2023 saw accelerated capacity expansion, at high investment and high volume

Date:03-19-2024

This article is initially published in 2024 China Pesticide Industry Watch magaznie , click to read and downlowd 

After years of development, the centralization and expansion have been continuing. In the past 14th Five-Year Plan period, the pesticide industry embraced its period of transformation and upgrading, where the pesticide industry has been speedily changing towards the green and low-carbon direction of development. Backed up by the domestic supply chain and the production capacity clustering superiorities, the Chinese pesticide industry is characterized with an obvious cost advantage, stable product structure, increased production capacity and innovation capability. Consequently, a substantial number of products are exported to the international market while fulfilling the domestic market demand. 

In recent years, with the impacts from a range of factors such as production cost structure, market development, stricter work safety/environmental compliance regulation and the relocation of pesticide factories, the pesticide industry investment becomes much higher and upgrading becomes more frequent, whilst the pesticide production capacity has increased significantly. The domestic industry leaders have continued their high-quality investment and have increased production capacity of products in short supply, via focusing on expansion of production of technical materials and clustering of production resources. Some companies seek to invest in production of active ingredients to extend to production of upstream intermediates, looking to promotion of a diversified production layout, which is expected to further enhance the integration of the complete industrial chain of the dominant products, having gradually formed their industrial chain advantages based upon key intermediates. 

This paper uses the pesticide and intermediates investment projects in China’s major chemical parks in 2023 as the entry point, giving a systematic presentation of the newbuild of the capacity of the Chinese pesticide technical and intermediates, the strategic layout of industrial chain extension and the ″Made in China″ industrial chain advantage in the agrochemical industry.

1. In 2023 Chinese pesticide production capacity expanded again, with newly increased capacity of above 2.4 million tons

According to AgroPages’ incomplete statistics, in 2023 the total number of new pesticide projects in China approached to 260, with newly increased capacity of above 2.4 million tons, including 1.28 million tons of pesticide technical and 1.12 million tons of intermediates. The capacity newbuild involves a total of 21 provinces, 101 chemical parks and 357 pesticide products (Table1). 

According to a survey and checking of the new investment projects of the domestic Chinese enterprises in 2023, the capacity newbuild in 2023 involves a total of 182 technical material products, which include 94 herbicides accounting for 51.37%, 40 fungicides accounting for 21.86% and 35 insecticides accounting for 19.13%. Among them, it is worthy of note that the 26 pesticide technical products new capacity exceeded 10,000 tons, covering glufosinate, 2,4-D, atrazine, mancozeb, clethodim, diquat, s-metolachlor, thiamethoxam, L-Glufosinate, 2,4-D isooctyl ester, glyphosate, terbuthylazine, chlorantraniliprole, ametryn, prothioconazole, pendimethalin, 2-Methyl-4-chlorophenoxyacetic acid, dicloran, tebuconazole, propazine, propanil, simazine, pyraclostrobin and acetamiprid. 

Herbicide technical capacity newbuild

In 2023, there was less investment in glyphosate technical capacity newbuild, where only Lanzhou Xinlongtai Biotechnology Co., Ltd invested in a production capacity of 27,000 tons. In contrast, the new production capacity of glufosinate in 2023 reached as high as 158,000 tons, totaling to nearly 200,000 tons if newbuild of 39,000 tons of L-Glufosinate was counted. Besides glyphosate and glufosinate, the investment in pyroxasulfone in 2023 was noteworthy, for which Chinese companies have started competition with newbuild of capacity of 5,650 tons, including Rainbow’s annual 2,000-ton pyroxasulfone production line at an investment of RMB300 million yuan and Binnong Technology’s planned annual 2,000-ton pyroxasulfone technical production line. In terms of the other hot herbicides, in 2023 there was a newbuilt of capacity of 130,000 tons of 2,4-D and 29,000 tons of 2,4-D isooctyl ester. Concerning the newbuild of capacity of the leading clethodim of cyclohexenone herbicides, 66,300 tons are being planned in 2023 by Syngenta, Rainbow, Lansheng and Liben. The market opportunity of diquat is growing fast and continuously, newbuild of which in 2023 was 93,000 tons (including 50,000 tons of Diquat dichloride). As the major herbicide used in corn and soybean fields, the production capacity of s-metolachlor increases by 40,000 tons in 2023. 

