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Many factors are positive, glyphosate may set off a midsummer market
2023/7/26
In midsummer, in July, the once silent glyphosate market experienced a "recovery". As of July 14, the mainstream transaction price of 95% glyphosate raw powder market was 29,000 yuan/ton, which was about 20% higher than the recent low point. Founder Securities Research Report believes that the price of glyphosate will enter the upward channel driven by multiple factors such as overseas demand, low domestic start-ups, and rising raw material prices. Affected by this, on the 17th, major stocks of glyphosate concept stocks in the Shanghai and Shenzhen stock markets jumped higher and closed in red.
Multiple benefits contributed to the rise in the market
As the most widely used herbicide in the world, glyphosate occupies 30% of the global herbicide market. At the beginning of 2022, after the price of glyphosate soared to 80,000 yuan/ton, as the contradiction between supply and demand eased and the cost of raw materials fell sharply, the market price of glyphosate began to lead the decline until it rebounded this month.
People in the industry generally believe that the destocking of the industry is the direct reason for the current market price of glyphosate to rebound. Statistics show that in the first half of this year, the entire industry is expected to reduce production by nearly 30%. At the beginning of July, the total inventory of domestic glyphosate factories was 50,000 tons, which was an improvement from the previous period. At present, overseas destocking is also very smooth, and the inventory has dropped to a reasonable level.
On the demand side, the demand in Brazil, a major importer of pesticides, has started. In May, the export volume also reversed the downward trend since December 2022, achieving a positive growth of 3% month-on-month. In addition, the price of phosphate rock is 900 yuan/ton, which still maintains a high level of volatility, and the price of raw material glycine and yellow phosphorus has risen, which has strong support for the cost of glyphosate.
Runfeng shares also stated in the recent performance briefing that most of the market inventory in the industry has fallen back to a basically reasonable state; Xingfa Group stated in the mid-term report that at the end of the second quarter, the market for some products such as glyphosate has picked up , product prices stabilized and rebounded. Xin'an Co., Ltd.'s existing inventory of preparation products has been fully exhausted, and new orders have been issued from downstream channels, and the order has been queued until the end of August.
The product safety is finally recognized by EFSA, which is good for the long-term
On July 6, 2023, the European Food Safety Authority announced the completion of the peer review of the glyphosate re-evaluation assessment report and issued a conclusion - no major concerns were found in the assessment of the impact of glyphosate on human health, animals and the environment. That is, according to the current evaluation results and corresponding use scenarios, no significant risks of glyphosate to human health, animals and the environment have been found to cause special concern, so its use can be considered safe. The conclusion released by the European Food Safety Authority It laid the foundation for glyphosate to successfully pass the re-evaluation in the EU.
The re-evaluation of glyphosate in the EU began in 2019, and it is the most comprehensive and transparent evaluation of a pesticide so far. Its re-evaluation dossier contains more than 180,000 pages and 1,500 scientific studies, and the information contained is 2-4 times that of general substances. The huge review workload and its special status in the field of pesticides doomed it to a long and tortuous re-evaluation road. Now the safety evaluation of glyphosate has finally come to an end in the EU, and the re-evaluation of glyphosate has begun to see the dawn.
In the next step, the European Commission will analyze the conclusions of the EU Food Safety Authority and the re-evaluation evaluation report produced by the glyphosate re-evaluation evaluation team, and will submit the re-evaluation report and draft regulations to the member states to recommend whether to continue or not to extend the glyphosate Phosphine approval. Representatives of EU member states will then vote on the draft regulation at the Standing Committee on Plants, Animals, Food and Feed.
This is good news for glyphosate, and it will bring good news to the expansion of glyphosate use in the future.
Is the price of glyphosate extremely low?
At present, the global glyphosate production capacity is about 1.18 million tons per year. According to the statistics of Zhongnong Zongheng, the average price of glyphosate in the first half of the year was 3.52 yuan per ton, a year-on-year decrease of 49.23%. This has also become one of the reasons why glyphosate concept stocks have been reduced in advance.
Xingfa Group issued a performance forecast in the interim report. It is expected that the net profit attributable to shareholders of listed companies in the first half of 2023 will decrease by 82.19%-83.56% year-on-year. The company stated that during the reporting period, the market prices of cyclical products such as glyphosate, organosilicon, yellow phosphorus, and phosphate fertilizers continued to fall, and production and sales also declined to varying degrees year-on-year, resulting in a sharp weakening of product profitability and large losses for some products. Xin'an Co., Ltd. expects that the net profit attributable to shareholders of listed companies in the first half of 2023 will drop by about 95.29% year-on-year. Jiangshan shares expect that the net profit attributable to shareholders of listed companies in the first half of 2023 will drop by 82.69%-85.16% year-on-year.
