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Crop Protection China News

Vol.6 Issue 16 2012 August 31, 2012

Vol.6 Issue 16 2012


[email protected] CCM II

Contents ■ Overview ...............................................................................................................1

Semi-annual financial reports of domestic listed pesticide enterprises ...............................................................1

■ Dynamic .............................................................................................................. 3Main pesticides' price trend in China, Jan.-August 2012 .................................................................................... 3Jiangsu pesticides output increases 3.5% in H1 2012 .......................................................................................... 6

■ Import and export ............................................................................................... 7Guangdong pesticide export volume and price in H1 2012 decrease ................................................................... 7China soybean import surges in Jan.-July 2012 ...................................................................................................8

■ Policy ................................................................................................................... 9New pesticide policy in Hainan Province is doubted divorcing from reality ....................................................... 9

■ Registration ....................................................................................................... 10China pesticide registration summary in Jan.-Aug. 2012 .................................................................................. 10

■ Company .............................................................................................................12Sinochem Group shows strong R&D capability ...................................................................................................12Accumulated occurrence area of main rice pest/disease in China, July 2012 ....................................................13Average market price of main crops in China (August 31, 2012) ........................................................................13

■ News in Brief ......................................................................................................14

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Vol.6 Issue 16 2012


[email protected] CCM III

Welcome to Crop Protection China News 1216

Till the end of August 2012, all listed pesticide enterprises have gradually released their semi-annual financial reports of 2012. After analyzing these 21 pieces of financial report, CCM International found out that the total revenue and net profit of these companies in H1 2012 have witnessed a large growth over H1 2011, up24.48% and 87.63% over H1 2011, reaching USD3.38 million and USD158.04 million. Although it seems to be a piece of very good news for domestic pesticide industry implying a gradual recovery, an obvious gap also shows between the data in Syngenta and other multinational pesticide enterprises as well. According to the Q1 and Q2 financial reports of Syngenta in 2012, the H1 revenue of the company’s crop protection department summed up to USD5.67 billion, 71.3% larger than the total revenue of all listed pesticide enterprises in China.

If there are any specific topics you would like us to cover or investigate any of the subjects covered in more detail, please contact us by +86-20-3761 6606, or [email protected].

Headlines of Crop Protection China News 1216

While approaching the end of Aug. 2012, all the domestic listed pesticide enterprises have

released their semi-annual financial reports of 2012 which showed an obvious recovery in domestic pesticide market.

Main domestic pesticides experience different price trends in the past eight months in 2012. It makes

most of domestic pesticide enterprises worry about their pesticide business in the coming months left in 2012.

The total output of pesticide technical of the major 20 enterprises in Jiangsu Province grows by 3.5%

in H1 2012.

Guangdong pesticide export volume and value in H1 2012 reach 38,000 tonnes and USD110 million,

down 12.6% and 10% over the same period of 2011.

China's soybean import volume in the first seven months of 2012 reaches 34.92 million tonnes and

the predicted import volume in the whole year of 2012 will be 54.55 million tonnes.

More and more complaints from pesticide retailers have been raised up in Hainan Province as the

new pesticide policy is now promoted.

According to the ICAMA, the new registrations of pesticide TC are 97 in China from Jan. 1 to Aug.

2, 2012, such as azoxystrobin, bispyribac-sodium, imidacloprid and so forth.

Sinochem Group has eight new pesticides' common names gained ISO interim approval, showing the

remarkable R&D capability of the company.

Location of key companies covered in this issue

RMB Exchange Rate, 31 Aug., 2012

100USA 634.49100EUR 793.78Source: The Bank of China (BOC)

Vol.6 Issue 16 2012


[email protected] CCM 1

■ Overview

Semi-annual financial reports of domestic listed pesticide enterprises

CompanyRevenue, million

USDYOY change

Net profit, million USD

YOY change

Nanjing Redsun Co., Ltd. 510.39 33.88% 22.25 7,340.21%

Zhejiang Wynca Chemical Industry Group Co., Ltd.

468.27 22.11% -4.38 -149.48%

Chongqing Huapont Pharm. Co., Ltd. 285.66 520.27% 36.23 290.33%

Lianhe Chemical Technology Co., Ltd. 233.74 20.15% 25.76 26.17%

Nantong Jiangshan Agrochemical & Chemicals Co., Ltd.

231.84 12.73% 0.90 100.24%

Shandong Shengli Co., Ltd. 196.40 -4.27% 0.34 -80.76%

Jiangsu Yangnong Chemical Co., Ltd. 194.40 25% 16.89 25.76%

Hubei Sanonda Co., Ltd. 176.15 12.09% 3.78 -20.98%

Shenzhen Noposion Agrochemical Co., Ltd.

176.03 -3.88% 18.38 -10.35%

Hebei Veyong Bio-Chemical Co., Ltd. 152.74 -0.18% 6.12 84.72%

Jiangsu Huifeng Agrochemical Co., Ltd. 112.65 83.18% 7.77 36.06%

Jiangsu Changqing Agricultural and Chemical Co., Ltd.

103.27 32.47% 12.38 23.35%

Jiangsu Lanfeng Bio-Chemical Co., Ltd. 98.94 6.17% 6.09 -29.96%

Lier Chemical Co., Ltd. 95.53 38.25% 7.07 -6.31%

Hunan Haili Chemical Industry Co., Ltd.

95.29 40.18% 0.66 90.08%

Anhui Huaxing Chemical Industry Co., Ltd.

81.40 5.74% -5.42 42.91%

Shandong Huayang Technology Co., Ltd.

52.86 -5.84% 0.50 58.85%

Shandong Dacheng Pesticide Co., Ltd. 37.75 -46.91% -13.93 N/A

Zhejiang Qianjiang Biochemical Co., Ltd.

