Copyright © CCM International Limited

Vol.1 Issue 09, 2009

Glyphosate China Monthly Report

Glyphosate China Monthly ReportVol. 1 Issue 09 Publication date: 27 September, 2009

■ Company Dynamics ....................................................................... 1Yangnong Chemical to expand glyphosate business ....................................................................... 1Hubei Xianlin to launch 20,000t/a EA ........................................................................................... 1

■ Market Analysis .............................................................................2Who will dominate Chinese glyphosate market? .............................................................................2Glyphosate producers to upgrade formulation ................................................................................3

■ Global Dynamics ............................................................................4Monsanto to shear more employees ................................................................................................4

■ Price Update ..................................................................................4Glyphosate price to remain low ........................................................................................................4Transportation ban impacts yellow phosphorous price ..................................................................5

■ Supply & Demand ..........................................................................6Glyphosate’s position in orchard threatened ...................................................................................6

■ Import/ Export Analysis ................................................................7Glyphosate export sees big tumble in July 2009 ............................................................................. 7

■ Regisatration ................................................................................ 8Glyphosate registration situation .....................................................................................................8

Content

China Crop Protection Summit 2010- will be launched in Shanghai China during 18th March and 19th March, 2010.

Ready Market Reports:- Outlook for China Glyphosate Industry 2009-2014- Production & Market of Ethanolamines in China - Edition (3)- World Outlook of Glyphosate 2009-2014 - Survey of Glufosinate in China - The Survey of 2,4-D in China - IDAN Survey in China - Production and Market of Metazachlor in China

Coming Reports:- Crop Protection China Report (update, 2nd edition): 30th Oct, 2009- Production and Market of Paraquat in China (2nd edition): 18th Sep 2009.- Future of Green Biotechnology in China: Oct 2009

Ready Trade Reports:- Paraquat Production and Export in China 2008-Jun. 2009- Pendimethalin Production and Export in China 2008-Jun. 2009- Metamitron Production and Export in China 2008-Jun 2009- Tebuthiuron Production and Export in China 2008-Jun.2009- Captan Production and Export in China Jan-Apr. 2009- Oxyfluorfen Production and Export in China 2008-Jun 2009- Diuron Production and Export in China 2008-Jun 2009

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Glyphosate China Monthly Report Vol. 1 Issue 09, 2009

II

Editors' words

Welcome to the September issue of Glyphosate China Monthly Report published by CCM International, a professional consulting company who has been extensively and intently focusing on dynamics of China’s glyphosate industry.

The year of 2009 is definitely a tough time for glyphosate producers. Despite gradual recovering economy, China’s glyphosate industry still stays at its downturn, embodying in export tumble and price slip, both of which have emerged since H2 2008 and are expected to continue this year. Awful environment has also brought Monsanto into trouble, pushing it to announce large-scale job cuts.

Grave challenge not only comes from gloomy market, but also from issuance of ban on low-content formulation, which has propelled China’s glyphosate producers to focus on product update and wastewater treatment investment. Being different in strategy development, producers with advantages in clients, technology patent and special products are expected to prevail over intense competition in China’s glyphosate industry.

• Yangnong Chemical is to expand its glyphosate business through issuing additional shares.

• Hubei Xianlin has completed 20,000t/a EA plant construction in Sep. 2009 and will start a trial run by the end of Oct. 2009.

• Companies who have plenty of clients, technology patent or special products will dominate Chinese glyphosate market in the future.

• Producers are actively updating their products as production of formulation with content lower than 30% will be forbidden in 2010.

• Monsanto is planning to cut more employees than previously announced for the sake of cost reduction.

• Glyphosate price will not go up in short time.

• Price rise of yellow phosphorous in major production bases since early August will end and the price will keep stable by the end of Sep. 2009.

• Owing to frequent or incorrect application of glyphosate which leads to negative impacts on orchard, peasants has started to turn to other herbicides, thus hreatening glyphosate’s leading position in orchard weeding. • China’s glyphosate export has experienced big tumble in Jul. 2009, with export volume of 30,770 tonnes, down about 17.4% year on year.

• Registration on low AI content has decreased greatly in 2009.

Headlines

Main Companies mentioned in this issue

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Glyphosate China Monthly Report Vol. 1 Issue 09, 2009

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■ Company Dynamics

Yangnong Chemical Group Company (Yangnong Chemical), on 12 Sep.

2009, announced that the company has received approval of its additional stock issuance from China Securities Regulatory Commission (CSRC). Yangnong Chemical expects to expand its glyphosate business through this additional stock issuance.

Under the requirement of CSRC, Yangnong Chemical is to issue no more than 18 million shares, which is expected to collect about USD66 million (RMB450 million). The raised capital is used for construction of a 30,000t/a glyphosate plant, which is undertaken by Yangnong Chemical’s subsidiary, Jiangsu Youth Chemical Company (Youth Chemical), mainly focused on glyphosate production.

