the overview of agrochemical industry in china

The Overview of Chinese Agrochemical Industry @ Davis Chen

Chia-yi Chemical Industry Corporation

1

CONTENT

Overview of Agrochemical Production & Export

Overview of Companies Manufacturing Active Ingredient

New Agrochemical R&D

Illegal Manufacturing

Outlook on the Future Market

Overview of Agrochemical Production & Export

01 Total Agrochemical Production During 1995-2010 Total Agrochemical Export During 1995-2010 Major Export Products

Total Agrochemical Production During 1995-2010

The production of Active Ingredient in 2010 reached 2.34 million tones, increased by 20.4% on year-on-year basis.

0

300

600

900

1200

1500

1800

2100

2400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

648 696822 822 863

1,039

1,296

1,7361,902

2,262 2,342

(YEAR)

(Unit: Kilotons)

1-1

4

Total Agrochemical Export During 1995-2010Sixteen Years’ Spectacular Export Growth Export volume exceeded imports for the first time in 1994, and since then, rapid export growth has continued. In fact, during the 16-year period as illustrated below, export volume increased tenfold to 613,000 tones in 2008, accounting for around 40% of the industry’s total output.

0

100

200

300

400

500

600

700

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

162192

222274

391428

398

477 485 508

613

(YEAR)

(Unit: Kilotons) [ Total Chinese Agrochemical Export Volume ]

1-2

5

Total Agrochemical Export During 1995-2010

0

314.286

628.571

942.857

1257.143

1571.429

1885.714

2200

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

463 541 592730

1,191

1,400

1,040

1,350

2,020

1,353

1,770

(YEAR)

(Unit: Million USD)

[ Total Chinese Agrochemical Export Value ]

1-2

6

Total Agrochemical Export During 1995-2010Main Export market: Asia and Latin America are the main export markets. With the rapid growth of herbicide application, it is noteworthy that exports to the United States, Japan and Western Europe have prospered in recent years.

JAPANUNITED STATESWestern EU

1-2

7


0

26

52

78

104

130

United States

Thailand

Ukraine

Australia

Russia

Indonesia

Vietnam

Uruguay

Israel

Nigeria

41.943.143.244.845.753.3

61.364.2

117.6127.1

(Nations)

(Unit: Millions USD)

[ Top 10 Export Markets, 2008, Herbicides]

1-2

8


0

5.2

10.4

15.6

20.8

26

Vietnam

Thailand

Indonesia

Ukraine

Bengal

Brazil

United States

Turkey

Belgium

Colombia

6.87.27.78.28.59.810.6

11.811.8

25.9

(Nations)


[ Top 10 Export Markets, 2008, Fungicides]

1-2

9


0

10

20

30

40

50

Vietnam

Pakistan

Thailand

United States

Korea

Indonesia

Japan

Philippines

South Africa

Ukraine

141515151619

22

34

39

47

(Nations)


[ Top 10 Export Markets, 2008, Insecticide]

1-2

10


China is able to produce 600 more active ingredients now.

ClethodimGibberellic Acidlambda-cyhalothrinCartap

MetolachlorEthephonAluminium PhosphideAcetamiprid

ParaquatTebuconazoleChlorpyrifosDimethoate

AtrazineCarbendazim2,4-DCarbofuran

ClopyralidChlorothalonilAbamectinProfenophos

DicambaPropiconazolMethylaminoavermectinCypermethrin

GlyphosateMancozebDiazinonFenitrothion

1-2

11

Agrochemical Products Structure Adjustment

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

1995 2000 2005 2010

11% 11% 10%7%

15%18%

29%

45%

70%

61%

42%

32%

InsecticideHerbicideFungicide

(YEAR)

(Market Share)

[ Ratio Change of 3 Types of Pesticides during 1995-2010 ]

The ratio among insecticides, fungicides and herbicides was optimized continously and underneath table shows this distinctive change.

