Glyphosate-Industry

GlyphosateGlyphosate Market StudyMarket Study

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Glyphosate Market Overview

Global Market of Glyphosate

Chinese Market of Glyphosate

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Production Trends of Crops & Energy Resources

Background information of glyphosate.

Glyphosate Overview

Glyphosate is a widely used herbicide used for control of annual and perennial plants, especially effective in weed control programs. It is an organophosphate chemical compound containing carbon and phosphorous. Roundup herbicide is the first commercial glyphosate product introduced and patented by Monsanto in 1974, which since then have become the most widely used herbicide in the world.

Glyphosate is nonvolatile, water-soluble, and odorless. Glyphosate-based herbicides are broad-spectrum and nonselective. Some crops have been genetically modified to be resistant to the effects of glyphosate, allowing glyphosate to become selective in these genetically modified crops. For example, glyphosate-tolerant soybeans are an example of such a plant.

How does it work?

Most plants need growth enzyme EPSP synthase to mature. Glyphosate-based herbicides inhibit such enzyme to stop further production of proteins necessary for plant growth. As a result, plants wilt and die off due to lack of growth nutrients.

The herbicide starts its biochemistry reactions from a plant’s leaves and soft stalk tissue.


Gly

phosate

Molecular Structure & Illustration

Phosphonoglycine herbicide in acid and salt form

Chemical NamesGlyphosate; Phosphonomethyl amino acetic acid.

Commercial NamesRoundUp; Glyphomax; Expert; Razor; Landmaster.

Chinese Names

草甘膦;膦甘酸;有机磷除草剂.

The herbicide starts its biochemistry reactions from a plant’s leaves and soft stalk tissue. It is then absorbed and transported throughout the plant surface. This biochemistry pathway only exists in higher plants and microorganisms but not in animals. Since glyphosate is delivered and accumulates in actively-growing parts of the plant, no parts of the plant survive after glyphosate takes effect. In addition, glyphosate-based herbicides are only effective on actively growing plants.

Glyphosate is the most effective herbicide in the market.

Glyphosate Overview

Glyphosate Formulations Glyphosate Applications Glyphosate Toxicity

The commercial versions of glyphosate products can be either in salt or acid form. Glyphosate application are widespread and favored due to ease of application and superior levels of effectiveness compared to other herbicides. Although major suppilers of commercial glyphosate products claim their products have the lowest toxicity in the market, long-term exposure to glyphosate can still cause cancer.


• Ammonium salt

• Isopropyl amine salt

• Glyphosate acid

• Potassium salt

• Grass

• Broadleaf

• Woody plants

• Clover

• Agriculture

• Horticulture

• Silviculture

• Garden maintenance

• EPA toxicity class II

• General Use Pesticide (GUP)

• Effects of glyphosate on human health and the environment depend on how much glyphosate is present and the length and frequency of exposure







The promising global glyphosate market is dominated by a few multinational companies with the strongest R&D programs.

Global Overview

The global glyphosate market, by the end of 2008, was valued at $22.53 billion usd. Additionally, glyphosate has the dominant majority of the herbicide market in the world. Because of glyphosate’s significant market share in the crop protection sector, industry players around the world pay close attention to its sales.

Monsanto is the first company began using glyphosate as a herbicide since 1974. Many glyphosate-based herbicide products have been introduced by companies worldwide since then. However, it is those companies with superior R&D capabilities and strong distribution channels share top market shares in the crop protection industry.

Global Glyphosate Market Share by Revenue (2008)

Monsanto

18.2%Cheminova

2.1%

FMC

2.0%

Arysta Lifescience

1.7%

United Phosphorus

1.3% Others

1.8%Top three companies in the industry held nearly 50% of the glyphosate market in 2008:

Sales Revenue Market Share


Syngenta

16.6%

Bayer

12.1%Dow

11.8%

Nufarm

9.9%

BASF

7.3%

Dupont

6.4%

Makhteshim Agan

6.3%

Sumitomo

Chemical

2.5%

2.1%Sales Revenue Market Share

1) Monsanto $4.1 billion usd 18.2%

2) Syngenta $3.7 billion usd 16.6%

3) Bayer $2.7 billion usd 12.1%

Although top glyphosate manufacturers are almost exclusively Western multinational corporations, high volatility in glyphosate prices in the past couple of years has been a potent capital investment driver for small to medium-sized manufacturers around the world, especially in China. As global demand for glyphosate continues to grow and glyphosate prices rebound further from recent lows, manufacturers of all sizes are prepared to compete head-on with their upgraded production capabilities.

Glyphosate markets worldwide have experienced a roller-coaster ride in the past ten years. However, the global market shall recover steadily from its recent lows in the near future.

