Thailand is getting closer to ban the pesticides paraquat and chlorpyrifos, due to safety concerns. As the list of banning countries grows, Chinese manufacturers, who are heavily dependent on exports, have to consider their destinations carefully and adjust on time.
According to Agribusiness Global, Thailand has done the next step in banning the use of paraquat and chlorpyrifos, when the Ministry of Public Health together with some NGOs have called for governments back-up in supporting the ban by 2019. However, some backwind already came from the Department of Agriculture by claiming the proposed time of effect by 2019 would be too tight to be realistically achievable.
The currently existing licenses of the two pesticides will run out in 2019 and cannot be renewed again. As a result, from 2019 onwards, paraquat and chlorpyrifos will be prohibited to use in Thailand.
Paraquat is already banned by more than 50 countries around the world due to its high toxicity, as already a small amount of consumption could kill a human being. The herbicide is also known to afflict severe damage to the environment.
China is the worldwide largest exporter of pesticides, supplying countries all around the world with comparable cheap agrochemicals. The main export nations are Brazil and the USA. As more countries are proposing the ban of a growing number of pesticides for usage for their farmers, China’s manufacturers have to be careful in keeping up with the development in their main destination.
Paraquat is the second most exported pesticide from China, while Chlorpyrifos is the sixth most exported pesticide. Together they had a share of 18% of the top 10 exported pesticides from China in 2016. To be noticed, Glyphosate alone already had 47% of the total share.
Of the export destinations for Chinese pesticides, Thailand was ranked number 8 in 2016, following other South-Asian regions like Vietnam and Indonesia. In general, South-Asia is the major destinations for Chinese pesticides, due to the high proportion of agriculture and booming economies. The share of Thailand for in the 10 largest export destinations has been over 6%. However, the export volume to Thailand had declined in recent years, which shows the diversification of China’s exports and lessen the dependence on single markets like the Thailand market. Hence, an import ban of certain pesticides like paraquat and chlorpyrifos to Thailand will only affect Chinese manufacturers to some small extent in the long term, even they highly dependent on exports.
Paraquat situation in China
China's paraquat consumer market will change greatly in the future. Because of its fatal toxicity, paraquat is being restricted by the Chinese government on the domestic market now. The new policy regarding restrictive management measures for paraquat in China has greatly impacted demand for paraquat in the domestic market and will continue to do so going forward.
After the announcement to ban paraquat AS in 2012 and the actual implementation on July 1, 2016, China government has now revealed to prohibit the use and sales of any paraquat formulation in China by September 2020. As a result, export will be the only remaining option for Chinese paraquat manufacturers to sell their products.
According to market intelligence firm CCM, China is the largest paraquat producer worldwide, with a capacity and output that share about 80% of the world's total. Besides, it is also the largest paraquat supplier and exporter based on advantages in technologies, environmental production, costs and equipment.
Earlier in 2017, also China’s neighbour Vietnam has announced to ban paraquat as well as 2,4-D from the market. Taiwan is another region announced to ban the herbicide. The ban will come to effect on February 2019. The announcements of both governments are likely to affect China’s paraquat exports since Taiwan and Vietnam are both one of the leading export destinations for China’s paraquat. In the first four months of 2017, Vietnam was the third largest importer of Chinese paraquat, while Taiwan was on the seventh rank.
Prospects for paraquat formulations in the Chinese market are not optimistic. As of May 2017, there was only one valid registration for paraquat non-AS formulations in China which will be expired in Sept. 2018. The solicit opinions manuscript issued by the MOA on May 9, 2016, had primarily affected the activity of paraquat non-AS formulations' promotion in the domestic market and technological development, marking the end of the era of paraquat in the local market after Sept. 2020.
Chlorpyrifos situation in China
Chlorpyrifos is one of the main insecticides for export in China. According to CCM, the market price of chlorpyrifos TC remained stable in the last week of July in China and is predicted to go down in a short period. There was heavy pressure on technical producers, and the intermediate was still under tightened supply. However, some producers reported downward market prices.
In H1 2017, chlorpyrifos had a tightened supply, which was aggravated by increasing demand in early 2017 and the prices significantly increased. Then, the price slightly decreased as the slack season for chlorpyrifos came and the total supply increased. However, the price was still comparable high. Besides, the supply of chlorpyrifos raw materials also tightens, which is predicted to remain in H2.
In terms of price, it rose by as much as 50% YoY. This was due to a tightened supply and increasing raw materials prices. The price is predicted to remain high for the foreseeable future.
The ban of chlorpyrifos was also proposed in the USA recently, as several senators called for the Environmental Protection Agency in the country to conduct a review of research on the harmful effect the insecticide have on different groups. If the review shows any people are being exposed to a harmful level of chlorpyrifos, the EPA must either suspend or revoke the registration, within three months.
CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets.
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