Glufosinate Focus: Price fluctuations by the mutual pull of effective supply capacity and market demand
According to the post of Linerlytica on Linkedin, Chinese port congestion was down across the board, with all 3 main port regions registering declines in berthing delays and vessel queues falling. Improved weather conditions in Eastern and Northern China helped to reduce the berthing delays, while the reopening of Shanghai has seen improved labor availability.
The China lockdown situation is getting better for resilience. Some COVID19 cases are still happening in the big cities, like Beijing. The control of pandemics brought some inconvenience to daily life. As a businessman, I think that “getting along with children at home” is the biggest challenge for us. The good thing is the COVID-19 pandemic did not bring a huge impact on the routine operation of production. Along with the weak season coming, the COVID19 would have a limited impact on China's agrochemical production and supply chain in the coming three months.
In China's agrochemical industry, there are many news about the new Glufosinate and Chlorantraniliprole capacities on the way to the market. Construction of Yisheng’s 20,000 Mt Glufosinate, 10,000 Mt L-Glufosinate, and 10,000 Mt Chlorantraniliprole got the approval of construction in Shandong province in May 2022. The Liben’s subsidiary company, Nei Mongol Shengling Chemical started construction of “50,000 Mt capacity of Glufosinate and intermediates” in A La Shan Novel and High Tech Industry Development District at the same time. And new capacities of Glufosinate from Changqing, Binnong, and Wynca will be coming out into the market soon. The traditional China Glufosinate giant product, Lier Chemical, also has a plan to expand additional 50,000 Mt Glufosinate capacities into the market in the coming two years. Veyong recently signed a technology transfer agreement with Zhejiang University of Technology for the industrialized production of L-glufosinate by the bio-enzymatic method. Using the synthetic biology and enzyme catalytic technology provided by the Zhejiang University of Technology, Veyong Biochemical will utilize highly efficient enzymes for glufosinate catalysis and convert D-Glufosinate into L-Glufosinate with high purity and high efficiency of the reaction. Combined with the new player, Hebei Chengxin, the supply market of Chinese Glufosinate market will be reshaped.
From my point of view, only the L-Glufosinate has the future. Because D-Glufosinate has no effect on weed control. There would be some risk for future Glufosinate evaluation of impact to the environment and humans. L-Glufosinate is the effective isomer. Only such an isomer can meet the principle of a sustainable portfolio perfectly. So Veyong could be the only producer in China which have competitive advantage among the Glufosinate manufactuers if they can successfully have the L-Glufosinate at a low cost with high purity in the future.
The current Glufosinate supply market is very sensitive. The leading producers’ contract line is occupied by key accounts’ orders. New capacities are trying their best to have the attention of global buyers, and traders are eager to get out with cash back, so there would be the possibility for low-cost Glufosinate to release in China market. The quantity would be not big. But it is sufficient to cause market fluctuation.
Since the weak season is coming. The weak season from June to July would lead to a lower operation rate. So the Glufosinate price would not drop sharply in short term. Weak demand will let us see a relatively stable downtrend in the coming two months. When the hot season comes, the balance of the new capacity and global demand would be more difficult to predict. Price fluctuations caused by the mutual pull of effective supply capacity and market demand will become the new norm.
For such anticipation, we can consider the global demand for the global 2023 crop protection market. Since the high recession possibility and Fed’s interest hike, the farmers will face more pressure on ROI. The global consumption of Agrochemicals would have a downtrend compared to the last two years’ growth. Even though the high pricing leaves global food commodities, it can not guarantee the farmer’s beneficiary for sustainable growth. In such a downtrend of consumption, it is hard to say if the future investment in the field will increase significantly.
Today, Fed will decide on the new policy of interest. Will 0.75 percentage point interest rate rise? Let’s see what will happen.
Do not hesitate to wait for the situation happens. In such an era of uncertainty, what we need to do is to proactively face the change.
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