Prochloraz Capacity Should Not Expand Blindly   

Prochloraz is a type of mainstream fungicide in China. There are now 11 prochloraz producers in China, including Jiangsu Huifeng Agrochemicals Co Ltd, Nantong Jiangshan Agrochemical & Chemicals Co Ltd, Zhejiang Rosi Chemical Co Ltd, Nantong Weilike Chemical Co Ltd and Jiangsu Luye Agrochemicals Co Ltd.
   In 2008, the total production capacity of prochloraz TC (technical) was 7 500 t/a in China. In 2009-2010, a few new or expansion prochloraz projects were constructed in the country. For example, Huifeng Agrochemicals expanded its prochloraz TC capacity from 3 000 t/a to 4 000 t/a; Zhejiang Rosi Chemical Co Ltd expanded its prochloraz TC capacity from 1 000 t/a to 3 000 t/a; and Nantong Weilike Chemical Co Ltd and Jiangsu Luye Agrochemicals Co Ltd set up new prochloraz TC plants. As a result, by 2010 China's total capacity of prochloraz TC reached 10 500 t/a. In addition, a few Chinese companies, such as Lianyungang Jindun Agrochemicals Co Ltd, are now planning to build new prochloraz TC projects. In 2012, China's total capacity of prochloraz TC is expected to reach 12 000 t/a.
   In 2010, China's actual output of prochloraz TC was around 4 500 tons, of which about 1 500 tons was consumed domestically, 2 000 tons was exported and the remaining was in stock. In 2011, the output is roughly the same as last year, but the domestic consumption and exports will be about 1 000 tons more than last year to maintain the balance between production and sales. Despite the rapid growth of domestic capacity, the demand for prochloraz TC at home and abroad grows slowly, leading to the decline of prochloraz TC prices. In 2008, the price of prochloraz TC was RMB85 000 - 90 000 /t. In 2010, despite the soar of raw material prices, environmental costs and labor costs, it dropped to RMB58 000 /t. In the first half of 2011, it was still on the downward path. Now, it lingers between RMB58 000 /t to RMB60 000 /t. Experts predict that in 2015, the domestic demand for prochloraz TC will reach 8 000 tons and foreign demand will reach 6 000 tons, so the global total demand will reach 14 000 tons. At present, the domestic capacity of prochloraz TC has exceeded 10 000 t/a, and the foreign capacity (mainly distributed in Germany, Britain, South Korea and Israel) totals nearly 5 000 t/a. By 2015, the global capacity of prochloraz TC is expected to reach more than 20 000 t/a, well exceeding the global demand.
   Since prochloraz was first used to control rice bakanae disease in China in 1993, due to its high efficiency, safety and broad spectrum, it has been widely used to control rice blast, rice sheath blight, wheat powdery mildew, wheat scab, sclerotinia rot of colza, tobacco brown spot, leaf blight of garlic, cucumber anthracnose and bananas anthrax. The expansion of its application scope can of course lead to the growth of its market demand. However, prochloraz faces intense competition and challenges from other similar products. For example, for the control of rice bakanae disease, farmers more like to use 20% (carbendazim + amobam) suspension, 901 rice seedling disinfectant and imidazole fungicides. For the control of rice blast, farmers like to use tricyclazole and its mixture as well as isoprothiolane. For the prevention and treatment of rice sheath blight, the preferred fungicides are hexaconazole and Jinggangmycin. For the control of wheat powdery mildew, farmers like to use triadimefon. In the prevention and treatment of banana anthracnose, carbendazim occupies a large market share. Compared with conventional fungicides like tricyclazole, isoprothiolane and hexaconazole, prochloraz features poor systemic induction, relatively high price and relatively high toxicity to fish, making its uses subject to certain restrictions.
   The production technology of prochloraz in China has now been rather mature. In the Chinese market, it is still a profitable product, so it can easily lead to business investment impulses. Blind capacity expansion will result in serious overcapacity, product homogenization and vicious competition. In this aspect, the lesson is very heavy. For example, in the past, because glyphosate, chlorpyrifos, abamectin and nicosulfuron were profitable, too many companies invested to produce them, leading to serious overcapacity and vicious competition. As a result, the companies suffered heavy losses. In addition, the production process of prochloraz can discharge a large amount of gaseous, liquid and solid wastes. With the strengthening of environmental management, its production cost has increased substantially. But in the first half of 2011, its price was still on a downward path. Thus, investment in prochloraz production faces great risks. In recent years, the production capacity of prochloraz has expanded rapidly, but its prices have continued to decline, export growth has slowed down, as well as there are many competitors and a lot of uncertain market factors, so it should be very prudent to invest in prochloraz production in the future.