Adopting DEA route, the new plant’s construction is still underway. The first stage with capacity of 15,000t/a was completed and launched around Q1 2009, enabling the company’s total glyphosate capacity to reach 25,000t/a, according to Yangnong Chemical’s Q1 financial report. Upon completion of the whole project by the end of 2009, the company’s glyphosate capacity will soar to 45,000t/a

from the original 10,000t/a in 2008.

Owing to glyphosate overcapacity and weak global demand, most glyphosate producers, even some big enterprises, have suffered profit tumble in 2009, such as Nantong Jiangshan Agrochemicals & Chemical Company (Nantong Jiangshan), whose net profit decreased about 99.3% in H1 2009 year on year, shown by its semi-annual report.

However, Yangnong Chemical has achieved net profit growth in 2009, which is scarce in glyphosate industry this year. According to the company’s semi-annual report, its net profit was about USD17.6 million (RMB120.0 million) in H1 2009, up 2.47% over the previous year, mainly attributed to its launch of new insecticides and stable sales channels for glyphosate. In order to ensure its profit growth, as early as 2008, Yangnong Chemical had signed a long-term supply contract with Syngenta, the world’s top crop protection enterprise. According to the contract, the value of glyphosate supplied by Yangnong Chemical is based on current production cost plus minimum profit.

According to China’s export record of glyphosate, the company accumulatively exported about 8,548 tonnes of glyphosate technical in H1 2009, increasing 77.93% over prior-year period, with total export value of USD 40.5 million in H1 2009.

Considering that glyphosate competition will become increasingly intense in the near future, Yangnong Chemical is determined to carry on its expansion project, aiming to grab more market share and to consolidate its position in glyphosate industry. Because of the soaring market in 2007, China’s glyphosate capacity has expanded rapidly, reaching over 600,000 t/a in 2009 with around 50 companies engaged in production, which is severely surplus.

Besides, Yangnong Chemical’s additional stock issuance will optimize the company’s financial structure. Upon completion of this issuance, the company’s debt-asset ratio is expected to reduce to 44.49% from the original 53.72% in March 2009.

Hubei Xianlin to launch 20,000t/a EA

Yangnong Chemical to expand glyphosate business

Hubei Xianlin Chemical Company (Hubei Xianlin) has completed its

20,000t/a EA plant construction in Sep. 2009, revealed Mr. Chen, sales manager of Hubei Xianlin. The company is expected to initiate a trial run by the end of Oct. 2009, which will enlarge China’s EA capacity to about 117,000t/a.

With total investment of USD11.13 million, the construction of the EA plant was started in H2 2008. The EA plant will introduce the production technology from Zhejiang University of Technology (ZUT), who firstly developed EO ammonolysis method for EA production in China. Currently, ZUT’s EA production technology is most advanced in China. And Jiaxing Jinyan Chemical Company (Jiaxing Jinyan), the largest EA producer in China, also adopts ZUT’s technology.

The production process of EO

ammonolysis method is shown as Figure 1.

The main raw materials for EA production are ethylene oxide (EO) and ammonia. For this project, EO will be purchased from Sinopec and ammonia is self supplied. And this EA plant will produce 3 specifications, namely MEA, DEA and TEA, with output proportion of 3:4:3, which indicates that DEA capacity of Hubei Xianlin will be 8,000t/a after this project is finished.

At present, EA production mainly concentrates in Jiangsu Province and Liaoning Province, with their total capacity accounting for about 91.4% of China’s total.

South China is the largest surfactant production region in China, and currently there are only one producer, namely Maoming Petro-chemical with capacity

FIGURE 1: ZUT’s EO ammonolysis method for EA production

EO

Tubular reactor

6MPa, 100℃ . Ammonia removal Evaporation Vacuum distillation MEA

DEA

TEA Ammonia

Source: CCM International

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Glyphosate China Monthly Report Vol. 1 Issue 09, 2009

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of 8,000t/a, which is far less than the demand (estimated to be about 35,000t/a~60,000t/a in South China). In light of huge market potential, Hubei Xianlin as a newcomer in EA industry is optimistic about the EA market.

With gradual economic growth, domestic demand for EA from downstream sectors has grown rapidly in recent years, reaching about 174,000 tonnes in 2008, with CAGR of about 12% in 2004~2008. And it is predicted that the demand will keep increasing with CAGR of over 8% in the next 5 years.

Despite strong demand, domestic EA is in short supply by far and thus China imports large quantities of EA from overseas market. And considering increased demand, domestic producers are active to expand the capacity. By the

end of 2009, Jiaxing Jinyan’s 50,000t/a EA plant and Fushun Baifang’s 50,000t/a plant are expected to be launched, and domestic EA capacity will reach about 217,000t/a, which will basically satisfy the domestic demand.

