China's government is
conducting environmental protection measurements throughout the country since
2015, which is restricting the supply of pesticide raw materials ever since.
The announcement of further pollution inspections in 2018 and 2019 is
supporting a tight supply of Chinese glycine, the main intermediate for
glyphosate production.
Glycine
is a free-flowing crystalline material, produced at varying levels of purity
and is used as a sweetener or taste enhancer, a buffering agent, re-absorbable
amino acid, or as a chemical intermediate, especially in the production of the
famous herbicide glyphosate. To sum it up, glycine is an important raw material
which is widely used in industries of pesticides, pharmaceuticals, foods and
feed. Particularly, it is very important in producing glyphosate as most
glyphosate in China is produced by glycine method.
China's
glycine producers are mainly located in Hebei and Shandong provinces, Some
glyphosate producers in Sichuan and Hubei provinces also have their own glycine
capacity, according to market intelligence firm CCM.
Due
to the production chain of glyphosate, the markets of glycine and glyphosate
are interdependent on each other. Accordingly, supply and demand for glycine
can significantly influence operating rate of glycine-based glyphosate. In
2017, Hebei and Shandong were the main targets of the country's environmental
inspections. Production cuts there spur overall glycine prices across the
country, and glyphosate prices also rose.
Currently,
environmental inspection is being carried out on a regular base and may even
get further stringent in 2018. In this context, glycine supply will continue to
be tight, pushing up market prices and restraining downstream glyphosate
operating rate.
New Environmental pollution inspection announcements
Recently
the Ministry of Environmental Protection of the People's Republic of China
announced that it planned to launch the second round of central environmental
inspections in 2019. The first round was held from the end of 2015 to the end
of 2017, which involved 31 provinces and solved many outstanding issues.
According to CCM, pollution prevention and control will continue being the
focus in the next 3 years, particularly significant reduction of PM2.5
concentration. It is known that besides Beijing-Tianjin-Hebei Region and its
surroundings and Yangtze River Delta Region, the Fenhe-Weihe Plain will also be
listed in the key regions for air pollution control. Industry insiders widely
believe that this will keep spurring up chemical prices. In 2016–2017, affected
by environmental inspection, PMIDA, glycine and glyphosate technical saw rises
of 22.70%, 33.11% and 37.11% respectively. Currently, many provinces are
eliminating chemical enterprises that cause environmental pollution.
Compared
with 2017, the prices of pesticide raw materials in 2016 were relatively
stable. In 2017, especially in H2 2017, mainly restricted by environmental
protection inspection, raw materials were in tight supply, and the price
increase was obvious. Among them, the increase in pyridine raw materials was
relatively large. The prices of downstream pesticide products of pyridines such
as imidacloprid and acetamiprid also increased substantially. After July 2017,
O,O -diethylthiophosphoryl chloride price began to rise due to tight
supply. Prices of organic phosphorus insecticides such as chlorpyrifos and
phoxim were driven by raw material costs, increased in varying degrees. Glyphosate
price had seen increasing momentum during 2017, due to a dramatic increase in
raw material cost caused by the short supply of glycine.
About the article
The
information for this article comes from CCM, China's leading market
intelligence provider for the fields of agriculture, chemicals, food and feed.
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