Some Concerns Hidden Behind the Rebound of Chinese Abamectin Market
After the global largest bio-pesticides sales-abamectin experienced the growth spurt in 2007 and 2008, the Chinese market went weakness from 2009 to 2011. There were widespread underemployment pesticide manufacturers or downtime in this period. The market began to pick up in the second quarter and the prices recovered substantially which was increased to more than 40% until June, 2012. Especially after the ointment was disabled, and as the shortage stock of Chinese companies’ abamectin refined flour and the increasing market demand in China, the prices are rapidly rising. The emamectin prices are also rising, and sometimes not available. The performance of abamectin markets fluctuates between optimality and badness together with joy and sorrow. Although the performance is glory at present, its market prospects are also faced with many variables and challenges.
The Patent of Transnational Corporations Entering, Seizing the Chinese Market
The advantage of abamectin and emamectin is to prevent and control the rice leaf roller and chilo suppressalis in rice stem borer, but in this field, the patented products launched by multinationals undoubtedly occupy a big advantage. Especially the appearance of DuPont Coragen, Bayer flubendiamide, Syngenta Foggo and other varieties which will greatly compress the living space of abamectin. As the protection limitation of these imported new varieties is longer and the result is better, they become the Chinese rice farmer’s preferred pharmacy on the protection and controlling of rice leaf roller and chilo suppressalis in rice stem borer.
The market share of flubendiamide begins to increase in recent two years and Coragen came out as the supremacy of China’s insecticide market from the beginning, while Foggo rise in MERCOSUR which is widely popular. Their reputation, sales and effect is surprisingly good. By the shocks of Coragen, flubendiamide, Foggo and so on, the pesticide consumption of abamectin, emamectin and other kinds of pesticides and insecticides has lowered quickly. The use of domestic bulk routine pesticide is reduced to 20%~40% this year, while advanced imports pesticides increased in 30%~40%.
Abamectin enterprises in China are relatively dispersed and are difficult to scale up. Compared with the multinational agro-chemical companies which possess the advantages of capital, technology, brands and trade, there is still a wide gap and is also unable to compete with them.
Parasite Resistance Increasing, Shortening the Life Cycle
For many years, abamectin has been popular in the Chinese market and became the mainstream pharmacy as its broad spectrum, high effect, low toxicity and high selectivity on the pest control of rice, cotton, fruit, tobacco and other crops. As it has been used year after year, the parasite resistance is becoming strong. So the Chinese farmers reflected to the distributors that even if increasing the drug concentrations, it is still difficult to effectively kill pests such as rice stem borers, cabbage caterpillar, cotton bollworm, etc. The abamectin content has increased from the earliest 0.2% to 3% or higher. Also, the drug resistance and regionalism is very evident. At present, the abamectin effect has been greatly reduced in south area of Yangtze River in China; while in northern China, pests have shown very strong resistance. In addition, to use 1~2 grams abamectin on rice per acre will not cause harm to aquatic organisms, but if the resistance occurred, the increasing amount of preparation will pose a threat to aquatic life as the abamectin is highly toxic to fish and other aquatic organisms toxicity. Thus may cause the disabled use of abamectin on some crops.
Ointment Banned in China, Lowering the Price
Abamectin to be regarded as biological pesticides of low toxicity and high efficiency was first mainly as “noble medicine” used on high-end cash crops such as flowers which is very expensive. It becomes the bio-pesticide affordable by most farmers only after the by-product grease begun to be deployment of EC as the original drug preparation. But in order to protect the environment, the grease was disabled in 2012. The high cost of equipment and technology for the transformation of grease conducted by the companies will lead to the increasing production costs of abamectin powder. Under this consequence, the abamectin powder price of the factories has been raised currently which will cause a great deal of pressure for the emamectin production of the factories. So the emanectin price also surges from last April until now.
As the efficacy of grease is better than powder, the disabled of ointments will result in the general decline effect of the main abamectin series products on the market and products’ cost performance for farmers is greatly reduced. Under the background of the strong impact of transnational corporations’ patent product, the abamectin price is pulled down. The end result will certainly keep the abamectin market share shrinking, while the abroad pesticide products will take opportunity to occupy more pesticides markets.
Significant Expansion of Chinese Enterprises, Resulting in Periodic Oversupply
In the second quarter of 2012, the registration of Chinese enterprises’ expansion immediately fired up again when abamectin was out of market downturn. According to the statistics, the products registered by more than 400 enterprises in Chinese 28 provinces have been accumulated up to 1300. Of which the number of TC registered businesses is 14 and emamectin registered enterprises reached to 33. At present, the annual capacity of abamectin is 2500 tons, but the real output is about 1800 tons. It is expected that in the recent two years the domestic and exports demand for abamectin is about 2300 tons, so the 500-ton gap between supply and demand need to be suppressed by the increasing price. This imbalance will lead to prices soaring and substantial production expansion of enterprises, which in turn causes the bouts of abamectin supply exceeding demand. With the sharply rising price of abamectin original drug prices in early last year, it will usher in a significant expansion wave.
In this regard, industry experts warned businesses not to blindly expand production. China has about 2 billion acres arable land, of which rice about 500 million acres. The dosage of abamectin is 1~2 grams for each rice acre, again plus the abamectin application on other field and the annually hundreds of tons of export, currently china can digest the abamectin bacteria pigment capacity. But if enterprises rushing headlong into mass production, even the export volume has been increased, it also will face the capacity excess situation, the future market competition will be exceptionally fierce. Abamectin will usher in era of brutal survival with the large number of manufacturing enterprises, overcapacity and lack of variety and technology innovations.