The main end users of EA are agrochemical, surfactant, pharmaceuticals and polyurethane in China, and their total consumption accounts for about 79% of EA market, among which agrochemical is the largest application field, sharing about 38% of

China’s EA market. And among the three EA products, namely MEA, DEA and TEA, DEA has the largest application in China, sharing over 55% of total EA consumption.

Hubei Xianlin has been specialized in production of fertilizer and chemical raw materials for about 40 years. Currently, its main products are sulfuric acid (100,000t/a), phosphate fertilizer (200,000t/a), compound fertilizer (100,000t/a) and sodium bisulfite (30,000t/a).

TABLE 1: Main EA producers in China, as of Sep. 2009

Company Specification Launch time

Current

capacity,

t/a

Capacity by

late of 2009,

t/a

Jiaxing Jinyan Chemical Company

(Jiaxing Jinyan)MEA, DEA,TEA Aug. 2008 50,000 100,000

Fushun Beifang Chemical Company

(Fushun Beifang)MEA, DEA,TEA 1996 30,000 80,000

Maoming Petro-chemical Shihua Company

(Maoming Petro-chemical)MEA, DEA, TEA Mar. 2001 8,000 8,000

Source: CCM International

■ Market Analysis

Who will dominate Chinese glyphosate market?

There are over 50 glyphosate technical manufacturers with their total

capacity amounting to about 655,400t/a in China now, but global demand was only about 600,000 tonnes in 2008. When global technical and PMIDA producers are also taken into consideration, it’s obvious that capacity of glyphosate technical production in China is obviously surplus. Limited market both at home and abroad will push many small glyphosate producers to withdraw from the market. So who will dominate Chinese glyphosate market in the future?

In August, most glyphosate technical producers suffered loss due to low technical price. From a perspective of comprehensive strengths, only those with advantages in the following three aspects can profit from glyphosate business or suffer less from capital loss, and have the most potential to dominate China’s future glyphosate market.

Plenty of clients: Typical enterprises are Zhejiang Wynca Chemical Group Company (Zhejiang Wynca), the largest domestic glyphosate producer, and Zhejiang Jinfanda Bio-chemical Company (Zhejiang Jinfanda), top 5 at home. For Zhejiang Wynca, it cooperates with Albaugh, Dow and Nufarm etc., and as for the latter, it has established business relationship with Atanor, Helm, Mey etc.

Technology patent or special product: Good examples are Zhejiang Wynca and Jiangsu Good Harvest-Weien Agrochemical Company. (Jiangsu Weien). It is no doubt that Zhejiang Wynca is the leading company in AEA pathway technology, especially in chloromethane recycling. And Jiangsu Weien is the first company to produce 77.7%WSG.

Cooperation with MNCs: Nantong Jiangshan Agrochemical & Chemicals

Company (Nantong Jiangshan) and Jiangsu Yangnong Chemical Group (Jiangsu Yangnong) belong to this type. For example, both Nantong Jiangshan and Jiangsu Yangnong have established cooperative relationship with Syngenta.

Though the third advantage can help the company get handsome profit in the short term, the first two are expected to have more power to consolidate the company’s comprehensive strengths in the long run, as there are high risks and uncertainty for the company only equipped with the third kind of strength.

Heavy dependence on big clients: The companies’ sales performance is largely subject to big clients’ cooperation intention. If the big clients do not cooperate with them, they even can not sell their products. The biggest problem for them is their weak ability to cope with unexpected market risk effectively.

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Glyphosate China Monthly Report Vol. 1 Issue 09, 2009

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Glyphosate producers to upgrade formulation

China's glyphosate 10%SL manufacturers are actively to upgrade

their products, driven by government’s regulation issued on 25 Feb. 2009, stating that glyphosate producers who produce formulation with a.i. content lower than 30% (mainly 10%SL) should change their registrations on active ingredient content before 31 Dec. 2009.

China is the only producer and user of 10%SL in the world. With its low price and easy application, 10%SL shares about 90% of China’s glyphosate market by sales volume. In 2008, there are 152 10%SL producers producing about 630,000 tonnes of 10%SL in China. It is thus predicted that after 10%SL withdraws from the market, a huge market gap of about 30,000 tonnes glyphosate technical will be left.

In order to gain more market share, producers of 10%SL and other low content formulation are taking urgent measures to upgrade their products. According to incomplete statistics, over 180 glyphosate manufacturers are working hard to change formulation content, such as Hubei Sanonda Company (Hubei Sanonda) and Jiangsu Taicang Pesticide Factory Company (Jiangsu Taicang).

‘Our company has changed the registration on low-content formulations, and now we are designing new package of 30%WP and preparing to promote it as soon as possible,’ said head of the Market Development Department of Fujian Sannong Group Company (Fujian Sannong).