32.50 -32.10% 4.76 -1.83%

ABA Chemicals Corporation 25.33 58.39% 4.03 20.03%

Zibo Wanchang Science and Technology Co., Ltd.

23.45 45.32% 7.86 63.17%

Total3,384.61 24.48% 158.04 87.63%

TABLE: Performance of domestic listed pesticide enterprises, H1 2012

Source: CCM International & H1 annual reports of the companies mentioned in the table

While approaching the end of Aug. 2012 (deadline of domestic enterprises to release semi-annual financial report), all the domestic listed pesticide enterprises have released their semi-annual financial reports of 2012 which showed an

obvious recovery in domestic pesticide market.

Summed up all the 21 listed enterprises in China, the total revenue in H1 2012 reached USD3.38 billion, up 24.48% over H1 2011 and the total net profit gained a considerable growth, reaching USD158.04 million which increased by 87.63% over H1 2011.

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Revenue of top three companies: Nanjing Redsun, Zhejiang Wynca and Huapont The revenue of Nanjing Redsun Co., Ltd. (Nanjing Redsun), a leading pyridine production enterprise in China, in H1 2012 amounted to USD510.39 million, reaching the top of the 21 listed enterprises. However, comparing with its revenue, its net profit in this period was the most worthy mentioned one. It enjoyed an incredible growth of 7,340.21% compared with the net profit in H1 2011, reaching USD22.25 million. The main reason for the surging of net profit is considered to be its reorganization with Nanjing First Pesticide Group Co., Ltd. (NFP Group) which has consolidated financial statements of Nanjing Redsun and the three subsidiaries of NFP Group, namely Nanjing Redsun Biochemicals Co., Ltd., Anhui Guoxing Biochemical Co., Ltd. and Nanjing Redsun International Trade Co., Ltd. As the second largest revenue gainer in H1 2012, Zhejiang Wynca Chemical Industry Group Co., Ltd., a leading glyphosate production enterprise in China, however, seemed not to enjoy its net profit in this period. It suffered a deficit of USD4.38 million which showed its net profit decreased by 149.48% over H1 2011. Although its main pesticide and organosilicon business still earned lots of money in H1 2012 with total operating profit of USD40.79 million, the large investment in a new project, namely Wynca Building Project (the new office building of Zhejiang Wynca), has cost all of them, reaching USD50 million. And the construction of the Wynca Building which has been criticized by some investors is considered to be the main reason for the deficit of Zhejiang Wynca in this period. Eyeing the growing price of glyphosate in the third season of 2012, Zhejiang Wynca predicted its net profit in Q3 2012 will reach USD4.29 million which will offset the deficit in H1 2012. The performance of Chongqing Huapont Pharm. Co., Ltd. (Huapont), a pharmaceuticals and pesticide production company, was vigorously promoted by one of its subsidiary, namely Nutrichem Laboratory Co., Ltd. (Nutrichem), a pesticide and intermediate company that Huapont completely merged in Dec. 2011. The revenue of Nutrichem's pesticide business was up to USD220.82 million (RMB1.40 billion) in H1 2012, accounting for 77.3% of Huapont's total revenue, USD285.66 million. It has surged the revenue of Hupont in H1 2012 to exceed that in H1 2011 by 520.27%. At the meanwhile, Huapont's net profit in this period also enjoyed a large growth with a growth rate of 290.33% YOY, reaching USD36.23 million. Nutrichem's contribution to the total net profit reached USD12.3 million, accounting for 33.95% of the total net profit of Huapont.

Other companies' performance

Lianhe Chemical

Lianhe Chemical Technology Co., Ltd., a leading pesticide intermediate manufacturer in China, also claimed a good performance in H1 2012 with revenue and net profit of USD 233.74 million and USD25.76 million, up 20.15% and 26.17% over the same period of 2011. Although the company's pharmaceutical intermediate business witnessed a descent in H1 2012, pesticide intermediate business, as the largest contributor to the revenue and net profit of the company, continued to develop swiftly in this period. The sales revenue of the company's pesticide intermediate business in this period reached USD120.22 million, up 26.14% over the same period in 2011.

Nantong Jiangshan, Jiangsu Yangnong, Hubei Sanonda and Anhui Huaxing

Different from Zhejiang Wynca, the main listed glyphosate production enterprises in China, namely Nantong Jiangshan Agrochemical & Chemicals Co., Ltd. (Nantong Jiangshan), Jiangsu Yangnong Chemical Co., Ltd. (Jiangsu Yangnong) and Hubei Sanonda Co., Ltd. (Hubei Sanonda), have all enjoyed the uptrend price of glyphosate in H1 2012. Assisted by other pesticide business, Nantong Jiangshan and Hubei Sanonda realized turning deficit into profit in this period. Jiangsu Yangnong's good performance in H1 2012 is attributed to the revenue growth of its herbicide products. The revenue of herbicide products, especially glyphosate, in this period reached USD67.81 million, up 88.48% over H1 2011. The steady revenue growth of insecticide products was also the main factor that promoted the growth of its total revenue. Its total revenue of the company's insecticide products reached USD114.78 million, up 4.65% over H1 2011. Anhui Huaxing Chemical Industry Co., Ltd. (Anhui Huaxing), as one of the three listed pesticide enterprises who suffered a deficit in H1 2012, has experienced a long and rough road in seeking for reorganization since 2010. The performance of its main pesticide business continued to slide in recent years. Fortunately, the company finally found an investor, namely CEFC Shanghai Oil Group Company Limited, to launch reorganization in July 2012 with a planned investment of USD308.29 million.