Fungicide technical capacity newbuild

The conventional fungicide mancozeb has been prosperous for a long time because of its excellent performance in resistance control. Noticeably, UPL announced acquisition of Corteva’s single-agent business unit except in China, Japan, South Korea and the EU member states. The acquisition is expected to enhance its product portfolio and leading position in the multi-site fungicide market. Domestically, as the mancozeb industry leader in respect of capacity, technical level and market share of mancozeb, Limin once disclosed its intended newbuild of an annual 45,000 tons of complexing form mancozeb. Besides Limin, in 2023 Liben Crop Science planned an annual 80,000-ton mancozeb project. In 2023, prothioconazole still remained at the peak of capacity expansion, with an increase of 19,100 tons. Furthermore, tebuconazole, trifloxystrobin and pyraclostrobin are also popular fungicide products undergoing frequent capacity investment, with newbuild of capacity of about 10,000 tons. 

Insecticide technical capacity newbuild

Since the initiation of localized production of chlorantraniliprole in 2023, its registration, capacity launch and formulation development are all put onto full gear. In terms of capacity newbuild, the production capacity increased by 21,500 tons in 2023 when AVILIVE Chemical, Guorui Chemical and Red Sun announced investment in launch of chlorantraniliprole projects. It is worth mentioning that Youdao Chemical recently disclosed achievement of full-load run of the company’s Phase II 10,000-ton chlorantraniliprole technical production plant, with production capacity totaling to 11,000 tons. At the end of August 2023, Red Sun’s annual 2,000-ton chlorantraniliprole project was completed and brought on stream. In addition, Zhongshan Chemical announced market release of a series of chlorantraniliprole formulations for application to different scenarios beginning from 2024, which are marketed both at home and abroad. To this end, the production capacity of chlorantraniliprole established in the past two years may begin to operate and product be released constantly. Besides chlorantraniliprole, the production capacity of thiamethoxam increased by 39,200 tons in 2023, whilst the major insecticide acetamiprid saw newbuild of capacity of nearly 10,000 tons in 2023. 

Note: The approved/planned capacity mentioned in the figure and text in this paper is not the actual capacity of investments and is for reference only.

Note: The production capacity, project owner and project location shown in Table 1-7 below are all from public information available from government websites or company announcement, being used by AgroPages only as incomplete statistics.

Table 1  2023 Pesticide Technical Material Investments in China 

(Incomplete statistics of technical material ≥ 10,000 tons) 

2. High amount investment becoming common 

As the global agricultural market continues to grow and the demand for highly effective pesticides increases, the agrochemical industry is experiencing an unprecedented booming of investment. In 2023, several companies announced billions of yuan of high amount investment in pesticide projects (Table2), which reflects the positive attitude of agrochemical enterprises in technological innovation, capacity and market expansion. It is not only a reflection of the confidence of enterprises in the future market but is also an indication of a major change in the market competition landscape. With the gradual implementation of these projects, the agrochemical industry plays a stronger position in the global agricultural supply chain, where enterprises may need to continuously improve the environmental compliance performance and the product innovation capabilities to adapt to the changing market and the policy regulation while chasing for economic benefits.

Table 2   2023 High Amount Investment in Pesticide Projects in China

(Incomplete statistics of certain high amount investment)

In view of the large investments listed above, the amount of investment of individual project has exceeded RMB10 billion yuan. Also, it is worth mentioning that most of the proposed/under-construction projects involve glufosinate or L-Glufosinate products. For instance, Hubei Taisheng, a subsidiary of Xingfa Group which is a leading phosphorus chemical company, launched annually 50,000 tons of L-Glufosinate and 50,000 tons of methyldiethoxyphosphine intermediate project; Shandong Xinhecheng Amino Acids Co., Ltd launched 60,000 tons of glufosinate project; Hebei Nongbiwei launched 10,000 tons of glufosinate project, Hebei Shanli, a subsidiary of Hebei Lingang Chemical launched 50,000 tons of glufosinate, 50,000 tons of methyldiethoxyphosphine and formulation projects; Baicaoyuan launched methyldiethoxyphosphine, L-Glufosinate technical and formulation projects. As selective herbicides, new capacity of glufosinate and L-Glufosinate has been continuously deployed in the last two years. At the same time, with go-ahead of the commercial planting of GMO soybean and corn, the glufosinate and glyphosate leading enterprises also ushered in a new round of growth opportunities, which may further boost the market demand, to the long-term benefit of the market growth.

3. Part of leading agrochemical enterprises breaking through to technical material production to build a complete industrial chain

To adapt to the industry development trending and enhance sustainability of business operation, in recent years, more and more enterprises are actively expanding scope of production and seeking new sources of growth via upstream and downstream production layout, as backed up by the advantages and resources of their main businesses. In this way, these companies can achieve new breakthroughs in the industrial chain development, towards establishment of their competitive and resilient industrial chain based upon diversified product operations. 