Mr. Lu from Sales Department of Jiangsu Taicang said ‘the company is now promoting the new products, mainly 41%IPA, and in order to encourage peasants to apply new products, the company will provide them some for free as an elementary means of promotion.’

Apart from product update, many enterprises have stated to initiate advertising campaigns to get a slice of the huge market gap, such as Jiangsu Good Harvest-Weien Agrochemical Company (Jiangsu Weien) and Anhui Huaxing Chemical Industry Company (Anhui Huaxing). ‘We are strengthening promotion activities as there is a big promising market brought by the ban on low content formulation production,’ said sales from Anhui Huaxing.

Currently, there are various formulations with different formulation type and

content in market, such as 30%SP/WP, 41%IPA, 50%SP/WP, 65%SP/WP, 62%IPA, 74.7%WSG, 75.7%WSG, 77.7% WSG, 88.8% WSG and 95%WSG etc. Glyphosate enterprises may shift to produce these formulations after 10%SL withdraws from market.

In global market, Monsanto’s Roundup (41%IPA) is the most popular glyphosate formulation which accounts for above 50% the world’s market share.

In China, 41%IPA is also the largest formulation except 10%SL, suggesting 41%IPA’s huge potential to substitute 10%SL in glyphosate formulation market.

For other formulations, market opportunity still exists. ‘It is too early to estimate which formulation will dominate China’s glyphosate market. But there is no doubt that peasants will pay more attention to quality and efficacy of the products,’ said Mr. Zhang, pesticide salesman in an agrochemical chain supermarket in Fujian Province, ‘In addition, salesmen’s effort in promotion, as well as agricultural technicians’ instruction to peasants on product application are needed to capture market needs.’

Take Anhui Huaxing as an example, its PMIDA sales value and volume dumped when Atanor, its biggest cooperator, encountered severe fiscal difficulty.

High uncertainty of cooperative relationship with MNC: As there are too many glyphosate technical suppliers in China, MNCs can change their cooperators easily. What’s more, the main consideration for some MNCs

when choosing partner in China, is not domestic companies’ low production cost, but their roles as newcomers, which are easily controlled.

Lack of independent brand: Most of these enterprises adopt OEM, so they have no independent brand to establish their own sales network and make their products known to users, mainly referring to peasants.

Therefore, it is concluded that the companies with plenty of clients, technology patent or special product will dominate Chinese glyphosate market in the future. If companies who only have strengths in international cooperation do not change their strategies, they will be venerable to market risk.

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Glyphosate China Monthly Report Vol. 1 Issue 09, 2009

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■ Price Update

Glyphosate price to remain low

Monsanto to shear more employees

■ Global Dynamics

Monsanto, the world's leading glyphosate producer, announced

on 10 Sep. 2009, that it would cut more employees than what is planned previously. It is reported that about 8% of its employees across the world, related to 1,800 jobs, will be sheared. Most of the planned laid-off employees come from the unit that produces Roundup, as Roundup business has suffered big profit loss compared with last year.

Early in June, Monsanto proclaimed to shear about 4% of its staff, about 900 jobs. Now, it has set a new target of 8%, according to spokeswoman Kelli Powers from the headquarters, who also disclosed that most of the employees working in the U.S. have already been informed of the job cut.

Monanto predicted that its 2009 sales income would touch the lowest point of its income forecast, due to the company’s weakening sales performance in businesses of Roundup and other

herbicides. The most direct reason of this slip is that farmers in the world have reduced herbicide application under global economic downturn and competitors in China seize the opportunity to introduce cheaper glyphosate-based herbicide.

In response to profit slip, Monsanto has started to reshuffle the company. On one hand, it streamlined the Roundup business by allocating a small division to take charge of Roundup sales; on the other hand, it continued to primarily focus on its most profitable business, namely genetically modified seeds for which Monsanto has applied patent. The job cut is part of Monsanto’s restructuring plan, from which Monsanto estimates that it could save between USD550 million and USD600 million.

The company expects the restructuring will save between USD220 million to USD250 million annually, with one third to be realized in fiscal 2010 and fully

realized in 2011.

It said that it expects full-year ongoing earnings per share for this year to be at the low end of its previously announced range of $4.40 to $4.50. Expected results will be achieved with the help of a lower tax rate, cost savings and strong demand for seeds, according to Monsanto.

Partially due to the deteriorating sales of Roundup, the company’s shares tumbled USD4.18, or 5 %, to close at USD79.30 on 10 Sep this year.

The job axe this year is in line with Monsanto’s future expansion strategy on GM seeds sales, which will promote profitability of its shares. For 2010 fiscal year, Monsanto expects sales income ranging from USD3.10 to USD3.30 per share while analysts expect USD4.08 per share.