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■ Dynamic

Main pesticides' price trend in China, Jan.-August 2012

Shandong Dacheng and Shandong Huayang

Shandong Dacheng Pesticide Co., Ltd. (Shandong Dacheng), as one of the three listed pesticide enterprises which suffered a deficit in H1 2012, has successfully finished its reorganization with Shandong Hualian Mining Co., Ltd. (Shandong Hualian), a large mining enterprise in Shandong Province, on 20 Aug., 2012. The successful reorganization of Shandong Dacheng will be exactly a kind of relief for its pesticide business. A continuous deficit of performance in the past two years has made its stock trade been specially treated. It may face delisting if its net profit continues to be negative in 2012 which seems to be obvious because of the rough reorganization since last year. The same reorganization thing happened to Shandong Huayang Technology Co., Ltd. However, unfortunately, its reorganization with Zibo Hongda Mining Industry Company, a large mining company in Shandong Province, is still hanging in the air.

Outlook

It is very excited for us to see the total revenue and net profit of the listed pesticide companies enjoyed a large growth in H1 2012, implying the gradual recovery of domestic pesticide industry. However, the data also showed the great gap between domestic pesticide enterprises and multinational pesticide enterprises. According to the Q1 and Q2 financial report of Syngenta in 2012, the H1 revenue of the company's crop protection department summed up to USD5.67 billion, 71.3% larger than the total revenue of all listed pesticide enterprises in China. Aiming to integrate domestic pesticide industry and cultivate large pesticide enterprises with international competitiveness, Chinese government has carried out Pesticide Industry Policy since Sept. 2010. The policy has provided a better condition for domestic pesticide enterprises with strong competitiveness in domestic pesticide market to lead the integration of the industry. Domestic pesticide industry did have changed a lot in two years' time, but not enough. Overcapacity, weak R&D capability, haphazard investment, etc., are still the main characteristics of domestic pesticide industry and it still needs time to rectify.

Main pesticides' prices in China have presented different trends in the past few months while entering 2012. Although some domestic pesticide enterprises have gained profit in the process of prices up and down in this period, they are

still worrying about their pesticide business in the coming months left in 2012.

Herbicides GlyphosateGlyphosate, as one of the hottest pesticides in domestic pesticide market, has enjoyed a continuous price rising while entering 2012. The average ex-work price of 95% glyphosate TC in domestic market reached USD4,897/t on 17 Aug., 2012, up 23.63% over the price in Jan. 2012. Short supply condition is predicted to be continued in the coming months since some main glyphosate producers plan to overhaul. Adding up the speculation of hot money lately in domestic stock market, the driving force of domestic glyphosate price is still sufficient, but less powerful compared with that in July 2012. ParaquatThe price of paraquat, another hot pesticide in domestic pesticide market, has experienced a stable condition in the first eight months in 2012. The ex-work price of 42% paraquat TK in Feb. 2012 among the prices from Jan.-August was the highest, reaching USD2,243/t. So far, the price of the product reached USD2,180/t according to the monitored price of CCM International on 17 Aug., 2012. Actually, the price has kept stable for four months since May 2012 at USD2,133/t. As the General Administration of Customs of China finally confirmed to classify paraquat as the product belonged to the Chapter 29 of the Import and Export Tariffs of the People's Republic of China, which means paraquat exporters will only

Vol.6 Issue 16 2012



get 5% of export rebate rate of the product, decreasing from 9%, domestic paraquat manufacturers raised the price of the product by nearly USD47.39/t, aiming to offset the predictable rising cost.

FIGURE 1: Daily ex-works prices of 95% glyphosate TC and 42% paraquate TK, Jan.-August 2012

Note: Ex-work price includes VATSource: CCM International

Insecticides

ChlorpyrifosThe ex-work price of 95% chlorpyrifos TC stayed at around USD6,003/t for two months while entering 2012. It jumped to USD6,367/t at the end of March 2012 due to the raising price of O,O-Diethylthiophosphoryl chloride from USD2,686/t in Jan. 2012 to USD3,397/t in March 2012 due to the environmental protection pressure forcing some of domestic manufacturers to suspend production. As the price of O,O-diethylthiophosphoryl chloride and 3,5,6-trichloropyridin-2-ol sodium gradually went down since then, the price of 95% chlorpyrifos TC continuously dropped to USD5,450/t on 17 Aug., 2012. Owing to the large chlorpyrifos TC capacity released by Hubei Benxing Chemical Industry Co., Ltd. (20,000t/a), the price of chlorpyrifos is predicted to further go down in the coming few months.

AbamectinThe ex-work price of 95% abamectin TC remained stable at around USD64,771/t for four months from Jan.-April 2012. It started to surge at the end of April 2012 as China started to launch the investigation toward the use of abamectin ointment, which has made domestic insiders believe that the use of abamectin ointment may be banned in China. The price has ever went up to the highest in the past few months to USD87,677/t on 18 June, 2012. Owing to the legitimacy of abamectin ointment is still unclear, some manufacturers restarted to produce abamectin ointment again and the price of the product gradually dropped to USD75,892/t on 17 August, 2012.

ImidaclopridThe price of imidacloprid started to surge in March 2012 due to the rise in production cost and the great demand both at home and abroad. The ex-work price of 95% imidacloprid TC on 28 March, 2012 reached USD22,433/t, 10.08% higher than that on 8 March, 2012. The price then kept stable till 17 August, 2012.

Lambda-cyhalothrinThe ex-work price of 95% lambda-cyhalothrin TC kept continuous decreasing from USD27,014/t in Jan. 2012 to USD25,276/t in August 2012. Sufficient inventory and weak demand were considered to be the main reasons for the price descent of lambda-cyhalothrin in this period.