1-3

12

Agrochemical Products Structure Adjustment

0

20

40

60

80

100

120

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20106.9 6.7 8 9.1 10.5 11.2 13.7 17.2 19.6

2416.6

12.217.3 20.4 23.1

33.242.2 45.5

58.2 61.6

81.1

112.7

39.7 41.245.9 47.8

42.5 43.450.5

6065.8

79.774.6

InsecticideHerbicideFungicide

(YEAR)

(Unit: Kilotons)

[ Total Agrochemical Outputs by Class in China during 2000-2010 ]

1-3

13

Overview of Companies Manufacturing Active Ingredient

02 Total Number Distribution Size Management Consolidation

Total Number of Agrochemical Manufacturer in China

There are currently over 1800 agrochemical companies in China, among which only around 450 actually manufacture active ingredients, and the rest are all formulators.

2-1

15

Distribution of Manufacturers in China

[ Distribution of Manufacturers in China ]

2-2

45%

5% 8%9%

10%

23%

JiangsuZhejiangShandongHebeiHenanOthers

Jiangsu is the largest agrochemical production.Shanghai and Guangdong are also two important areas for agrochemical export, where there are more foreign trade companies than manufactures, as they have a pool of excellent foreign trade talents. 16

Size of Agrochemical Manufacturers in China 2-3

300+Sales Value over USD 10 Million

200Sales Value over USD 100 Million

28Export Value over USD 30 Million

[ Size of Manufacturers in China Including Domestic Sales & Overseas Sales]

17

Business Administration & Management 2-4

Many good companies have adopted DCS in all their plants, which not only ensure production safety but also higher the yield.

18

Consolidation 2-5The government has realized the scattered industry is not good for the sustainable development of China‘s agrochemical industry for several years.

The Pesticide Industry Policy lately issued in September states the government aims to have 50% ofagrochemical manufactures operating from designated chemical industrial parks by 2015, increasing to 70% by 2020. By 2015, the number of the companies should account for at least 50% of annual agrochemical sales, reaching 70% by 2020.

More big and strong players have speed their expansion thru acquisition. They are not lacking money any more, for they can finance capital easily from market. Eg. the largest formulator in China NOPOSION Pesticide. Since its going public in 2008, it has bought 20 more companies in different provinces, and with the accelerating of merger and expansion, NOPOSION gets more positive supplements in products structure and region coverage.The sales figure is only 1 billion USD before 2007,but now the figure has doubled more in 2010.

From the Political Side

From the Market Side

19

New Agrochemical R&D

03

New Agrochemical Research & Development

Since the reform and opening-up, China has started to establish its own national innovation centers, and two R&D institutions have been set up in North and South of China, respectively. China also has made great progress in technology improvement and innovation since 2003, there have been 30 new compounds developed by the industry.

The policies lately published, like the “12th Five Year Plan”, has showed the government's unprecedented passion to encourage innovation and advocates “changing the capacity driven economic development model to innovation driven model”.

During the “Eleventh Five-Year Plan”, 34 varieties of agrochemicals with intellectual property rights have obtained registration certificates, and the accumulated market income exceeded 1.909 billion Yuan.

21

Illegal Manufacturing

04

Combating Against Illegal Manufacturing

In recent years, we are receiving more and more complaints from our members, overseas companies and our counterparts in different areas that many bad quality products from China bring them big troubles.

Collusion between importers and Chinese illegal manufactures!

23

Measurement Against Illegal Manufacturing

Verify and combat against illegal manufacturing activities, aiming to eliminate the counterfeit agrochemicals from the origins

Improve supervision system of agrochemical industry and clearly stipulated the enterprises who are manufacturing agrochemical for export, must obtain production approval, and meet the environmental requirements ( exporters can avoid some supervisions easily under the previous rule ).

Promote Legal Manufacture List to related authorities in other countries.Conduct credit evaluation of pesticide companies,promote credit awareness in this industry

24

Outlook on the Future Market

05

Outlook on the Future

Land Reform will drive greater consumption of agrochemicals domestically. More rigorous environmental requirements for manufacturing facilities eliminate many weak companies, and at the other side, advantageous company is easy to get capital from market to buy other companies, which together will surely speed the industry consolidation.

Industry-sponsored working groups aim to stabilize supply of key actives (glyphosate, imidacloprid, paraquat, abermectin, 2,4-D).

26

Outlook on the Future

Rebate programs are intended to create more branded formulations for export versus technical actives.

Greater interest in fungicides of farmers will increase the ration of fungicide among the total agrochemical output.

Marketing of the self explored new products in the oversea marketing is to be increased and see the achievement within several years.

27