By CCM – The imidacloprid technical price in China is on an immense surge in the beginning of 2017. According to CCM’s research, the main reason can be found in the tight supply of its raw materials, which will not rise significantly in the near future.
After hovering at a low level during the first two-third of 2016, the price of imidacloprid technical began to rise in August of last year. The growth was very steady up to the beginning of the year 2017, where the price rise showed a large increase in the first days of the new year.
As a fact, several insecticides in China experienced a price rebound in 2016, including nicotinoids as well as biological and organophosphorus insecticides.According to CCM, the price trend of imidacloprid 97% technical has witnessed a year on year growth of more than 30% in the first half of January and a month on month rise of 10.35%. The average price in the beginning of January was USD18,625/t.The reasons for the low price of imidacloprid during the last years in the first place has been a huge overcapacity of this insecticide , which could not meet sufficient demand in the world market. Chinese producers expanded the production of imidacloprid in 2013 by more than 10,000t/a to 30,000t/a, while the global demand kept remaining somewhere over 20,000t/a.
Reasons for price rebound
The rebound of the price occurred in the last third of 2016, which can be mainly explained by a tightened market supply together with the surge of production costs, due to shrinking supply of upstream products.The tightened market supply of imidacloprid technical in China is the result of China’s overall effort to reduce overcapacity of pesticides, which is a part of the Zero Growth of Pesticide Utilization by 2020 plan. In addition, heavy pollution in several provinces in China throughout the year 2016 have led the government in China to implement stricter environmental protection rules and laws, which forced many insecticide producers in China to cut or limit their production. All these measurements led to the tightening supply of imidacloprid in China.
The other reason for the price rebound is increased production costs. On the one hand, the prices of some raw materials have surged, due to the environmental measurements of China’s government, which led to reduced production. On the other hand, paraquat AS was banned in China in July, which led to a huge production slowdown of pyridine and its by-product CCMP. CCMP however, is one of the main raw materials used for the production of imidacloprid. Hence, the supply of raw material is shrinking, which rises the purchase prices and therefore the production costs for imidacloprid manufacturers.
Outlook
The reasons for the price surge in January 2017 are mainly due to the supply cut in Shangdong province, a region that is very important for China’s pesticides manufacturing, which was the target area of environmental inspections recently.
Furthermore, the holidays in China during the Spring Festival have prevented the insecticides industry from increasing production again. Hence, CCM predicts, that the price of imidacloprid is going to rise further in the short run, due to the remaining tight supply of raw materials.
In the long run, a recently revealed proposal of banning imidacloprid in Canada by Health Canada may have a significant impact on the world market of this widely used insecticide. Imidacloprid is one of the most popular insecticides in Canada and worldwide, mainly used for corn and canola plants. It is quite controversial, though because the insecticide is linked to several bee colony losses and is considered as a threat to the ecosystem in Canada.
Nowadays, China is one of the biggest exporters of imidacloprid in the world and therefore heavily dependent on the world market development. More than half of China’s output of this insecticide is used for the export in the world market. Hence, China’s producers have to keep aware of the demand situation globally and be able to adapt their production and strategy foresighted.
Source:news.agropages
