Three Reasons: Demand for Abamectin Increasing in China
Affected by supply and demand, abamectin has been showing the trend of tight supply and price rise, which is unique phenomenon in China pesticide market. Among them, prices of abamectin ointment increase from 700 yuan/kg in December 2008 up to more than 1,050 yuan/kg at present. As abamectin’s applications continue to expand, Chinese insiders are full of optimism on the future, and some companies begin to expand capacity. But experts have warned that business expansion should be cautious and avoid price wars resulting from the overcapacity.
According to reports, abamectin original drug has been increased at the rate of about 50% per year since 1995. With capacity increasing year by year, it has become one of the world’s leading bio-pesticide products. In the current China’s market, abamectin’s status equals to methamidophos, and has become the most important variety among pesticides. According to analysts from insiders, there are several major factors stimulating increased demand for abamectin:
Firstly, derivatives represented by emamectin benzoate rapidly develop, which greatly boosts consumption of abamectin original drug. Emamectin benzoate is mainly used for lepidoptera and other pests, as well as it is the future direction of abamectin for more activity, less residue, lower toxicity and better security. Development of emamectin benzoate stimulates demand for abamectin more than 30%, so annual consumption of abamectin fine powder increases from 500 to 600 tons.
Secondly, abamectin applications change from cash crops to field crops with highly toxic pesticides disabled. Due to the high toxicity to aquatic organisms, abamectin has been forbidden from rice market in the past. In the demonstration project summing-up meeting held last year on the highly toxic pesticide alternatives, aimed at plant diseases and insect pests of rice and other six crops, experts recommended 28 abamectin insecticides as the fourth batch of five kinds of highly toxic pesticide alternatives, but also announced 56 supporting technologies for use, so abamectin was applied into the rice market at once. In 2009, many manufacturers have introduced abamectin and emamectin benzoate products in order to seize and occupy rice pesticide market.
Thirdly, abamectin dosage has increased with pest resistance to abamectin products. In 1995, 1.8% abamectin preparations were used to control pests without resistance by the dilution of 15,000 times while only 2000 to 3000 times at present in China. With the expansion of applications, pest resistance to abamectin has been increasing, especially in regional resistance.
At present, China’s abamectin production capacity reaches about 2,500 tons per year, with the actual output about 1,800 tons. In 2009, demand for abamectin is expected to continue to maintain an increase of 50%, with around 2,300 tons in demand, among which, supply and demand gap of 500 tons must be controlled by driving prices up.
It is understood that abamectin projects require large investment, long investment cycle, strict entry rules as well as fermentation technique difficult to master. With dosage increasing year by year, abamectin is in short supply situation in the year of 2004, 2006 and 2009. Imbalance between supply and demand causes sharp price rise, while manufacturers substantially expand production resulting in abamectin oversupply in stages. However, abamectin is expensive and requires a lot of money for off-season production, so Chinese abamectin manufacturers can only use low-cost sales to return the funds for normal production.