Global Overview

The wide spread application of glyphosate as the choice for crop weed control did not take its footing until Monsanto’s patent on glyphosate herbicide expired in 2000. Since then, both weed control effectiveness and a broad range of product availability have contributed to an accelerated glyphosate demand and sales volume since 2000. Prices of glyphosate began its steep ascend in the forth quarter of 2007. Eventually, glyphosate prices skyrocketed in the first half of 2008. Both demand and sales for glyphosate started to grow at slower paces as global capacity gradually increased over the years along with price-sensitive changes in the herbicide market. Recent recovery of glyphosate prices, along with general improvement of the overall global economy, suggests glyphosate industry growth shall continue over time. Sales for glyphosate will pick up as global demand growth rate accelerates in the next couple of years.

Glyphosate Global Sales Forecast(1997 – 2010E)

Glyphosate Global Demand Forecast(2000 – 2010E)


0.00%

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60.00%

70.00%

80.00%

90.00%

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1997 2000 2002 2004 2006 2010E

Tons Percentage Increase

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200,000

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1,000,000

1,200,000

2000 2002 2004 2006 2008 2010E

Tons Percentage Increase

Glyphosate markets in North America and Europe will be stagnant. In contrary, growth momentum in the Latin American market will remain unchanged.

Global Overview

North AmericaThe glyphosate markets in the United States and Canada are expected to experience the least amount of growth in the coming years. The North American market is highly saturated where almost all crops planted in this region use herbicides already. In order for glyphosate market to grow in this region, glyphosate products must compete head-on with other classes of herbicides. Such fierce competition will allow minimum amount of growth in this developed market. The only hope for growth is the remaining crops pending genetic modification to increase yield.

Europe

Herbicide Sales Revenue Trend in World Regions(2005 – 2015E)

[$ billions usd]

$5.0

$6.0

$7.0

$8.0


EuropeThe European glyphosate market is estimated to lead a similar trend as in the North American market. Growth will decline, but slightly stronger than in the North American market. Two major obstacles that hinder glyphosate growth in the European market are stricter environmental rules and Europe’s opposition against use of genetically modified crops.

Latin AmericaThe Latin American market includes countries such as Brazil, Argentina, Mexico, Chile, and other Caribbean islands. This market has the most potential for growth in the three regions illustrated. The glyphosate market in this region has been fluctuating around 60% of market sizes of North America & Europe. It shall grow to $6 billion usd by 2015. Demand for food and land will be the main catalysts driving growth in the Latin American glyphosate market.

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E 2014E 2015E

North America Europe Latin America

Prices of glyphosate peaked to historical highs in 2008, significantly contributing to spike in sales revenue in the same year.

All regions around the world still have a large potential for glyphosate market share growth for many years to come.

Global Overview

North AmericaSince the regional market of the United States and Canada has the most herbicide saturatation, it also enjoys the top glyphosate herbicide market share amongst its peers. Glyphosate sales boast over half of the herbicide market. This strong market position attributes to considerable increases in genetically modified crops that are resistant to glyphosate in recent years.

EuropeLow entry barrier in glyphosate herbicide manufacturing has created a large number of glyphosate manufacturers in Europe. In addition, popularity of no-till farming in Europe contributed to interests in using the non-selective glyphosate

Herbicide Market Shares in World Regions

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%


contributed to interests in using the non-selective glyphosate herbicide in crop farms. The glyphosate-based herbicides contributed 40% of European herbicide revenue in 2008.

Latin AmericaCrops grown in this region is comparable with that of North America. Market share of glyphosate in Latin America is almost identical to that in North America, about $2.3 billion usd in 2008. The Latin American glyphosate market is well-positioned for healthy growth with assistance from increasing trend in significant demand for genetically modified crops in this region.

Although glyphosate has already become a popular herbicide around the world, there is still a promising potential for its market growth.

0.00%

10.00%

20.00%

30.00%

Glyphosate Triazines Sulphonyl Ureas Others

Global North America Europe Latin America

Regional markets characteristics comparison.