In 2012, Monsanto expects to achieve double gross profit of fiscal 2007, given the strong demand for GM seeds.

Glyphosate price now is still staying at a very low level and will not go up in

short time.

In the first half of this September, glyphosate technical price lingered at a low level, down to only USD2,914/t (RMB19,900/t).

Gyphosate technical price rose up from January this year, reaching the highest in March up to now, from USD3,294/t in 1-15 January to USD4,100/t in 1-15 March, which caused Chinese glyphosate technical producers to clear out their inventory during that period.

Glyphosate price up-thrust for the moment had encouraged many manufacturers and experts to expect an

upcoming bright market for glyphosate. But after a very short period of flourish, the price dumped again from April and has remained sluggish up to now.

Overcapacity will not be relieved in the short term.

For one thing, Chinese glyphosate

FIGURE 2: Glyphosate technical price, 2009

2,500

3,000

3,500

4,000

4,500

Jan 1

~15

Jan 1

6~31

Feb 1~

15

Feb 16

~28

Mar 1~

15

Mar 16

~31

Apr 1~

15

Apr 16

~30

May 1~

15

May 16

~31

June

1~15

June

16~30

July

1~15

July

16~3

1

Aug 1~

15

Aug 16

~31

Sep 1~

15

Pric

e: U

SD/t

Source: CCM International

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Glyphosate China Monthly Report Vol. 1 Issue 09, 2009

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technical production capacity has soared to 655,400t/a currently, but global glyphosate demand was only about 600,000 tonnes in 2008. When taking PMIDA capacity into account, the overcapacity will become more severe in China. For another thing, many small producers have suspended their glyphosate production, as the price is too low to gain profit. And when the price rebound to a normal level, suspended glyphosate producers will resume production, which will lead to low price in return.

• Capacity concentration needs long time

Capacity concentration, namely to clear out small companies, is helpful for healthy development of glyphosate industry, but it takes a long time to realize. Generally, there are two driving force for glyphosate capacity concentration: one is the national environmental protection policy, which restricts the development of small-scale enterprises and finally squeezes their market share; the other is the continued gloomy industry, which will force them to withdraw from the market. These two forces currently are taking effect but both of them need long time.

• Gloomy market

Because domestic consumption of glyphosate technical is very limited compared with its capacity, only about 34,000 tonnes in 2008, 90% of China’s glyphosate technical (taking PMIDA into account) is exported. But affected by global financial crisis, overseas demand is shrinking, especially in South America, one of China’s key export destinations of

glyphosate.

For one thing, Argentina’s biggest PMIDA user Atanor has encountered fiscal difficulties since last year, which directly led to low import volume of PMIDA.

For another, Argentina government is considering forbidding glyphosate use nationwide, mainly considering food safety and environmental protection, which has posed great pressures on local distributors in Argentina and thus they dare not enlarge glyphosate import volume from China. Furthermore, in light of local big inventory and sluggish economy, Argentina has declined the import volume from China since last October. Meanwhile, Argentina’s farmers under economic downturn have little

money to buy pesticide.

• Zhejiang Wynca’s price drop will cause copy-cat effect

Zhejiang Wynca Chemical Group Company (Zhejiang Wynca) began to lower its price to less than USD2,782/t (RMB19,000/t) after 2009 FCI Trade Summit, held in Argentina. As the leading glyphosate producer in China, Zhejiang Wynca’s price drop, without doubt, will induce price slip among glyphosate producers nationwide. The only chance for the price rise this year may occur in Q 4, in view of expected price rise of crude oil, as well as distributors to increase stock as preparations for next year’s pesticide production peak season.

TABLE 2: Ex-factory prices of glyphosate products and the raw materials, Sep. 2009

Product USD/t RMB/tPrice change over

last month

Glyphosate technical 2,914 19,900 -0.50%

Glyphosate

formulations

10% SL 315 2,150 -6.52%

41% IPA 1,508 10,300 -1.90%

62% IPA 1,801 12,300 -2.38%

50% WP 2,167 14,800 -1.33%

75.7%WP 3,221 22,000 -5.58%

PMIDA 1,786 12,200 -1.61%

Yellow phosphorus 1,698 11,600 2.65%

Chlorine 198 1,350 8.00%

DEA* 1,596 10,900 3.81%

Glycine 1,464 10,000 2.04%

IDAN 1,391 9,500 -1.04%

Formaldehyde 158 1,080 8.00%

DMP 1,054 7,200 0.00%

PCl3 673 4,600 9.52%

Source: CCM International

Note:* the quotation of imported DEA

Transportation ban impacts yellow phosphorous price

The price rise of yellow phosphorous in major production bases early

August will come to an end and the price will keep stable by the end of this Sep., as the downstream companies have suspended purchase, due to the ban on transportation of hazardous materials from 15 Sep-9 Oct. for the sake of China’s National Day.

