global agrochemical and crop protection market being further frozen, the export-oriented, technically and financially strong Chinese enterprises began to look at the Chinese domestic market. This move will surely promote the Chinese pesticide market to develop more technically, intensively and service-oriented products.