Vol.6 Issue 16 2012



FIGURE 2: Daily ex-work price trend of main insecticides in China, Jan.-Aug. 2012


Fungicide Fungicides have witnessed a general weak market quotation in the first eight months of 2012. Most of the fungicides have experienced continuous dropping prices since Jan. 2012. Among all the fungicides, azoxystrobinhas suffered the largest price plunge in this period due to overcapacity and impeded export condition. The ex-work price of 95% azoxystrobin TC dropped to USD38,705/t on 7 Aug., 2012 from USD52,923/t on 7 Feb., 2012.

FIGURE 3: Daily ex-work price trend of main fungicides in China, Jan.-August 2012


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Jiangsu pesticides output increases 3.5% in H1 2012

According to the Statistics Bureau of Jiangsu Province, the total output of pesticide technical produced by the major 20 pesticide enterprises was 184,913 tonnes in H1 2012, an increase of 3.5% compared with 178,670 tonnes in H1 2011.

Jiangsu Province is the largest pesticide production province in China, and the total pesticide output value of its major 20 pesticide enterprises was USD2.5 billion (RMB15.6 billion) in H1 2012, realizing USD155.6 million (RMB986.6 million) profits. (Statistics range: Jiangsu Province's major 20 pesticide enterprises, similarly hereinafter)

During the period of H1 2012, except for herbicide and fungicide, the output of various pesticides showed a somewhat decrease, of which the output of insecticide decreased the most. The total output of herbicide technical of the major 20 pesticide enterprises increased sharply in H1 2012, an increase of 13.4% year on year. Moreover, the output of fungicide technical was up by 9.9% in H1 2012 compared with that in H1 2011. However, the output of insecticide technical declined sharply by 17.5% in H1 2012. The output of plant growth regulator and acaricide also has a certain degree decrease in the same period.

FIGURE 4: Output of pesticides by variety in Jiangsu Province, H1 2011, H1 2012

Note: "Output" in the figure means the quantity of technical of the major 20 pesticide enterprises in Jiangsu Province.Source: Statistics Bureau of Jiangsu Province, CCM international

The output of main pesticides, such as glyphosate, trifluralin, imidacloprid, chlorothalonil, tricyclazole, increased sharply in H1 2012. Meanwhile, the output of some pesticides was declined sharply, such as buprofezin, cypermethrin, tebuconazole, ethephon and so forth. The details of the output of the main pesticides technical are shown below:

According to the Statistics Bureau of Jiangsu Province, the total export volume of the major 20 pesticide enterprises was 45,005 tonnes, and the export value was USD438.6 million (RMB2,780.6 million) in H1 2012. Some insiders predicted that the output volume and export volume of pesticide technical would increase in 2012, especially for herbicide and fungicide, because the US, Brazil, Australia and other countries expand planting areas and increase the demand for pesticide. In addition, the US is now facing the worst drought in 50 years, and plant diseases and insect pests would be breeding severely after the drought based past experience. Therefore, the pesticide demand would increase in the near future. Moreover, farmers in the Association of Southeast Asian Nations (ASEAN) prefer to buy Chinese pesticide produces which could increase the export of pesticides. The output of foreign pesticide enterprises would decline substantially for the high production cost and they may buy pesticides from China for sale.

Vol.6 Issue 16 2012



The output of pesticide technical of Jiangsu Province ranks the first in China. There are nearly two hundred of pesticide enterprises in Jiangsu Province, accounting for 25% of the total enterprises in China. Many large-scale pesticide enterprises are concentrated in Jiangsu Province, such as Nantong Jiangshan Agrochemical & Chemical Co., Ltd., Jiangsu Yangnong Chemical Group Co., Ltd., Nanjing Redsun Group Co., Ltd. and so forth.

TABLE 1: Output of main pesticides in Jiangsu Province, H1 2011, H1 2012

Category Pesticide technicalOutput, H1 2012,

tonne Output, H1 2011,

tonneChange, %

Herbicide

glyphosate 61,999 52,938 17.2

butachlor & acetochlor 17,226 15,477 11.3

paraquat 11,612 13,335 -12.9

trifluralin 2,929 1,591 84.1

Insecticide

chlorpyrifos 13,654 14,500 -5.8

imidacloprid 5,467 5,017 9.0

buprofezin 1,841 2,615 -29.6

cypermethrin 1,056 1,213 -12.9

Fungicide

mancozeb 6,306 5,769 9.3

tebuconazole 2,003 2,503 -20.0

carbendazim 6,970 7,651 -8.9

chlorothalonil 4,971 4,020 23.6

thiophanate-methyl 2,551 2,594 -1.7

tricyclazole 1,481 850 74.3

Plant growth regulator

ethephon 3,825 4,499 -15.0

paclobutrazol 454 395 14.8

Acaricidedicofol 473 508 -6.8

pyridaben 275 270 1.8

Note: "Output" in the table means the quantity of technical of the major 20 pesticide enterprises in Jiangsu Province; "change" means year-on-year growth of output in H1 2012.Source: Statistics Bureau of Jiangsu Province, CCM international

■ Import and export

Guangdong pesticide export volume and price in H1 2012 decrease

According to the statistics from the General Administration of Customs of China (GAC), pesticide export volume and value of Guangdong Province in H1 2012 reached about 38,000 tonnes and USD110 million, down 12.6% and 10%

over the same period of 2011. The average export price of these pesticides raised, reaching USD2,814/t and up 4.3% over that in 2011.