The price rise of yellow phosphorous since this Aug. is mainly driven by increasing demand from pesticide industry. Usually, annual peak season for pesticide production starts from October, but with ban on transportation of hazardous chemical materials, most pesticide companies advance the purchase

period for raw materials, including yellow phosphorous, which has pushed up yellow phosphorous price. Since the ban was implemented, most pesticide companies have suspended the purchase, causing the raw material prices to keep stable.

The change of yellow phosphorus price has little impacts on glyphosate industry,

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Glyphosate China Monthly Report Vol. 1 Issue 09, 2009

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as currently glyphosate production has a rather low operating rate due to gloomy market. The ban is mainly implemented in Beijing and its surrounding regions, including Tianjin City, Hebei Province, Inner Mongolia Autonomous Region, Liaoning Province, Shanxi Province and Shandong Province. Besides, Sichuan Province will suspend approval of highway transportation of hazardous materials cross cities and provinces during 30 Sep. to 9 Oct. this year. Transportation of hazardous materials by waterway will be limited from 1-8 Oct.

In China, yellow phosphorus capacity mainly concentrates in Yunnan (52%), Guizhou (20%), Sichuan & Chongqing (12%) and Hubei (8%).

Yellow phosphorous price usually stays at a high level from January to April with its increasing demand, as this period is hot

season for pesticide production. However, the period is rainless in most parts of China, which means that electricity supply will fall short of demand in major yellow phosphorus production regions, whose electricity is mainly hydropower,

so operating rate of yellow phosphorous production is rather low, which leads to insufficient supply of yellow phosphorous.

FIGURE 3: Ex-factory price of yellow phosphorous in China, Jan. -Sep. 2009

1,4501,5001,5501,6001,6501,7001,7501,8001,8501,9001,9502,000

15-Ja

n

31-Ja

n

15-F

eb

28-F

eb

15-M

ar

31-M

ar

15-A

pr

30-A

pr

15-M

ay

31-M

ay

15-Ju

n

30-Ju

n15

-Jul

31-Ju

l

15-A

ug

31-A

ug

15-S

ep

Source: CCM International

■ Supply & Demand

Owing to frequent or incorrect use of glyphosate, negative impacts have occurred in orchard, such

as soil erosion, which prompts peasants to turn to other herbicides, such as paraquat. This indicates that glyphosate’s leading position in orchard weeding has got greatly threatened, as orchard is the largest consumer of glyphosate in China.

The negative impacts mainly include:

• Glyphosate will kill the weed’s roots, which is unfavorable to protecting water and land in orchard.

• Some symptoms of malnutrition occur in fruit trees, such as small leaves, rolled leaves, etc., because phosphate ions, glyphosate’s main degradation product, tends to combine with ions of iron, zinc, etc, and form phosphates, which hinders fruit trees to absorb iron and zinc.

• Glyphosate has phytotoxicity on fruit trees. As glyphosate takes a long time to lose its activity in soil, it could be absorbed by fruit root and transmitted across different parts of the fruit trees, which can baffle the growth of fruit tree’s roots and leaves. Long-term and successive use of glyphosate will aggravate the phytotoxicity.

Because of above negative impacts, glyphosate is

facing decreasing market share. The situation mainly happens to orchards of apple and pear. In Shandong Province, the second largest origin of apple, peasants used to apply glyphosate to control weeds in orchard, but currently, the application times and area have greatly declined. According to a peasant interviewed, in view of glyphosate’ damages on orchard, he reduced the application frequency to once every 3 years from original twice to three times every year. Hebei Province, the largest origin of pear and whose orchard area ranks the first in China, has encountered similar

FIGURE 4: Consumption structure of glyphosate in China, 2008

35%

32%

8%

25%

Orchard Traditional crops Tea, rubber and sugarcane Others

Note: Traditional crops mainly include wheat, rice, cotton, soybean, corn, etc;

Others mainly include wasteland reclamation, non-agriculture use, etc.

Source: CCM International

Glyphosate’s position in orchard threatened

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Glyphosate China Monthly Report Vol. 1 Issue 09, 2009

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According to China Customs, in Jul. 2009, with export value of USD77.77

million, China’s glyphosate export has experienced big tumble in Jul. 2009, with export volume of 30,770 tonnes, down about 17.4% year on year.

As of Jul. 2009, China has accumulatively exported about 258,417 tonnes of glyphosate products this year, up about 4.4% over prior year. But calculated by AI, the accumulative export volume in 2009 has decreased by 2.5% over the same period of last year.

Compared with Jul. 2008, the export volume of 41% IPA and 75.7% WP has significantly increased in Jul. 2009, with respective growth rate of 50.4% and

360.7%, while for 62% IPA and technical, their export volume dropped 61.9% and 22.8%.