In fact, not only the glyphosate market was sluggish in the first half of the year, but also the overall chemical industry. According to data, the chemical raw material index in the capital market fell by 5.55% in the first half of the year. Internationally, the world's chemical giants also lowered their operating data for the second quarter. BASF recently released preliminary data for the second quarter, showing that sales in the second quarter are expected to drop by 25% to 17.305 billion euros, mainly due to a sharp decline in prices and sales, while the negative impact of currency factors also caused a decrease in sales. In the second quarter, the BASF Group's EBIT before special items is expected to be 1.007 billion euros, down 57% from the strong performance in the same period last year. BASF expects net income in the second quarter to reach 499 million euros, significantly lower than the 2.09 billion euros in the same period last year. Prior to this, chemical companies such as Dow, Lanxess, Cabot, and LyondellBasell issued warnings that their profits in 2023 would be lower than previously expected.
However, the current glyphosate market situation is changing. Internationally, since July 2023, the traditional peak season for procurement in South America has begun. The demand from Brazil and other major pesticide importing countries has brought an increase in foreign trade orders, and the overall inventory of the industry has been significantly reduced. From October to December, the demand in the northern hemisphere is driven, and exports may gradually increase. In summer, the appearance of the El Niño phenomenon and high temperature may lead to power cuts in enterprises, which will not only transmit the price of yellow phosphorus and push up the cost of glyphosate, but also limit the start of glyphosate itself.
At the same time, July and August are the traditional off-season, and there are more arrangements for high-temperature maintenance. In addition, routine maintenance of equipment is expected to overlap. During this period, the production capacity of glyphosate technical will be relatively low. In terms of production capacity, there is currently no new planned production capacity in China. On June 21, Runfeng Co., Ltd. issued an announcement on the postponement of some fundraising projects. After careful research, the company decided to adjust the project "38,800 tons/year herbicide project (Phase I) - 30,000 tons/year glyphosate soluble granules" to July 2024, so that glyphosate Phosphine prices constitute support.
Multiple benefits contributed to the rise in the market
As the most widely used herbicide in the world, glyphosate occupies 30% of the global herbicide market. At the beginning of 2022, after the price of glyphosate soared to 80,000 yuan/ton, as the contradiction between supply and demand eased and the cost of raw materials fell sharply, the market price of glyphosate began to lead the decline until it rebounded this month.
People in the industry generally believe that the destocking of the industry is the direct reason for the current market price of glyphosate to rebound. Statistics show that in the first half of this year, the entire industry is expected to reduce production by nearly 30%. At the beginning of July, the total inventory of domestic glyphosate factories was 50,000 tons, which was an improvement from the previous period. At present, overseas destocking is also very smooth, and the inventory has dropped to a reasonable level.
On the demand side, the demand in Brazil, a major importer of pesticides, has started. In May, the export volume also reversed the downward trend since December 2022, achieving a positive growth of 3% month-on-month. In addition, the price of phosphate rock is 900 yuan/ton, which still maintains a high level of volatility, and the price of raw material glycine and yellow phosphorus has risen, which has strong support for the cost of glyphosate.
Runfeng shares also stated in the recent performance briefing that most of the market inventory in the industry has fallen back to a basically reasonable state; Xingfa Group stated in the mid-term report that at the end of the second quarter, the market for some products such as glyphosate has picked up , product prices stabilized and rebounded. Xin'an Co., Ltd.'s existing inventory of preparation products has been fully exhausted, and new orders have been issued from downstream channels, and the order has been queued until the end of August.
The product safety is finally recognized by EFSA, which is good for the long-term
On July 6, 2023, the European Food Safety Authority announced the completion of the peer review of the glyphosate re-evaluation assessment report and issued a conclusion - no major concerns were found in the assessment of the impact of glyphosate on human health, animals and the environment. That is, according to the current evaluation results and corresponding use scenarios, no significant risks of glyphosate to human health, animals and the environment have been found to cause special concern, so its use can be considered safe. The conclusion released by the European Food Safety Authority It laid the foundation for glyphosate to successfully pass the re-evaluation in the EU.