The export volume in Feb. was the smallest among the first six months of 2012, reaching 3,150 tonnes and down 14.2% over the same period in 2011. The export volume in the next four months gradually rebounded. The export volume in June was the highest among the first six months of 2012, about 8,886 tonnes, up 24.6% over May 2012 and up 1.7% over June 2011. However, the average export price of pesticide in June witnessed a descent, reaching about USD2,531/t, down 7.8% over May 2012 and down 11.4% over June 2011.

The further concentration of pesticide production and export in Zhejiang Province, Jiangsu Province and Shandong Province in recent years was considered to be the reason for the descent of the export volume in Guangdong Province in this period. As the total export volume of domestic pesticide in China, about 392,000 tonnes, witnessed an uptrend in

Vol.6 Issue 16 2012



the first five months of 2012, the total export volume of China in H1 2012 is believed to grow over that of H1 2011. The descent of export volume in Guangdong Province in this period actually implies that the pesticide export position of Guangdong Province is now declining.

The increasing price of raw material since the beginning of 2012, such as caustic soda, methanol, benzene, yellow phosphorus, etc., is considered to be the main factor that pushed up the export value of pesticides. Plus, the rising of electricity cost and labor cost also added up to the rising of pesticide price which directly affected the export value of pesticides in Guangdong Province.

The main destinations of the exported pesticide from Guangdong Province were Republic of Ghana, Association of Southeast Asian Nations (ASEAN) and the US in H1 2012. Republic of Ghana was the largest pesticide importer of Guangdong Province. It totally imported 7,326 tonnes of pesticide from Guangdong Province in H1 2012, down 40.8% over the same period of 2011 and accounting for 19.5% of the total pesticide export volume of Guangdong Province in this period. The total export volume in H1 2012 to ASEAN from Guangdong Province also witnessed a descent of 42.7% over H1 2011, reaching 3,673 tonnes. Pesticide export volume to other countries witnessed an increasing, such as the US, the EU and Bangladesh, respectively reaching 3,143 tonnes, 2,095 tonnes and 1,588 tonnes and up 60%, 240% and 30% over H1 2011. The exported pesticides in H1 2012 from Guangdong Province were mainly herbicides, insecticides and mosquito-repellent incense. The total export volume of these pesticides reached 16,000 tonnes, 8,749 tonnes and 6,944 tonnes, down 19.3%, 21.6% and 18.4% respectively over H1 2011. Private pesticide enterprises were the main export subjects with total pesticide export volume of 35,471 tonnes in H1 2012, accounting for 93.3% of the total export volume in Guangdong Province in this period. Foreign-funded pesticide enterprises and state-owned pesticide enterprises totally exported 1,330 tonnes and 1,199 tonnes of pesticide respectively, up 16% and down 15.2% over H1 2011.

China soybean import surges in Jan.-July 2012

According to the data from the General Administration of Customs of China, China's soybean import volume and value surged in the first seven months of 2012, reaching 34.92 million tonnes and USD19.56 billion, up 20.1% and 16.8%

over the same period of 2011 respectively.

The import volume in July 2012 was the largest among the months in the past two years, reaching 5.87 million tonnes, up 4.4% and 10% respectively compared with that of June 2012 and July 2011.

The surging of China's soybean import volume in the first seven months is attributed to the good profit condition in domestic soybean oil processing industry but the relative low price of soybean in the world before June 2012. Plus, as the soybean processing industry gradually recovered in H1 2012, the demand for soybean increased. Domestic soybean oil processing enterprises started to largely import soybean in H1 2012 which led to surging import volume in Jan.-July 2012 against the same period in 2011. The top three largest soybean import enterprises in China in H1 2012 were Shandong Chenxi Group Co., Ltd. (2.15 million tonnes), China Grain Reserves Corporation (2.02 million tonnes) and COFCO Eastocean Oil & Grains Industries (Zhangjiagang) Co., Ltd. (1.16 million tonnes). However, according to the National Grain & Oil Trading Center, the soybean import emotion of domestic processing enterprises will start to cool down from Aug. 2012 and the import volume in Aug. 2012 will decease to 4.5 million tonnes. The total import volume of soybean in Sept.-Dec. 2012 is predicted to reach 15.13 million tonnes. Thus, China's soybean import volume in H2 2012 will reach 25.50 million tonnes, 3.55 million tonnes less than that of H1 2012. The decline prediction of soybean import volume in Aug.-Dec. 2012 is not confusing. Although the import volume of soybean in July 2012 reached the peak among the months in the past two years, the increasing price of soybean in the world since July 2012 has decreased the import willingness of domestic soybean processing enterprises who wish the soybean price to fall after a rise before they have to import soybean again.

The severe drought occurred in the US is considered to be the main pushing hand of the increasing price of soybean in the world. On 10 Aug., 2012 , the United States Department of Agriculture released World Agricultural Supply and Demand Estimates expressing that the first survey-based soybean yield in Aug. 2012 forecast of 36.1 bushels per acre (1 bushel=27.216 kg) is 4.4 bushels lower than last month's projection and 5.4 bushels lower than last year's yield. The

Vol.6 Issue 16 2012



■ Policy

soybean production for 2012/13 in the report is projected at 2.7 billion bushels, down 358 million bushels due to lower harvested area and yields.

