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Strong bullish expectations for glyphosate in the future
2023/10/23
Since October, the market price of glyphosate has been slowly rising, with prices rising to 31000 yuan/ton, which is about 240 million yuan/ton compared to mid June, an increase of nearly 30%. Hua'an Research Report pointed out that global demand for glyphosate is showing signs of recovery, and it is estimated that overseas companies will gradually stop destocking and enter a replenishment period in the fourth quarter. Replenishment demand will accelerate the recovery, boosting glyphosate prices.
Downward space for raw material cost lockdown
Phosphate ore, as a scarce resource, has non renewable properties. With years of mining, rich mineral resources in China have been continuously consumed, and the overall grade of phosphate rock has shown a significant downward trend. In addition, due to factors such as high mining difficulty and long mining cycles, the overall operating rate of phosphate rock in China is relatively low. According to data from Business Society, the price of phosphate rock has increased from 396 yuan/ton at the beginning of 2021 to 970 yuan/ton by September 2023, a nearly threefold increase. Last month, the domestic phosphorus ore market entered the "Golden Nine" peak season, and the tight spot supply of phosphorus ore has intensified due to good downstream demand.
On October 18th, the Phosphorus Exchange held its 13th competitive sale of phosphorus ore in 2023. This bidding sale consists of 6 sections, with a total volume of approximately 68700 tons. 24 companies successfully registered and ultimately bid for 6 sections, with a total volume of 68700 tons and a transaction amount of 54.5177 million yuan (the actual amount is subject to final settlement). The winning bid price is all between 10% and 42% higher than the base price.
Business Society predicts that the yellow phosphorus market will continue to operate at high prices in the short term. At the same time, the strong market impact of other raw materials such as liquid chlorine and glacial acetic acid has led to a price increase of 13500 yuan/ton for glycine, driving the continuous increase in the cost of glyphosate.
International factors support the upward trend of glyphosate
On October 13th, the EU government failed to pass the vote on the extension of glyphosate due to insufficient votes, failing to reach a consensus on the proposal to extend the glyphosate use license. According to current EU regulations, to support or reject the proposal, a "qualified majority" of at least 15 member states (representing at least 65% of the EU's total population) must be obtained in the vote of the EU's 27 member state committee. According to foreign media reports, the member states that voted against were Austria, Luxembourg, and Croatia, while Bulgaria, Belgium, Germany, Malta, the Netherlands, and France abstained. The other 18 member states voted in favor, but these countries only represent 55.03% of the EU's total population and did not meet the 65% population threshold, so no opinion can be drawn.
Recently, the European Commission released a draft for the re evaluation and approval of glyphosate, proposing to extend its approval period in the EU by 10 years, with a new approval period from December 16, 2023 to December 15, 2033.
In early November, the EU government will once again attempt to reach a consensus. If it fails again, the European Commission will make a final decision on the fate of glyphosate.
The spokesperson for the European Commission expressed confidence in the draft, "Currently, considering that the European Food Safety Agency (EFSA) and many colleagues from different countries have studied a large amount of scientific data, we believe that the proposal provides a good suggestion
The future is likely to rise but not fall
Glyphosate is the world's largest herbicide in use. Brazil, the United States, and Argentina are the top three global consumers of glyphosate, while China is the world's main producer of glyphosate. The current global production capacity of glyphosate is approximately 1.183 million tons, of which 813000 tons are concentrated in China. Currently, global demand for glyphosate is showing signs of recovery, with a domestic glyphosate operating rate of 80%.
Due to the seasonal impact of agricultural production, the consumption of glyphosate also shows a significant seasonal trend. From the perspective of pesticide exports from China to the United States, due to the shipping time taking 1-2 months, combined with processing configuration and distribution, the traditional stocking season for American manufacturers is the fourth quarter, starting from October to November, and stocking until March of the following year, increasing inventory to over 80% before the medication season; From the perspective of the southern hemisphere, the first season of corn, soybeans, and cotton cultivation in Brazil and Argentina is mainly concentrated in September to November, and glyphosate use will enter a peak period. It is expected that overseas glyphosate stocks will rapidly deplete. Meanwhile, with the global promotion and application of genetically modified crops, the demand for glyphosate will further increase.
From the export data of Chinese customs, it can be seen that Brazil stopped destocking and entered a replenishment period in June. The replenishment demand of the United States and Argentina has been fluctuating at low levels for several consecutive months and showing an upward trend.
According to data from Baichuan Yingfu, under the pressure of rising costs, the current gross profit per ton of glyphosate is as low as 3350 yuan, which has also fallen to the bottom of the past three years. From a cyclical perspective, in 2008, it reached a record high of over 100000 yuan/ton. Although the price eventually fell, there has been a slow rise in the bottom since then. Therefore, it is judged that there is not much room for the price of glyphosate to decline.