Global Overview

Global Glyphosate Market Regional Summary

North AmericaNorth AmericaNorth AmericaNorth America EuropeEuropeEuropeEurope Latin AmericaLatin AmericaLatin AmericaLatin America

Number of CompetitionNumber of CompetitionNumber of CompetitionNumber of Competition 40 - 50 45 - 55 30 - 40

Types of CompetitorsTypes of CompetitorsTypes of CompetitorsTypes of Competitors

Mode of DistributionMode of DistributionMode of DistributionMode of Distribution

* Six leading multinational innovative companies* Multinational or national generic companies* Regional generic companies

* Direct product distribution* Stand-alone distributors


Mode of DistributionMode of DistributionMode of DistributionMode of Distribution

Levels of CompetitionLevels of CompetitionLevels of CompetitionLevels of Competition

Typical End-UsersTypical End-UsersTypical End-UsersTypical End-Users

Competitive AdvantagesCompetitive AdvantagesCompetitive AdvantagesCompetitive Advantages

* Stand-alone distributors* In-house sales for other regional and multinational generics

Tier 1: Majority market shares leadersTier 2: Group of companies with significant market shares, butless than those of the market leadersTier 3: Local manufacturers and market leaders

* Horticultural gardeners and nurserymen* Agricultural property owners* Farmers

* Price* Quality of products* Extensive product portfolio







Increasing domestic consumption of glyphosate is the only way to avoid any harms from over-capacity in China.

Chinese Market

The Chinese glyphosate market is characterized by an export-oriented development, with majority of demand coming from North America, Europe and Latin America. Glyphosate manufacturing capability in the Chinese market is several multiples of domestic consumption. Currently, China has the dominant position in global glyphosate supply, accounting for 70% of total market share of glyphosate worldwide.

Although China enjoys a lion’s share of the global glyphosate market, its glyphosate formulation production technology is comparatively ineffctive, causing Chinese manufacturers to sell at minimum prices in the global market. Additionally, unavailability of foreign country registrations and weak international sales channels indicate that majority of the glyphosate sales profit disappear in the supply chain before landing in the hands of Chinese manufacturers.

China Glyphosate Market Capacity and Demand (2007 – 2010E)

Chinese domestic demand for glyphosate is at its minimum compared to total capacity. It is estimated 900,000

[tons]


that by the year of 2010, total glyphosate capacity in the Chinese market will reach 800,000 tons from 400,000 tons in 2007, whereas domestic demand for glyphosate will be a disappointing 93,000 tons from 50,000 in the same time period. Capacity increases is expected to accelerate faster than domestic demand growth.

While the Chinese glyphosate market will continue to develop & global demand for glyphosate-based herbicides shall remain strong for years to come, it is important for China to accelerate its own glyphosate consumption. Domestic sales development will counter the effects of foreign market over-saturation and high price volatility in the event of global or regional downturns.

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2007 2008 2009E 2010E

Capacity Demand

350,000361,000

530,000

707,000

The Chinese glyphosate industry is highly fragmented with only a handful of sizeable players in the market.

Glyphosate Capacity by Location

• There is about 40 top glyphosate manufacturers in the Chinese market

• Majority of manufacturers in the glyphosate industry are located in the Yangtze River Delta. Top geographical locations include:

‒ Zhejiang (150,000 tons)

‒ Jiangsu (92,000 tons) Beijing

[tons]

Chinese Market


‒ Shandong (40,000 tons)

‒ Anhui (22,000 tons)

‒ Sichuan (15,000 tons)

• The actual number of total official and unregistered glyphosate manufacturers across China is several hundreds

• Tougher environmental standards and fierce competition have facilitated plant closures and consolidation throughout the industry in recent years

Beijing

Shanghai

Guangzhou

40k

92k

150k

22k

15k

Other Provinces: 63k

Glyphosate-based herbicide application in China will grow over time to become comparable to other regions around the world.

Chinese Market

Use of agrochemical in China is quite different from norms in North America, Europe and Latin America. Pesticide use in China is almost 50% of all agrochemical used in the country, whereas herbicide use is the majority in other countries. Since glyphosate-based herbicide is the most effective crop protection herbicide with lower toxicity, demand growth for glyphosate in China is very promising.

There are two main production methods for glyphosate-based herbicide in China: aminoacetic acid and diethanolamine (IDA). Only the IDA method is used by manufacturers in North America, Europe and Latin America. Production cost with the IDA method fluctuates positively with the price of oil. Raw material cost increases will also affect production cost using the aminoacetic acid method.

Agrochemical Usage Comparison(China vs. Developed Countries)

Glyphosate Production Costs in China


0%

10%

20%

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60%

Pesticides Fungicides Herbicides Others

China Developed Countries

0%

10%

20%

30%

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50%

60%

70%

Key Ingredient Phosphorous Caustic Soda Formaldehyde Others

Aminoacetic Acid Diethanolamine

Glyphosate prices are expected to be much less volatile in 2010.

Glyphosate Price Trend in China (2004 – 2008)

China won glyphosate anti-dumping case in Argentina.

Monsanto shut down a glyphosate production line with annual yield capacity of 100,000 tons in 2006 because of business restructuring and tougher environmental standards in the United States. Much of this demand was then sourced from China at lower prices than Monsanto’s original production costs.