The import price of soybean in China has rocketed by 21.33% comparing with the price of USD592.42/t in Jan. 2012 and USD718.8/t in Aug. 2012. The price of domestic soybean also witnessed a great rise in the past few months from USD633.81/t in Jan. 2012 to USD760.68/t in Aug. 2012 (both purchasing prices). So far, the self-sufficient rate of domestic soybean is less than 20%. Given the shrinking of domestic soybean planting areas in Heilongjiang Province, China has changed into a net soybean importer in the past few years. Released by Chen Xiwen, office director of the Central Rural Work Leading Group, China has to plant at least 29.33 million ha. of soybean (China's soybean planting area in 2012 is predicted to reach nearly 8 million ha., down 3.8% YOY) to fill the gap of 54.55 million tonnes of the predicted soybean import volume in 2012

FIGURE 5: China's soybean import volume, 2005-2012e

Source: General Administration of Customs of China

New pesticide policy in Hainan Province is doubted divorcing from reality

As the full implementation of new pesticide policy in Hainan Province, namely Implementation Measures on Business License Management of Pesticide Wholesale and Retail in Hainan Province (Trial) (Implementation Measures for

short), being intensely promoted by the Hainan Government, more and more complaints from pesticide retailers have been raised up in the province. Although the deadline of the full implementation has been postponed by the Department of Agriculture of Hainan to 30 Sept., 2012 from 30 June, 2012, pesticide retailers expressed that the great pressure they are bearing has never been weakened and doubted the regulations in the new policy divorcing from reality.

The main problem that most pesticide retailers in Hainan Province facing is the high threshold regulation in the new policy, namely every pesticide retailer who wants to remain running pesticide business in Hainan Province should pay USD23,678.73-USD31,571.64 (RMB150,000-RMB200,000) of quality assurance deposit, employ at least five professional marketing personnel, equip the company with a delivery vehicle with carrying capacity of 5 tonnes and 300 square meters of warehouse. They believe that even though they have gained pesticide business licenses in Hainan Province, they are still unconfident in running pesticide business well under the great pressure of capital shortage. "Credit sales model in pesticide business is very popular in Hainan Province. We can't timely get money back with

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such a sales model because farmers are usually unwilling to pay their money back until their agricultural produces are successfully sold out and they earn money. If the harvest is bad, we even can't get any money of the sold pesticide products that year and have to wait for a whole year till the next year," said a pesticide retailer in Sanya City, Hainan Province. Current capital is becoming more and more important for pesticide retailers with credit sales model, especially to those medium and small sized ones. Plus, few pesticide manufactures are now willing to do credit business with pesticide dealers and retailers but cash, the business in pesticide terminal market are much rougher. They believed that regulation of handing in USD23,678.73-USD31,571.64 of quality assurance deposit as one of the thresholds is the government's disregarding of reality. The reason for retailers considering equipping a delivery vehicle with carrying capacity of 5 tonnes and 300 square meters of warehouse as divorcing from reality is that they believed it is a waste. "There is no need to equip a delivery vehicle with such large carrying capacity and it may even not be used a lot. What kind of farmer will order so many pesticides a time in China? As for the regulation of equipping 300 square meters of warehouse, there is no need to equipping it in the same way," said another pesticide retailer in Sanya City, Hainan Province.

However, Hainan Government's determination of promoting the new policy seemed not to be bothered by the complaints from pesticide retailers. An official from Bureau of Agriculture of Sanya expressed that the main purpose of the new policy is to further regulate pesticide market in Hainan Province and raise the threshold of running pesticide business to force those unqualified pesticide retailers and enterprises to be washed out of the market. He admitted that the difficulties of the reformation are huge and appealed the public to try to understand the difficulties that the Hainan Government is now experiencing. As for the complaints, he said that aiming to promote the policy more smoothly, the execution of the new policy will somehow be loosened up according to local conditions in different cities in Hainan Province.

China pesticide registration summary in Jan.-Aug. 2012

■ Registration

According to the Institute for the Control of Agrochemicals, Ministry of Agriculture (ICAMA),

from Jan. 1 to Aug. 2, 2012, 97 pesticides TC have gained registration in China. Thereinto, 79 kinds of pesticides TC gained formal registration; 18 kinds of pesticides TC gained provisional registration. In detail, 41 herbicides TC have been registered from Jan. 1 to Aug. 2, 2012. Moreover, there are 30 kinds of insecticides TC, 19 kinds of fungicides TC and 7 kinds of other pesticides TC have gained registration during the period of Jan. 1, 2012 to Aug. 2, 2012.

Among these pesticides TC, some varieties are hot during the registration period, such as azoxystrobin, bispyribac-sodium, imidacloprid, clethodim, cyhalofop-butyl, abamectin, diflufenican, profenofos, acetamiprid, epoxiconazole and so forth. Azoxystrobin, strobilurin fungicide, is one of the world's largest-selling fungicides and its patent was expired on Feb. 8, 2010 in China. As its patent expired, many manufacturers are optimistic about the market prospect and intent on registering and producing it. Azoxystrobin TC was registered for 11 times by different enterprises up to Aug. 2, 2012. According to the ICAMA, 14 manufacturers achieved

bispyribac-sodium TC registration up to Aug. 2, 2012. Bispyribac-sodium, lower toxic herbicide, is believed to have a promising market in the future, as it has excellent effect on controlling grasses, sedge and broad-leaved weeds, especially echinochloa. During the period of Jan. 1 - Aug. 2, 2012, there were four new registrations of imidacloprid TC in China. Currently, imidacloprid is a staple product in China and its profit is decreasing with each passing day. Some small manufacturers stopped operation as facing gradually and strictly environmental protection technique request. However, many manufacturers with high environmental protection technique are interested in it, being aided by the rapidly advancing market of imidaclaopridis and the sharply increasing price in H1 2012.

Among the companies applied for pesticides registration, some companies are more active than the others. 12 companies have gained three or more registrations of pesticides TC during Jan. 1-Aug. 2, 2012. For example, Jiangsu Huifeng Agrochemical Co., Ltd. has registered six kinds of pesticides TC, three herbicides, two fungicides and one insecticide. Jiangsu Changlong Chemicals Co., Ltd. has registered four insecticides TC and one herbicide TC. Sinochem Ningbo (Lianyungang) Chemicals Co., Ltd. has registered three insecticides TC and one fungicide TC. CAC Nantong Chemical Co., Ltd. has registered three herbicides

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TC. Lier Chemical Co., Ltd. has registered two fungicides TC and one herbicide TC.