Expansion of production capacity of dominant products (Table3)

Table 3  2023 Pesticide Technical Investment by Part of Leading Chinese Enterprises in China

(Incomplete statistics)

To consolidate its C’l chlarnpyridine industry chain, Lier Chemical made an investment in newbuild of production lines of fluroxypyr, triclopyr and diquat products; as the first Chinese company developing and industrializing the production of glufosinate and L-Glufosinate, in 2023 Yonon not only spent a lot in increase of its glufosinate and L-Glufosinate technical capacity to expand the market share but also established product portfolios such as spirodiclofen, picloram and diquat; moreover, Shandong Yisheng planned an investment in renovation and expansion of glufosinate production lines. 

Clethodim is one of the advantageous products of Cynda Co., Ltd. In 2023, the company planned a newbuild of annual capacity of 5,000 tons of clethodim technical. Clethodim is also a key product of Lansheng Biotech, in 2023 the company planned its capacity extension from annual 4,000 tons to annual 12,000 tons.

A lot of companies own s-metolachlor registration, having made production layout in China. In 2023 Changqing planned a capacity upgrade of s-metolachlor up to 5,000 tons; Nutrichem’s annual 15,000-ton s-metolachlor technical upgrade project was completed and accepted; the annual 10,000-ton s-metolachlor upgrade project of Zhongshan Xiangshui, a wholly owned subsidiary of Zhongshan Chemical, has been largely completed, ready for completion acceptance. 

BSM Chemical and Shandong Huayang Pesticides are both the leading pendimethalin technical manufacturers in China; in 2023, the two companies invested in production expansion respectively by 6,000 tons and 10,000 tons for pendimethalin technical.

Basing on major products, enterprises moving into upstream industry to build a complete industry chain (Table4)

Table 4  2023 Investment in Upstream Intermediates by Part of Leading Chinese Enterprises in China

(Incomplete statistics)

To further stabilize the prothioconazole supply chain, Hailir acquired 26% stakes in Shaanxi Jinxinyi in 2022. Recently, the Phase II Project of Shaanxi Jinxinyi was added with an annual 18,000 tons of α-acetyl-γ-butyrolactone, which is the intermediate of prothioconazole. In addition, Hailir planned an investment in production of the package technical material/intermediate like 2,3 dichloropyridine, covering trifloxystrobin, dimoxystrolin, acetamiprid and imidacloprid; Lier Chemical invested in expansion of annual 3,000 tons of flumioxazin, (6-Amino-7-fluoro-2H-1,4-benzoxazin-3(4H)-one) in support of the production of flumioxazin technical in Lier Chemical Guang’an base, which would increase the company’s production capacity; Cynda Co., Ltd planned newbuild of imazethapyr, 3,000 tons of PDE (5-Ethylpyridine-2,3-dicarboxylic acid diethyl ester) and MPDE (5-Methylpyridine-2,3-dicarboxylatediethylester); Fengshan Group planned a parachlorotoluene fine chemical project to produce important pesticide technical such as 4-Chlorotoluene and O-Chlorotoluene to meet the company’s needs of production of trifluralin technical; Yifan Group invested in the (3-trans-Chloroallyl)oxyamine project to supply raw materials for the company’s clethodim production in Ningdong base, this is an integration of the upstream and downstream production; to focus on the major product bentazone, Alpha has formed its integrated industrial chain of intermediates, technical materials and terminal formulations via launch of production of bentazone and the intermediate sulfamide. 

Pilot production in process to facilitate diversified strategic layout  (Table 5)

Table 5  2023 Pilot Production Run by Part of Chinese Leading Enterprises in China

(Incomplete statistics)

To support its strategic production layout, Xingfa Group planned an investment in launch of the Biochemical Glufosinate Pilot Project, aiming to provide an experimental basis for the subsequent scale-up production of biochemical glufosinate; Lier Chemical invested in expansion of production of Chlorantraniliprole and the L-Glufosinate pilot project, soon after the company announced that it had mastered the biochemical production technology of glufosinate and issued a fundraise for newbuild of an annual 10,000-ton L-Glufosinate technical plant; Cynda’s niche product workshop renovation involved technical upgrade of the four existing products of the workshop, whilst 15 pesticide technical products were added, which not only included major technical materials such as pyroxasulfone, flumioxazin, nicosulfuron and bentazone, but also included Cynda’s exclusively registered diflufenican and pyraflufen-ethyl in China.