Downward space for raw material cost lockdown
Phosphate ore, as a scarce resource, has non renewable properties. With years of mining, rich mineral resources in China have been continuously consumed, and the overall grade of phosphate rock has shown a significant downward trend. In addition, due to factors such as high mining difficulty and long mining cycles, the overall operating rate of phosphate rock in China is relatively low. According to data from Business Society, the price of phosphate rock has increased from 396 yuan/ton at the beginning of 2021 to 970 yuan/ton by September 2023, a nearly threefold increase. Last month, the domestic phosphorus ore market entered the "Golden Nine" peak season, and the tight spot supply of phosphorus ore has intensified due to good downstream demand.
On October 18th, the Phosphorus Exchange held its 13th competitive sale of phosphorus ore in 2023. This bidding sale consists of 6 sections, with a total volume of approximately 68700 tons. 24 companies successfully registered and ultimately bid for 6 sections, with a total volume of 68700 tons and a transaction amount of 54.5177 million yuan (the actual amount is subject to final settlement). The winning bid price is all between 10% and 42% higher than the base price.
Business Society predicts that the yellow phosphorus market will continue to operate at high prices in the short term. At the same time, the strong market impact of other raw materials such as liquid chlorine and glacial acetic acid has led to a price increase of 13500 yuan/ton for glycine, driving the continuous increase in the cost of glyphosate.
International factors support the upward trend of glyphosate
On October 13th, the EU government failed to pass the vote on the extension of glyphosate due to insufficient votes, failing to reach a consensus on the proposal to extend the glyphosate use license. According to current EU regulations, to support or reject the proposal, a "qualified majority" of at least 15 member states (representing at least 65% of the EU's total population) must be obtained in the vote of the EU's 27 member state committee. According to foreign media reports, the member states that voted against were Austria, Luxembourg, and Croatia, while Bulgaria, Belgium, Germany, Malta, the Netherlands, and France abstained. The other 18 member states voted in favor, but these countries only represent 55.03% of the EU's total population and did not meet the 65% population threshold, so no opinion can be drawn.
Recently, the European Commission released a draft for the re evaluation and approval of glyphosate, proposing to extend its approval period in the EU by 10 years, with a new approval period from December 16, 2023 to December 15, 2033.
In early November, the EU government will once again attempt to reach a consensus. If it fails again, the European Commission will make a final decision on the fate of glyphosate.
The spokesperson for the European Commission expressed confidence in the draft, "Currently, considering that the European Food Safety Agency (EFSA) and many colleagues from different countries have studied a large amount of scientific data, we believe that the proposal provides a good suggestion
The future is likely to rise but not fall
Glyphosate is the world's largest herbicide in use. Brazil, the United States, and Argentina are the top three global consumers of glyphosate, while China is the world's main producer of glyphosate. The current global production capacity of glyphosate is approximately 1.183 million tons, of which 813000 tons are concentrated in China. Currently, global demand for glyphosate is showing signs of recovery, with a domestic glyphosate operating rate of 80%.
Due to the seasonal impact of agricultural production, the consumption of glyphosate also shows a significant seasonal trend. From the perspective of pesticide exports from China to the United States, due to the shipping time taking 1-2 months, combined with processing configuration and distribution, the traditional stocking season for American manufacturers is the fourth quarter, starting from October to November, and stocking until March of the following year, increasing inventory to over 80% before the medication season; From the perspective of the southern hemisphere, the first season of corn, soybeans, and cotton cultivation in Brazil and Argentina is mainly concentrated in September to November, and glyphosate use will enter a peak period. It is expected that overseas glyphosate stocks will rapidly deplete. Meanwhile, with the global promotion and application of genetically modified crops, the demand for glyphosate will further increase.
From the export data of Chinese customs, it can be seen that Brazil stopped destocking and entered a replenishment period in June. The replenishment demand of the United States and Argentina has been fluctuating at low levels for several consecutive months and showing an upward trend.
According to data from Baichuan Yingfu, under the pressure of rising costs, the current gross profit per ton of glyphosate is as low as 3350 yuan, which has also fallen to the bottom of the past three years. From a cyclical perspective, in 2008, it reached a record high of over 100000 yuan/ton. Although the price eventually fell, there has been a slow rise in the bottom since then. Therefore, it is judged that there is not much room for the price of glyphosate to decline.
Under the triple factors of price, demand, and inventory, it is expected that overseas demand will accelerate the recovery in the fourth quarter and drive the market trend of glyphosate to reverse and upward.
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