In the first seven months of 2009, the top 10 glyphosate export destinations by

value are US, Argentina, Brazil, Malaysia, Thailand, Indonesia, Australia, Ghana, Uruguay and Vietnam, with total export value of USD533.24 million, sharing about 74.8% of China’s total. However, the value of glyphosate products exported to top 10 destinations was reduced by 67.7% than the previous year. As the largest destination of China’s glyphosate, the volume to US has accounted for about 36.5% of the total as of Jul. 2009.

In Sep. 2009, the operating rate in glyphosate industry still keeps at a very low level, about 30%-50%. Besides, some producers still hold large quantities of stock, which indicates that glyphosate market is still in its downturn. It is predicted that the export volume in H2 2009 will decrease compared with previous year and accumulative export volume for full-year 2009 will decline.

situation. Though this adverse situation just emerges in several provinces, it may extend to more regions in the near future, because of glyphosate’s inevitable phytotoxicity.

According to professors’ suggestions, paraquat used in orchard weeding is applied in spring and summer when crops are in blooming period and weeds start to grow, while glyphosate is applied in autumn when the weeds are difficult

to be cleared out with other herbicides, and when the fruit trees grow slowly thus uneasily suffering from glyphosate’s phytotoxicity.

In 2008, orchard has consumed about 11,200 tonnes of glyphosate (calculated by AI), accounting for 35% of the total consumption in China. In 2004-2008, glyphosate application in orchard increased with CAGR of about 30.5%, almost equal to the growth rate of overall

consumption of glyphosate in China. In the next 5 years, the growth of glyphosate consumption in orchard is definitely to slow down and will be lower than the overall growth of glyphosate consumption in China, due to its inevitable phytotoxicity.

TABLE 3: Top 10 glyphosate destinations, Jan.-Jul. 2009 and Jan.-Jul. 2008 (Value: million USD, Volume: tonne)

Jan.~ Jul. 2009 Jan.~ Jul. 2008

Destination Value Volume Destination Value Volume

US 260.19 82,109 US 616.48 58,313

Argentina 78.12 23,734 Argentina 333.83 29,482

Brazil 63.76 17,831 Australia 130.61 14,177

Malaysia 28.41 9,796 Singapore 129.05 12,872

Thailand 27.13 12,683 Thailand 103.81 18,741

Indonesia 17.93 6,870 Malaysia 87.87 8,484

Australia 15.25 4,836 Uruguay 64.48 8,843

Ghana 15.09 7,961 Belgium 64.16 5,747

Uruguay 13.68 6,871 Indonesia 60.80 7,818

Vietnam 13.67 8,225 Taiwan 58.70 5,347

Top 10 533.24 180,916 Top 10 1,649.79 169,824

Top 10 share 74.8% 70.0% Top 10 share 75.7% 68.6%

Source: CCM International

■ Import/ Export Analysis

Glyphosate export sees big tumble in July 2009

FIGURE 5: Glyphosate export situation, Jul. 2009 and Jul. 2008

0

5,000

10,000

15,000

20,000

25,000

41%IPA 62%IPA 75.7% WP Technical

Jul. 2009 Jul. 2008

Source: CCM International

CCM International Limited www.cnchemicals.com

Glyphosate China Monthly Report Vol. 1 Issue 09, 2009

8

As of 1 Sep. 2009, there have been 689 active registrations for glyphosate

products owned by 334 companies, including 198 temporary, 478 formal and 13 repacking.

Among 689 active registrations, about 182 are glyphosate formulations with AI content lower than 30%, accounting for 26.42% of China’s total active registrations of formulations. And glyphosate SL registration still dominates the Chinese market, accounting for 63.6% of China’s total active registrations of formulations.

Among 198 temporary registrations, 121 registrations, 61.1% of the total, are for glyphosate SL, 16 registrations are for glyphosate technical and the remaining 61 belong to registrations of SP and WSG.

Most of the formal registrations are for glyphosate SL and technical. Among 478 formal registrations, 306 registrations are for glyphosate SL (accounting for 64.0% of the total formal), 113 for technical (23.6%), and the rest 59 for SP and WSG. What’s more, among the total 478, about 120 are formulations with content lower than 30%, sharing about 25.1% of total formal registrations or about 62.1% of China’s total glyphosate formulation under 30%, both formal and temporary.

As for the 13 repacking, 12 registrations are for SL and 1 for WSG. Registration volume for 10% SL and 41% SL is 4 for each.

The companies registering glyphosate products mainly concentrate in 4 provinces, namely Jiangsu (50), Shandong (34), Guangxi (30) and Zhejiang (22), with their total active registrations accounting for about 40.7% of the total as of Sep. 2009.