Production capacity of created products (Table 6)

Table 6  2023 Production Capacity of Part of Products of Chinese Originality 

(Incomplete statistics)

Cyproflanilide benzamide is CAC International’s created novel insecticide. To shape the cyproflanilide benzamide-supporting intermediate industry chain, in 2023 CAC International planned an extension to the cyproflanilide benzamide technical production as well as newbuild of the important intermediates dedicated to the environment-friendly cyproflanilide benzamide which included cyclopropanecarboxaldehyde, 2-Chloro-3-nitrobenzoic acid, 2-fluoro-3-nitrobenzoic acid and cyclopropanecarboxamide; Cynda has been actively working on creation of pesticides, having successfully developed and launched a number of innovative and disruptive compounds, its niche product workshop renovation encompasses production of self-created Quinadone, pyraquinate and topramezone; Jiangshan Agrochemical & Chemicals holds a patent for its burndown herbicide JS-T205, for which the company already started construction of the Phase II project. Jiangshan announced a fundraise for construction of its JS-T205 technical and formulation production plant, including construction of supporting facilities.

4. Production of pesticide technical and intermediates expanded in parallel, revealing the promienent advantages of Chinese pesticide industry chain

Over the last two years, with the continued expansion of pesticide technical production capacity, the market demand for key intermediates in synthesis of major pesticide technical has been increasing, providing further space of increase in the intermediate market, with a broad prospect. Via additional investment in the upstream intermediate and raw material productions, manufacturers are in a position to continuously improve production process, reduce production cost and maintain profit margin, thus leveraging the cost control and defending themselves by the cost-effective operations. Thanks to the growing downstream demand, besides the technical registrants, manufacturers with the advantage of key innovations have been actively deploying production in the industrial chain of technical material and intermediates. 

Over the last two years, relevant government departments have guided and encouraged pesticide manufacturers to promote establishment of complete production chain, improve industry concentration and promote the pesticide industry to move towards green, efficient and sustainable development. In this context, some of the Chinese pesticide companies could correctly identify their own advantages and make effort to develop segment market, making investment in their dominant product production to extend to the upstream intermediate production, which facilitated gradual formation of the complete industry chain advantage of these companies, as based upon their key intermediate resources.

In 2023, China’s pesticide investments involved 174 pesticidal intermediate product varieties, with a total production capacity close to the production capacity of technical materials, spreading all over to 20 provinces and 66 chemical parks. What comes below is a presentation to the 20 major pesticide intermediates in respect of capacity or popularity (Table 7).

PMIDA is an important intermediate of glyphosate. In contrast to the new capacity of 527,000-ton planned in 2022 (Hebang Guang’an’s annual 500,000-ton PMIDA), there was only one investment in PMIDA in 2023, but for a larger production capacity. In November 2023, Shandong Ruili Bio’s 50,000 ton-PMIDA project was announced, with a planned investment of RMB580 million yuan in newbuild of an annual 50,000-ton PMIDA production plant aiming at increase of the company’s product categories and expansion of market share.

In recent years, the production capacity of glufosinate and L-Glufosinate has been rising constantly, for which more and more glufosinate manufacturers are planning to build methyldiethoxyphosphine production lines. In 2023, the production capacity of Methyldiethoxyphosphine, the key intermediate of glufosinate, was further expanded, with an increase of 123,000 tons. The investing enterprises included Jiamusi Heilong Pesticide (a subsidiary of Shandong Huimeng), Hubei Taisheng Chemical (a subsidiary of Xingfa Group), Inner Mongolia Haopu Technology Co., Ltd, Hebei Shanli Science and Technology Chemical (a subsidiary of Hebei Lingang Chemical) and Anhui Shengli.

1-Amino-8-naphthol-4,6-disulfonic acid K-Acid and 2-Amino-5-Chloro-3-Methylbenzoic Acid are both the key intermediate of chlorantraniliprole. In recent years, with the expansion of chlorantraniliprole production capacity, the demand for intermediates has been increasing. In 2023, the planned new capacity of 1-Amino-8-naphthol-4,6-disulfonic acid K-Acid and 2-Amino-5-Chloro-3-Methylbenzoic Acid was 12,500 tons and 5,000 tons respectively. The investing enterprises included Youdao Chemical, Anhui Hengke Chemical (held by Shandong Taisheng Biological), Gansu Yongrun Tianze, Guangxi Liwei New Materials, Liaoning Fengshou and Hubei Shengkang Chemical (a subsidiary of GREATCHEM).

