The
imidacloprid technical price in China is on an immense surge in the beginning
of 2017. According to CCM’s research, the main reason can be found in the tight
supply of its raw materials, which will not rise significantly in the near
future.
Ex-works
price of imidacloprid 97% TC in China, Jan. 2016-Jan. 2017
Source:
CCM
After
hovering at a low level during the first two-third of 2016, the price of
imidacloprid technical began to rise in August of last year. The growth was
very steady up to the beginning of the year 2017, where the price rise showed a
large increase in the first days of the new year.
As
a fact, several insecticides in China experienced a price rebound in 2016,
including nicotinoids as well as biological and organophosphorus insecticides.
According
to CCM, the price trend of imidacloprid 97% technical has witnessed a year on
year growth of more than 30% in the first half of January and a month on month
rise of 10.35%. The average price in the beginning of January was USD18,625/t.
The
reasons for the low price of imidacloprid during the last years in the first
place has been a huge overcapacity of this insecticide, which could not meet
sufficient demand in the world market. Chinese producers expanded the
production of imidacloprid in 2013 by more than 10,000t/a to 30,000t/a, while
the global demand kept remaining somewhere over 20,000t/a.
Reasons for price
rebound
The
rebound of the price occurred in the last third of 2016, which can be mainly
explained by a tightened market supply together with the surge of production
costs, due to shrinking supply of upstream products.
The
tightened market supply of imidacloprid technical in China is the result of
China’s overall effort to reduce overcapacity of pesticides, which is a part of
the Zero Growth of Pesticide Utilization by 2020 plan. In addition, heavy pollution
in several provinces in China throughout the year 2016 have led the government
in China to implement stricter environmental protection rules and laws, which
forced many insecticide producers in China to cut or limit their production.
All these measurements led to the tightening supply of imidacloprid in China.
The
other reason for the price rebound is increased production costs. On the one
hand, the prices of some raw materials have surged, due to the environmental
measurements of China’s government, which led to reduced production. On the
other hand, paraquat AS was banned in China in July, which led to a huge
production slowdown of pyridine and its by-product CCMP. CCMP however, is one
of the main raw materials used for the production of imidacloprid. Hence, the
supply of raw material is shrinking, which rises the purchase prices and
therefore the production costs for imidacloprid manufacturers.
Outlook
The
reasons for the price surge in January 2017 are mainly due to the supply cut in
Shangdong province, a region that is very important for China’s pesticides
manufacturing, which was the target area of environmental inspections recently.
Furthermore,
the holidays in China during the Spring Festival have prevented the
insecticides industry from increasing production again. Hence, CCM predicts,
that the price of imidacloprid is going to rise further in the short run, due
to the remaining tight supply of raw materials.
In
the long run, a recently revealed proposal of banning imidacloprid in Canada by
Health Canada may have a significant impact on the world market of this widely
used insecticide. Imidacloprid is one of the most popular insecticides in
Canada and worldwide, mainly used for corn and canola plants. It is quite
controversial, though because the insecticide is linked to several bee colony
losses and is considered as a threat to the ecosystem in Canada.
Nowadays,
China is one of the biggest exporters of imidacloprid in the world and therefore heavily
dependent on the world market development. More than half of China’s output of
this insecticide is used for the export in the world market. Hence, China’s
producers have to keep aware of the demand situation globally and be able to
adapt their production and strategy foresighted.
About CCM
CCM is
the leading market intelligence provider for China’s agriculture, chemicals,
food & ingredients and life science markets.
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