Review of China's Pesticide Market in 2009    

Recently, Mr. Wang Luxian, an expert at China Pesticide Industry Association (CPIA), released a report to review China's pesticide industry in 2009 and give his projection for 2010.


1  The performances of China's
pesticide industry in 2009

(1) Production maintained a stable growth

According to China's National Bureau of Statistics, China produced 2.262 million tons  of pesticides (including active ingredients and formulations) in 2009, up 12.3% year on year, creating a new record, of which the output of insecticides was 797 000 tons, up 5.1%, accounting for 35.2% of the total, up 0.6 percentage points; fungicides 240 000 tons, up 8.0%, accounting for 10.6% of the total, up 0.3 percentage points; and herbicide 816 000 tons, up 18.3%, accounting for 36.1% of the total, up 3.7 percentage points. The fourth quarter of 2009 was an off-season for pesticides, but in October, November and December 2009, the monthly output of pesticides reached 169 000 tons, 195 000 tons and 219 000 tons, up 26.8%, 33.7% and 23.9%, respectively, and the sales/production ratio reached 99.9%, 98.9% and 100.3%, respectively.
     In the first half of 2009, in order to timely control serious wheat rust, China's  pesticide enterprises greatly increased the production of wheat rust-specific fungicides like triazoles. In the second half of 2009, they greatly increased the production of insecticides for the control of rice insects. Meanwhile, the Chinese pesticide industry stopped the production, sales and uses of methamidophos and other four highly toxic organophosphate insecticides but increased the production of new-type insecticides, such as imidacloprid, triazophos, avermectins, emamectin benzoate, acetamiprid, acephate, chlorpyrifos, fipronil butylene and diazinon, vigorously promoting efficient, safe, environmentally friendly water-based and solid new forms and new formulations of pesticides, gradually reducing the production of emulsifiable concentrates (EC) and wettable powders (WP), and made effort to increase the production of fungicides and herbicides to make the ratio of insecticidal, fungicidal and herbicidal outputs reach a reasonable layout according to agricultural needs.

(2) Export growth slowed down

According to China's General Administration of Customs, in 2009, China imported 44 000 tons of pesticide formulations, down 0.5% year on year, and China's pesticide formulations import was equivalent to 8.7% of its pesticide formulations export and 1.9% of its total pesticides (including active ingredient) output in the same period, and the average pesticide formulation import price was US$7 500/t CIF China. The import amount of herbicide formulations was 19 000 tons, accounting for 43.2% of the total pesticide formulations import, and costing US$110 million, with an average import price of US$5 789/t CIF China. In 2009, China's export amount of pesticide formulations was 508 000 tons, up 4.7%, accounting for 22.5% of China's total pesticide (including active ingredient) output in the same period, of which the export amount of herbicide formulations was 317 000 tons, up 14.7%, accounting for 62.4% of the total pesticide formulations export and 38.8% of China's herbicide total (including active ingredient) output in the same period. Due to the dramatic fluctuations of glyphosate prices, China's average export price of all pesticide formulations was US$2 795.3/t FOB, down 32.9% year on year. The export value of herbicide formulations was US$750 million, down 39.6%, and the average export price of herbicide formulations was US$2 366/t, down 46.7%.

(3) Sales and inventories had varying growth

According to the statistics of All China Federation of Supply and Marketing Cooperatives, in 2009, the sales amount and value of pesticide formulations in China was 824 000 tons and RMB19.96 billion, up 6.5% and 24.9% year on year, respectively. Out of the sales amount of pesticides, the sales amount of insecticides was 361 000 tons, up 6.4%; fungicides 153 000 tons, down 8.7%; and herbicides 231 000 tons, up 7.5%. In late December 2009, the amount of stocked pesticide formulations was 174 000 tons, down 15.0%, including 49 000 tons of stocked herbicides, up 4.5%, and 30 000 tons of stocked fungicides, down 25.5%.

(4) Profits dropped sharply

In 2009, China's pesticide industry achieved a total industrial production value of RMB132.03 billion at current prices, up 4.4% year on year, and a total sales of RMB128.04 billion at current prices, up 5.4%, and a sales/production ratio of 97.0% (96.1% in 2008), and a total corporate profit of RMB7.6 billion (the accumulated profit of the first 11 months), down 29.5%. The sharp drop of the corporate profit was mainly caused by the international financial crisis and the non-rational dramatic fluctuation of product prices, especially the price of glyphosate. It is worthy mentioning that bio-pesticides are developing fast in China. In 2009, the industrial output value of bio-pesticides increased by 18.7%, total sales of bio-pesticides increased 21.8% year on year to RMB14.81 billion, accounting for 11.6% of the total sales value of pesticides (not including those used for transgenic crops), and total profit of bio-pesticides was RMB990 million (the accumulated profit of the first 11 months) , up 17.9%. This is a stark contrast to the drop of the total profit of China's pesticide industry.


2  Predictions for the development of China's pesticide industry in 2010

In November 2009, the Chinese Ministry of Agriculture held a seminar in Shanxi province to predict the development trends of China's pesticide market in the next few years. Experts all agreed that the demand for pesticides in China will grow by 3% to 6% annually in the next few years. On the 25th National Crop Protection Conference held in Jinan, Shandong province at the same time, experts predicted that in 2010, agricultural insect hazards will be more severe than in 2009, and 302 700 tons of pesticides (100% active ingredients) will be required to control pests, increasing by 17% from the actual pesticide consumption of 2009, including 129 500 tons of insecticides, 9 676 tons of acaricides, 70 700 tons of fungicides and 89 100 tons of herbicides. In 2010, pesticide products with an annual demand of more than 10 000 tons each will be dichlorvos, acetochlor, glyphosate, copper sulfate and trichlorfon; and products with an annual demand of 5 000 to 10 000 tons each will be carbendazim, phoxim, atrazine, butachlor, dimehypo, chlorpyrifos, 2,4-D butyl ester, paraquat, thiophanate-methyl, omethoate and acephate.
   According to the above analysis and predictions, China's pesticide market will be optimistic and have several favorable factors in 2010. First, the Chinese central government has promised to increase investment in agriculture, increase subsidies to agriculture and agricultural materials and raise purchase prices of crops in 2010. This will encourage farmers to buy more fertilizers and pesticides. Second, with the continuation and intensification of the world food crisis, the demand for bio-energy grows. This will promote the prosperity of the world's pesticide market. Third, as the world economy, especially China's economy, is recovering, domestic pesticide prices are gradually becoming rational. But there are also some unfavorable factors, mainly including the unstable world economic recovery, the lasting impact of the financial crisis, the oversupply of China's pesticide industry and the disorderly market competition.
   It is predicted that in 2010, China's pesticide total output will reach about 2 million tons. This can meet the needs of China's agricultural production and exports. The export amount and value of China'