Outlook for China’s Pesticides Market 2018, Golden Times for Overseas Traders

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Publish time:12/28/2017 12:00:00 AM      Source: CCM
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China’s pesticides market will continue growing in 2018, driven by updated processing technology and market consolidation. Large enterprises will profit the most in 2018 and more pesticides are getting banned. Foreign traders of Chinese pesticides will face good opportunities to bring the products under trusted brand names to international markets and benefit from the growing demand worldwide.


 


According to market intelligence firm CCM, the pesticides industry in China will continue rising in 2018, supported by the elimination of further excessive production capacity and outdated enterprises. This will lead to an upgrading of the industry domestically and enhance the competition in international pesticides markets. 


Overall, China's pesticide use has dropped in the past three years constantly. The middle kingdom has announced in 2015 the goal to achieve zero growth in the number of pesticides used by 2020, and, according to official reports, it has already seen negative growth over the last three years, likely to continue in the future. 


It might be only a matter of time for the second round of price hikes to arise throughout the Chinese pesticide technical market, given the tightening market supply, increasing global demand, and supports from the new pesticide policies in the country. After all, Chinese pesticide producers have been facing increasing production costs in China, which results from the increased environmental pressure by the government, conducting regular inspections.  


Environmental regulations have posed significant impacts on domestic pesticide industry in 2017. China's environmental policies always work well in regulating the market. Stringent administration helps cut out small-sized or even unlicensed producers and favours the development of leading enterprises.  


Since H2 2016, the central government has started four rounds of environmental inspection across the country. This will help eliminate outmoded capacity and enterprises that have substandard environmental protection equipment or unable to afford environmental equipment upgrading. As a result, the supply side will be further optimised. 


What’s more, by 2025, hazardous chemical producers that do not meet safety standards have to move into designated industrial parks in China or shut down their facilities. This regulation is likely to affect the supply of pesticide intermediates in China for 2018, as small- and medium-sized enterprises, as well as large enterprises with major potential risks, have to start relocation before 2018 and finish before the end of 2020, according to CCM’s research. 


Large enterprises will shine in 2018

The year 2018 will benefit the Chinese pesticides manufacturers that already have upgraded their production processes and are in possession of a highly integrated supply chain, able to generate their needed raw materials by themselves to avoid high purchase costs. 


Hence, leading enterprises in this industry are going to have more power in the market as environmental inspections and safety inspections become a normal routine in the foreseeable future. The main advantages of large pesticides enterprises are the self-sufficiency in raw materials and the resulting independence of market voluntarily, the implementation of new national standards for pesticides to fight fake and counterfeit products, as well as big overseas markets with growing demand and already existing clients. 


Two new pollution laws in 2018

On January 1, 2018, the Water Pollution Prevention and Control Law will be enforced officially. Besides increasing some rules and improving related contents, it also strengthens the punishment of illegal water emission. Minor violation will be fined with production suspension and monetary fines, for a severe violation, the business may be shut down.


 


On the same date, China’s first Environmental Protection Tax Law of the People’s Republic of China will be enforced. So far, the applicable tax standards have been determined across the country and levies are ready. After the policy implementation, enterprises with air and water pollutant emissions will be affected negatively. According to the law, enterprises, institutions and other business operators shall pay taxes if they directly discharge taxable pollutants into the environment. 

 

More toxic pesticides will be banned

All highly toxic pesticides should be banned in China within five years. According to CCM, there are 12 high-toxicity pesticides now in China. The government looks to improve the safety of its farm produce with this measurement. 


As a fact, China has already withdrawn 22 highly toxic pesticides from use so far, and it prohibits the use of any such products on fruit, vegetables and tea. 


Three pesticides will be banned in the coming year, namely aldicarb, phorate and isocarbophos. However, the bans will likely have limited impact on the industry, as the pesticides marked for phaseout comprise only a very low percent of annual pesticide production in China.

 

China may be aiming to achieve more regulatory alignment with the European Union as a way to make trade easier between the two economies. 


Huge opportunities for foreign traders of Chinese pesticides

According to CCM, China’s pesticides industry is facing a bunch of challenges that will continue to put pressure on enterprises in 2018. Overall, the recovery of the global economy will still be a major support to domestic supply.


As China is the largest pesticides exporter worldwide, the country is depending highly on the development of global markets and the demand for agrochemicals. Especially small enterprises have an uncertain future in China, not able to update their production and waste disposal technology to the required standards and lacking overseas clients for sufficient profitably of their sales. Hence, mergers and acquisitions will continue throughout China’s pesticides companies in 2018. 


Due to the low quality of Chinese pesticides formulation and high barriers to enter overseas markets with own pesticide brands, traders are still one of the main purchasers of Chinese pesticides, mostly pesticides technical, to process them into higher quality pesticides formulations and sell them under well-established brands in their respective markets. 


Hence, foreign traders have a great opportunity to collaborate with Chinese pesticide manufacturers and sell their products under local names. Especially traders with a good distribution network can profit highly from bringing the Chinese products in the local market, creating a win-win situation for Chinese manufacturers and themselves. 


Notably, China may be aiming to achieve more regulatory alignment with the European Union as a way to make trade easier between the two economies.


About this article

More information on this article and China’s pesticides market can be found in CCM’s Newsletter and industrial reports. CCM is China’s leading market intelligence provider for the fields of agriculture, chemicals, and food & feed. 

 

You can find comprehensive market research in CCM’s pesticide database as well. Please click on the links to check the different services of CCM or contact the team directly by emailing econtact@cnchemicals.com or calling 86-20-37616606.


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