Owing to the ban, registration on low AI content has decreased greatly in 2009. As of Sep. 2009, there are 205 registrations of glyphosate products registered for the first time by 158 companies in 2009, including 29 for formulations with low AI content, sharing14.1% of the total new registrations in 2009 (Including these new formal registration license changed from temporary registration).

The new registrations in

2009 include 18 temporary registrations owned by 18 companies and 187 formal ones owned by 150 companies. Among the 18 temporary registrations, 9 are for glyphosate SP, 6 for WSG and 3 for SL. It seems that registration volume of glyphosate SP and WSG are springing up in China. Among the 187 formal, 30 are for glyphosate SP, 6 for WSG, 113 for SL, 1 for SC and 37 for technical.

In the near future, SL registration will keep its dominating position and that of WP and WSG will grow rapidly, attributed to the exit of glyphosate formulations with low AI content, mainly 10% SL. Besides, new registration of glyphosate technical will become increasingly difficult for glyphosate companies, as the Chinese Government pay more and more attention to environmental protection.

TABLE 4: Active registration for glyphosate products in China, as of Sep.2009

ItemGlyphosate products

<30% ≥30%

Technical / 129

Single formulation 178 356

Mixed 4 22

Total 182 507

Source: CCM International

■ Regisatration

Glyphosate registration situation

CCM International Limited www.cnchemicals.com

Glyphosate China Monthly Report Vol. 1 Issue 09, 2009

9

TABLE 5: First registrations of glyphosate products, 2009

FormulationRegistration

volumeMain specification

(Registration volume)Main Companies

SL 111

41% IPA (61)

Zhejiang Wynca Chemical Group Company; Shandong Binnong

Technology Company; Zhejiang Changxing No.1 Chemical

Company; Shandong Qiaochang Chemical Company; Zhejiang

Biok Kaipu Chemical Company; Shanghai Shenglian Chemical

Company; Shandong Kesaiji Agrochemical Company; Anhui

Huaxing Chemical Company; Shandong Weifang Runfeng Chemical

Company; Jiangsu Youth Chemical Company

62% IPA (8)

Jiangsu Anpon Electrochemical Company ; Zhejiang Linghua

Industry Company; Anhui Huaxing Chemical Company; Jiangsu

Rotam Chemical Company; Jiangsu Jingma Chemical Company;

Zhejiang Jinfanda Biochemcial Company

10% (23)

Shandong Qiaochang Chemical Company; Anhui Zhongshan

Chemical Company; Shandong Jinan Lubang Chemical Company;

Zhejiang Changxing No. 1 Chemical Company; Jiangxi Bobang

Biology & Medicine Company; Hubei Tianmen Yipule Agrochemical

Company

SG 11 75.7% (3); 88.8% (2)

Shanghai Shenglian Chemical Company; Jiangsu Nantong Feitian

Chemical Company; Zhejiang Jinfanda Biochemical Company;

Guangdong Ruidefeng Biotechnology Company; Jiangsu Good

Harvest-Weien Agrochemical Company; Anhui Zhongshan

Chemical Company; Jiangsu Ruibang Pesticide Company; Zhejiang

Wynca Chemical Group Company

SP 31 50% (16); 30% (6)

Jiangsu Nantong Feitian Chemical Company; Jiangxi Zhengbang

Biochemcial Company; Guangdong Ruidefeng Biotechnology

Company; Chongqing Shuangfeng Chemical Company; Sichuan

Beier Industry Company; Shanghai Shenglian Chemical Company;

Lier Chemical Company; Guangxi Yiduoshou Biotechnology

Company; Lier Chemical Company; Jiangsu Institute of Ecomones

Company

TC 37 95% (36)

Shandong Dacheng Pesticide Company; Jiangsu Kesheng Group

Company; Anhui Zhongshan Chemical Company; Hunan Yongzhou

Guangfeng Agrochemical Company; Zhejiang Leji Chemical

Company; Jiangsu Tenglong Biological & Medicinal Company;

Jiangsu Lianyungang Liben Pesticide Chemical Company;

Shandong Weifang Kesai Agrochemical Company; Henan Hebi

Agriculture &Forestry Pharmaceutical Company

Mixture 15

33%/44%/46%(MCPA+Glyphosate)

SL

/WP (6);

20% (Dicamba+glyphosate) SL (2)

Zhejiang Wynca Chemical Group Company; Shandong Qiaochang

Chemical Company; Shanghai Taihe (Group) Company; Shanghai

East (Zhengzhou) Pesticide Company; Shandong Qiaochang

Chemical Company; Jiangsu Tongzhou Zhengda Pesticide

& Chemical Company; Nantong Xinhua Pesticide Company;

Chongqing Yongchuan Chemical Company

Total 205 \ \

Source: CCM International's stastical data from ICAMA

CCM International Limited

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