During the period, some multinational giants also participated actively in the registration of pesticides TC, such as DuPont, Syngenta, FMC and so forth.

TABLE 3: Registration of pesticides TC in China, Jan.1 - Aug. 2, 2012

CategorySerial number

Produce, TCRegistered number

CategorySerial number

Produce, TCRegistered number

Herbicide

1 bispyribac-sodium 7

Insecticide

1 imidacloprid 42 clethodim 4 2 abamectin 23 cyhalofop-butyl 3 3 profenofos 24 diflufenican 2 4 acetamiprid 2

5sulfometuron-methyl

2 5lambda-cyhalothrin

2

6 chlorimuron-ethyl 2 6 bifenthrin 2

7clodinafop-propargyl

2 7 thiodicarb 2

8 carfentrazone-ethyl 2 8 clothianidin 29 2,4-D 1 9 cartap 210 MCPA 1 10 chlorfenapyr 111 prodiamine 1 11 flufiprole 112 metamitron 1 12 cyflumetofen 113 metazachlor 1 13 carbosulfan 114 bensulfuron-methyl 1 14 diafenthiuron 115 pretilachlor 1 15 chlorpyrifos 1

16glufosinate-ammonium

1 16 fenpropathrin 1

17glyphosate ammonium

1 17 pirimicarb 1

18 bromacil 1 18 matrine 1

19 diuron 1 19 neochamaejasmin 1

20 pyroxsulam 1 20 malathion 121 clopyralid 1 21 thiamethoxam 122 flurtamone 1 22 triazophos 123 thiobencarb 1 23 tetrachlorvinphos 124 hexazinone 1 24 fenitrothion 125 sulcotrione 1 25 lufenuron 126 sulfentrazone 1 26 ivermectin 127 halosulfuron-methyl 1 27 ethiprole 1

28 aminocyclopyrachlor 1 28 spinetoram 1

29 fluroxypyr-mepthyl 1 29 indoxacarb 130 orthosulfamuron 1 30 fenobucarb 131 acifluorfen sodium 1 Total 4132 anilofos 1

Fungicides

1 azoxystrobin 733 carbetamide 1 2 epoxiconazole 2

34flupropanate-sodium

1 3 tebuconazole 2

35 terbuthylazine 1 4 difenoconazole 136 terbutryn 1 5 propiconazol 137 desmedipham 1 6 albendazole 138 ethofumesate 1 7 picoxystrobin 139 isoproturon 1 8 polyoxin B 140 maleic hydrazide 1 9 dithianon 141 atrazine 1 10 fluazinam 1

Total 57 11 cyproconazole 1

Others

1oriental fruit moth sex pheromone

1 12 metalaxyl 1

2 pyridaben 1 13 captan 13 etoxazole 1 14 tricyclopyricarb 1

45-aminolevulinic acid，ALA

1 15 kresoxim-methyl 1

5 daminozide 1 16 cyprodinil 16 chlorpropham 1 17 fentin hydroxide 17 brassinolide 1 18 probenazole 1

Total7 19 ipconazole 1

Total 27

Note: Oriental fruit moth sex pheromone is an insect sex pheromone, the active ingredients include 85% (Z)-8-dodecenyl acetate, 2% (Z)-8-dodecenol and 8% (E)-8-dodecenyl acetate.Source: ICAMA, CCM International

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TABLE 2: Pesticides TC registration of foreign companies in China, Jan.1 - Aug. 2, 2012

Company Produce, TC

DuPont

chlorimuron-ethyl

picoxystrobin

sulfometuron-methyl

Syngenta

cyprodinil

pirimicarb

prodiamine

Chemturadaminozide

ipconazole

DowAgrosciencespyroxsulam

spinetoram

FMC sulfentrazone

Nissan Chemical Industries, Ltd. halosulfuron-methyl

Otsuka cyflumetofen

Sumitomo Chemical Co., Ltd. etoxazole

Bioglobal Pty Ltd. oriental fruit moth sex pheromone

Note: Oriental fruit moth sex pheromone is an insect sex pheromone, the active ingredients include 85% (Z)-8-dodecenyl acetate, 2% (Z)-8-dodecenol and 8% (E)-8-dodecenyl acetate.Source: ICAMA, CCM International

■ Company

Sinochem Group shows strong R&D capability

Recently, Sinochem Group, a centrally administered state-owned enterprise in China's pesticide industry, has eight new pesticides' common names gained ISO interim approval, according to the official website of Sinochem Group. It

shows the remarkable R&D capability of Sinochem Group.

In detail, the six new pesticides, mainly fungicide, were researched and developed by Shenyang Research Institute of Chemical Industry (SYRICI), a wholly-owned subsidiary of Sinochem Group, also a leading chemical research institute in China. The common names of the six pesticides were namely coumoxystrobin, enoxastrobin, flufenoxystrobin, fenamistrobin, tricyclopyricarband pyrisoxazole. According to the Institute for the Control of Agrochemicals, Ministry of Agriculture (ICAMA), coumoxystrobin, enoxastrobin, fenamistrobin and tricyclopyricarb have gained formal registration in China. SYRICI is planning to put pyrisoxazole and enoxastrobin into the domestic market in 2013. One of the other two new pesticides was developed by Shenyang Sciencreat Chemicals Co., Ltd. (Shenyang Sciencreat), a subsidiary company of SYRICI, namely pyriminostrobin, an acaricide. And the other one was developed by Youth Chemical Co., Ltd. (Youth Chemical), a subsidiary of Jiangsu Yangnong Chemical Group (Sinochem Group is its major shareholder), namely heptafluthrin, pyrethroid insecticides.