The re-evaluation of glyphosate in the EU began in 2019, and it is the most comprehensive and transparent evaluation of a pesticide so far. Its re-evaluation dossier contains more than 180,000 pages and 1,500 scientific studies, and the information contained is 2-4 times that of general substances. The huge review workload and its special status in the field of pesticides doomed it to a long and tortuous re-evaluation road. Now the safety evaluation of glyphosate has finally come to an end in the EU, and the re-evaluation of glyphosate has begun to see the dawn.
In the next step, the European Commission will analyze the conclusions of the EU Food Safety Authority and the re-evaluation evaluation report produced by the glyphosate re-evaluation evaluation team, and will submit the re-evaluation report and draft regulations to the member states to recommend whether to continue or not to extend the glyphosate Phosphine approval. Representatives of EU member states will then vote on the draft regulation at the Standing Committee on Plants, Animals, Food and Feed.
This is good news for glyphosate, and it will bring good news to the expansion of glyphosate use in the future.
Is the price of glyphosate extremely low?
At present, the global glyphosate production capacity is about 1.18 million tons per year. According to the statistics of Zhongnong Zongheng, the average price of glyphosate in the first half of the year was 3.52 yuan per ton, a year-on-year decrease of 49.23%. This has also become one of the reasons why glyphosate concept stocks have been reduced in advance.
Xingfa Group issued a performance forecast in the interim report. It is expected that the net profit attributable to shareholders of listed companies in the first half of 2023 will decrease by 82.19%-83.56% year-on-year. The company stated that during the reporting period, the market prices of cyclical products such as glyphosate, organosilicon, yellow phosphorus, and phosphate fertilizers continued to fall, and production and sales also declined to varying degrees year-on-year, resulting in a sharp weakening of product profitability and large losses for some products. Xin'an Co., Ltd. expects that the net profit attributable to shareholders of listed companies in the first half of 2023 will drop by about 95.29% year-on-year. Jiangshan shares expect that the net profit attributable to shareholders of listed companies in the first half of 2023 will drop by 82.69%-85.16% year-on-year.
In fact, not only the glyphosate market was sluggish in the first half of the year, but also the overall chemical industry. According to data, the chemical raw material index in the capital market fell by 5.55% in the first half of the year. Internationally, the world's chemical giants also lowered their operating data for the second quarter. BASF recently released preliminary data for the second quarter, showing that sales in the second quarter are expected to drop by 25% to 17.305 billion euros, mainly due to a sharp decline in prices and sales, while the negative impact of currency factors also caused a decrease in sales. In the second quarter, the BASF Group's EBIT before special items is expected to be 1.007 billion euros, down 57% from the strong performance in the same period last year. BASF expects net income in the second quarter to reach 499 million euros, significantly lower than the 2.09 billion euros in the same period last year. Prior to this, chemical companies such as Dow, Lanxess, Cabot, and LyondellBasell issued warnings that their profits in 2023 would be lower than previously expected.
However, the current glyphosate market situation is changing. Internationally, since July 2023, the traditional peak season for procurement in South America has begun. The demand from Brazil and other major pesticide importing countries has brought an increase in foreign trade orders, and the overall inventory of the industry has been significantly reduced. From October to December, the demand in the northern hemisphere is driven, and exports may gradually increase. In summer, the appearance of the El Niño phenomenon and high temperature may lead to power cuts in enterprises, which will not only transmit the price of yellow phosphorus and push up the cost of glyphosate, but also limit the start of glyphosate itself.
At the same time, July and August are the traditional off-season, and there are more arrangements for high-temperature maintenance. In addition, routine maintenance of equipment is expected to overlap. During this period, the production capacity of glyphosate technical will be relatively low. In terms of production capacity, there is currently no new planned production capacity in China. On June 21, Runfeng Co., Ltd. issued an announcement on the postponement of some fundraising projects. After careful research, the company decided to adjust the project "38,800 tons/year herbicide project (Phase I) - 30,000 tons/year glyphosate soluble granules" to July 2024, so that glyphosate Phosphine prices constitute support.
With the recovery of glyphosate price, what is the future trend? Zhongnong Zongheng Agricultural Chemical Department believes that the price of glyphosate is expected to rise first and then stabilize in the second half of the year. Industry insiders also said that as the price of glyphosate rises, it is expected that the industry's start-up load will also pick up, and the market supply will rise again, which will offset the sharp rebound of glyphosate. Glyphosate may usher in the midsummer market.
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