α-acetyl-γ-butyrolactone is an intermediate of the major fungicide prothioconazole. In 2023, the new capacity increase as planned for α-acetyl-γ-butyrolactone was 35,000 tons, including 18,000 tons of Shaanxi Jinxinyi (26% stakes held by Hailir), 15,000 tons of Inner Mongolia Daoke Chemical and 2,000 tons of Gansu Xinweike Fine Chemical. 

2-Chloro-5-chloromethyl thiazole is an essential intermediate for synthesis of second-generation neonicotinoid insecticides such as thiamethoxam and thiacloprid. In 2023, the production capacity of 2-Chloro-5-chloromethyl thiazole was planned to increase by 11,800 tons, including 3,359 tons of Gansu Shengjinyuan Biotechnology Co., Ltd, 3,000 tons of Hubei Dingchen Chemical Co., Ltd, 5,000 tons of Ji’ning Fushun Chemical Co., Ltd and 400 tons of Fuxin Tianli Fine Chemical Co., Ltd.

Dimethyl sulfate is of wide use, covering downstream applications to production of a variety of pesticides such as methamidophos, acephate, prometryn, hexazinone and dicamba, with a market shortfall at home and abroad. In 2023, there was a planned increase of capacity of dimethyl sulfate by 140,000 tons, being invested by Ningxia Xinrun Chuantai Materials Co., Ltd for 120,000 tons and Yumen Haotai Chemical Co., Ltd for 20,000 tons.

1,3-Cyclohexanedione is an important pesticide intermediate and is essential for synthesis of the herbicides sulcotrione and mesotrione. In 2023, there was a planned increase of capacity of 1,3-cyclohexanedione by 10,000 tons, being invested respectively by Shandong Wanhao Chemical Co., Ltd and Leping Rongkai Technology Co., Ltd. 

The rest of intermediates such as 2,4-dichlorophenol, 3,4-dichloroaniline, 3-methylpyridine, 2-chloropyridyl-5-methylene chloride, 6-Ethyl-o-toluidine (MEA) and Ethyl N-cyanoethanimideate are all  important intermediates for synthesis of pesticides.

Table 7   2023 Pesticide Intermediate Investments in China 

(Incomplete statistics of major capacity and popular intermediates)

5. Chinese pesticide industry gradually becomes differentiated and clustered, as backed up regional resource superiority 

The pesticide industry has been developing in alignment with the regional resource superiority and production differentiation, this has gradually become much clearer. From the perspective of the type of pesticide project launched in different regions, the differentiation of regional development of the pesticide industry across the country is no longer shown by energy availability or policy advantages but has gradually grown into the sort of regional clustered production distribution. This is of benefit to formation of regional structure of the Chinese pesticide industry, as well as to the benefit of complementary supply of resources between different regions.

Taking the phosphorus chemical industry as an example, with reliance on the phosphate ore resource and the relatively complete industrial foundation in the provinces of Yunnan, Guizhou, Hubei and Sichuan, these provinces could grow their phosphorus chemical industry rapidly and satisfactorily. In the circumstance of strong demand for glyphosate products, the supply of the upstream phosphate ore is increasingly becoming short. Therefore, the enterprises with phosphorus sources are in a stronger market position to dominate the market. The two provinces Hubei and Sichuan have released incentives which will promote adjustment of product structure; build clustering of advantageous industries; shape industrial patterns with complementary advantages between regions; establish upstream and downstream synergy as well as industry integration. The policies and incentives are expected to cultivate phosphorus chemical industry leaders with control of resource and domination of industrial chain; promote ″chained″ transformation and upgrading; facilitate cross-regional, upstream and downstream collaboration; and will guide phosphate ore, phosphorus chemical industry and downstream enterprises to launch strategic cooperation with each other. Under the guidance of favorable policies, the phosphorus chemical industry leaders have made their production layout one after another. 

Besides the trending of gradual integration of the phosphorus chemical industry chain, Ningxia and other regions in China are fully utilizing the local material and geographical advantages, having accordingly formed various chemical industry clusters. For example, Beilite Chemical Co., Ltd and Ningxia Dongwu Agrochemical Co., Ltd could utilize Ningxia’s unique advantage of raw material resources such as cyanamide, dicyandiamide, ammonium nitrate, acid, alkali, as well as the regional industrial clusters to have achieved rapid progress in development of the cyanamide-associated downstream pesticide industry sector, especially in development of guanidine and nicotinamide products like imidacloprid, thiamethoxam, clothianidin and dinotefuran.

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2024 China Pesticide Industry Watch