With the global alleviation of COVID-19 as well as the sustained economic recovery in China, the chemical industry in China has entered into a boom cycle. In particular, main chemical products from Hubei Xingfa, such as glyphosate, silicone, and dimethyl sulfoxide have shown a significant increase in market price. Facing favorable market opportunities, the company has scientifically organized production and operation, formulated flexible sales strategies, and achieved a record high in the first half of the year. In the first half of 2021, Hubei Xingfa achieved sales revenues of USD1.52 billion (RMB9.85 billion), up by 5.48% YoY. Net profits attributed to shareholders of the listed company surged by 730.05% YoY to USD176.46 million (RMB1.14 billion).
Glyphosate is the most widely used herbicide in the world, accounting for approximately 30% in the herbicide market in the world. In 2020, the global glyphosate production capacity was about 1.1 million tons. There are about ten glyphosate manufacturers in the world, and the American company, Monsanto, annually produces 370 thousand tons of glyphosate. The remaining capacity is mainly concentrated in China.
Glyphosphate is primarily synthesized with a
glycine method or an iminodiacetic acid IDA method. Many enterprises in China
mostly use a glycine method to produce glyphosate. With the increase in
planting area of genetically modified crops, and with other herbicides
leaving the herbicide market, such as paraquat, glyphosate will become an
irreplaceable product, and the market demand for glyphosate is estimated to
Hubei Xingfa with large profits and growing strength in glyphosate industry
Hubei Xingfa’s subsidiary company, Taisheng, currently has a 180 thousand ton annual glyphosate production capacity, and the scale of Taisheng’s production capacity ranks first in China. Another one of Hubei Xingfa’s subsidiary companies, Inner Mongolia Xingfa, currently has a 50 thousand ton annual glyphosate production capacity, with a plan to increase to 230 thousand tons of annual glyphosate production capacity by the second quarter of 2022.
Taisheng has significant advantages over other companies in terms of raw material. Without relying on external resources, the company still has self-supporting annual glyphosate production capacity of 100,000 tons. Taisheng and its subsidiary companies also have large-scale yellow phosphorus production capacity, which can supply nearby consumers. Hydrochloric acid, which is a side product from the organosilicon devices in the industrial parks of Yichang, is also necessary during the production of glyphosate. In addition, the organosilicon devices can effectively consume methyl chloride created by glyphosate, which can reduce the environmental risks associated with glyphosate.
In the first half of 2021, due to the
continuously strong demand in the overseas market, the prices of yellow
phosphorus, acetic acid, glyphosate and other raw materials from China have
continued to rise sharply. The price of glyphosate reached to nearly RMB 50
thousand per ton including tax.
Hubei Xingfa to increase presence in silicone market
In recent years, the silicone industry in China has developed quickly with increasing demand in the industries of architecture, vehicles, electricity, alternative energy, and communication electronics. In 2020, the global organic silicon monomer production capacity was about 6 million tons, of which nearly 60% of the production capacity is distributed among about 10 companies in China.
Hubei Xingfa’s subsidiary company Hubei Xingrui currently has the capacity to produce 360 thousand tons of silicone monomers per year, and its another subsidiary company Inner Mongolia Xingfa plans to reach an annual production capacity of 400 thousand tons by June 2023. After the completion of this project by Inner Mongolia Xingfa, the competitiveness and market influence of Hubei Xingfa in the silicone industry will be further enhanced.
For more information on China’s glyphosate market, please check our Glyphosate China Monthly Report.