Compared with other domestic pesticide enterprises, Sinochem Group shared inestimable advantages of scientific research in China. It has two national pesticide research and development centers, SYRICI and Zhejiang Chemical Industry Research Institute (ZCIRI). Of which, SYRIC is the main research unit in pesticide research and development. SYRICI is a leading pesticide research institute in China for the development of proprietary products. It has developed some proprietary products, most of which are fungicides. Sinochem Group has enhanced its scientific research ability after acquiring SYRICI in 2007. In Feb. 2012, the Safety Evaluation Center of SYRICI obtained a Good Laboratory Practice (GLP) certification of the Netherlands. Thereafter, the scientific research ability of SYRICI even Sinochem Group has enhanced greatly. At present, Sinochem Group also has a lot of generic pesticide products like what other companies have. But because it owns great research ability, Sinichem Group will gain more proprietary products, thereby enhancing its competitiveness.

In China, Sinochem Group also faced fierce competition coming from other large scale corporations. It should be observed that China National Chemical Corporation (ChemChina), another centrally administered state-owned pesticide enterprise in China, is unwilling to lag behind either. In 2011, ChemChina gained 60% stakes of Makhteshim Agan Industries, the

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biggest generic pesticide player in the world. ChemChina could easily enter oversea market, making full use of the strong sales networks of Makhteshim Agan Industries. ChemChina is to become the world's top twenty pesticide giants in 2012. At present, ChemChina has more advantages in sales network while Sinochem Group has more advantages in proprietary products.

As a large agricultural country, pesticides are the significant goods for agricultural production in China. And the pesticide technical output was over 1.7 million tonnes in China in H1 2012. However, most of the pesticide varieties China produced are generic pesticides. There are only few new pesticides developed by China itself at present. Domestic producers have to face fierce competition from oversea companies who have introduced lots of proprietary products in China. Besides, China hasn't gained pricing power in pesticide export. It is predicted that, Sinochem Group will be playing a key supporting role in China's pesticide research and development with the remarkable scientific research development strength.

Accumulated occurrence area of main rice pest/disease in China, July 2012

Pest and disease Accumulated occurrence area, million ha. Occurrence time

Rice plant hopper 7.33

July 2012

Rice leaf roller 3.74

Rice stem borer 6.13

Rice blast 0.95

Rice sheath blight 4.9

Southern rice black-streaked dwarf 0.03

Source: Guangxi Plant Protection Station

Average market price of main crops in China (August 31, 2012)

Crops

31-August-12 15-August-12 31-August-11

USD/t RMB/t USD/t RMB/t USD/t RMB/t

Wheat 339 2,154 337 2,142 316 2,022

Corn 371 2,353 370 2,347 357 2,282

Soybean 759 4,815 779 4,947 620 3,968

Peanut 1,576 10,000 1,607 10,200 1,969 12,600

Rice 418 2,653 417 2,650 380 2,429

Rapeseed 821 5,210 803 5,100 727 4,650

Broomcorn 520 3,300 520 3,300 398 2,550

Note:Price here means the average market price of these crops in China. Rice here means late indica rice(before milling). Source: CCM International

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■ News in Brief

5.19 million ha. of crops hit by natural calamity in July 2012

Learned from the Ministry of Civil Affairs of the People's Republic of China, there was 5.19 million ha. of crops hit by natural calamity in China in July 2012, including 0.62 million ha. of total crops failure. And the direct economic loss was up to USD13.44 million.

China's import volume of grain up 283.7% in H1 2012

The total import volume of grain, including rice, wheat, barley and corn, reached 7.34 million tonnes in China in H1 2012, up 283.7% compared with that of H1 2011, according to the data from the National Bureau of statistics of China. The substantial growth of imported grain further increased peasants' sales difficulty of grain.

Jiangsu Yangnong's pesticide workshop suffers fire

Imidacloprid equipment of Jiangsu Yangnong Chemical Group Co., Ltd. (Jiangsu Yangnong), a listed pesticide company in China, suffered lightning on 14 Aug., 2012, which led to a fire in the workshop. Fortunately, Jiangsu Yangnong announced that the fire will not directly affect the company's production.

Zhejiang Province's total output of pesticide technical increases by 14% in H1 2012

On 14 Aug., 2012, Zhejiang Pesticide Industry Association announced that the total output of pesticide technical (counted by 100% AI) was up to 112,684 tonnes from Jan. to June 2012, increasing by 14% compared with the same period in 2011. In detail, the output of insecticides, fungicides, herbicides and plant growth regulators reached 7,430 tonnes, 7,217 tonnes, 96,272 tonnes and 1,760 tonnes respectively. Among them, the growth rate of plant growth regulators was the most, reaching 42% in H1 2012.

Pests and diseases seriously damage cotton in Xinjiang in H1 2012

It's reported that the accumulated occurrence of cotton pests and diseases reached 1.02 million ha. in Xinjiang Uyghur Autonomous Region (Xinjiang) in H1 2012 , increasing by 0.11 million ha. compared with the same period in 2011 and including 0.86 million ha. of pests and 0.16 million ha. of diseases. Among them, cotton aphid, cotton thrips tabaci and cotton spider mites were more serious in H1 2012 than that in H1 2011.



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Journalist: Keke Lan, Youqiao Chen, Zaoqun Chen

Editor: Ada Feng

Chief Editor: Rachel Pan

Publisher: CCM International Limited

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