Glyphosate market in China is improving due to the rise in prices of raw materials

Jan 5th, 2017

China is strengthening the price of glyphosate as a result of price increase for glycine and paraformaldehyde, as well as growing demand from the processing industry.

Since August 2016 technical glyphosate prices have been rising. In October the price slightly declined, but in November, there was an advance in price by 22.5 %. Such dynamics suggests that the point of minimum prices has been passed and hereafter the price of technical glyphosate will strengthen.

The reason for rising prices is the increasing cost of raw materials for glyphosate production, namely the rising prices of glycine and paraformaldehyde, which is related to the reduction in government contracts. Another factor of the increase in raw material prices is the weather in Northern China that complicates logistics. About 70 % of glyphosate production is based on glycine.

More than half of the production of paraformaldehyde and glycine are concentrated in Hebei province. As an active industrial region, Hebei is facing problems of environmental pollution in the cities. Therefore, the Ministry of environmental protection of China adopted a resolution that reduces the number of industries in the province. Thus, at the end of 2016 manufacturers of paraformaldehyde and glycine have reduced the production volume, which caused a shortage of raw materials. As a consequence, such major producers as Linyi Hongtai and Shijiazhuang Donhua Jiniong increased the price of glycine, which affected the cost of glyphosate.

The price of glyphosate is dependent on weather conditions in the winter. At this time, manufacturers give special attention to the storage conditions of glyphosate and try to build the appropriate facility that leads to price development for this product. This year recovery of price for glyphosate has been caused by heavy snowfall, which prompted problems with the transportation of raw materials, leading to their deficiency. Thus, problems with logistics have forced Aerospace Hebei and Hebei Jin Taida to close down the production of paraformaldehyde. Prices of methyl alcohol and yellow phosphorus, which are also needed for the manufacture of glyphosate, rose due to rising prices for coke during the cold period.