The US Senate passed the $2.3 billion usd bill to promote biofuels program in the United States.4,000

6,000

8,000

10,000

12,000

14,000

16,000

1

1

2

Chinese Market

[$ usd/ton]

4

2

3

3

5


States.

Planned capacity expansion during the same period would reach 400k tons due to high industry margin from price increases.

Monsanto to invest $196 million usd in a Luisiana glyphosate production plant, increasing global capacity by 20%.

Monsanto announced re-opening of 100k ton production line.

Chinese domestic prices for glyphosate surpassed $14,000 per ton in the second quarter of the year.

Brazil reduced anti-dumping tax on all Chinese glyphosate products from 11.7% to 2.9%.

-

2,000

4,000

Prices of glyphosate have experienced a roller-coaster ride in the past couple of years, reaching as high as $14,600 usd per ton near mid-2008 before crashing to their average levels from previous years. Although there have been recent price rebounds, glyphosate prices are not expected to recover significantly until well into 2010.

Three main factors that will drive a healthy growth of the global glyphosate market are: increasing conversion of genetically modified crops, adoption of no-till farming and biofuels initiatives worldwide. Glyphosate-based herbicides will continue to throne the de facto status of crop protection agrochemical in many years to come.

4

5

Summary of top Chinese glyphosate manufacturers.

Company NameCompany NameCompany NameCompany Name Chinese NameChinese NameChinese NameChinese Name LocationLocationLocationLocation 2009 Production Capability2009 Production Capability2009 Production Capability2009 Production Capability Increase in Capability in 2008Increase in Capability in 2008Increase in Capability in 2008Increase in Capability in 2008 Glyphosate Production MethodGlyphosate Production MethodGlyphosate Production MethodGlyphosate Production MethodZhejiang Wynca Chemical Group 新安股份 Zhejiang 7.1 0.9 Aminoacetic AcidNantong Jiangsha Agrochemical & Chemicals 江山股份 Jiangsu 2.7 3 Aminoacetic Acid & IDAShandong Weifang Rainbow Chemical 山东润丰 Shandong 2 0 Aminoacetic Acid & IDAZhejiang Changxing First Chemical 浙江长兴 Zhejiang 2 0 Aminoacetic Acid & IDANanjing Red Sun Group 南京红太阳 Jiangsu 2 1.5 IDAAnhui Huaxing Chemical Industry 华星化工 Anhui 1.5 1 IDAJingma Chemicals 浙江捷马 Zhejiang 1.5 1 IDAZhejiang Jinfanda Biochemical 浙江金帆达 Zhejiang 1.2 0 Aminoacetic AcidJiangsu Good Harvest-Weien Agrochemical 江苏好收成 Jiangsu 1.2 1.2 IDAFujian Sannong Group 福建三农 Guangdong 1 0 Aminoacetic AcidHubei Taisheng Chemical 湖北泰盛 Hubei 1 1 Aminoacetic AcidJiangsu Suhua Group 江苏苏化 Jiangsu 1 0 Aminoacetic AcidShandong Binnong Technology 山东滨农 Shandong 1 1 Aminoacetic AcidSichuan Leshan Fuhua Agrochemical Technology 乐山福华 Sichuan 1 1.5 Aminoacetic AcidZhejiang Linghua Industry 浙江菱化 Zhejiang 1 0 Aminoacetic AcidShandong Vicome Greenland Chemical 胜邦绿野 Shandong 1 0 Aminoacetic Acid & IDAJiangsu Kuaida Agrochemical 江苏快达 Jiangsu 1 0 IDAJiangsu Anpon Electrochemical 江苏安邦 Jiangsu 1 0 IDAJiangsu Yinyan Specialty Chemicals 江苏银燕 Jiangsu 1 0 IDAShandong Qiaochang Chemical 山东侨昌 Shandong 1 0 IDA

Chinese Market


Zhejiang Biok Kaipu Chemical 拜克开普 Zhejiang 1 0 IDAHubei Sanongda Group 沙隆达 Hubei 0.6 1.5 Aminoacetic Acid & IDAJiangsu Suzhou Jiahui Chemical 苏州佳辉 Jiangsu 0.6 0 IDAJiangsu Taicang Chemical 太仓农药 Jiangsu 0.6 0 IDAGuangxi Zizhu Chemical 广西自主 Guangxi 0.5 0 Aminoacetic AcidJiangxi Electrochemical 江西电化 Jiangxi 0.5 0 Aminoacetic AcidShanghai Hujiang Biochemical 上海沪江 Shanghai 0.5 0 Aminoacetic AcidAnhui Chloro Alkali Chemical Group 安徽氯碱 Anhui 0.5 0 IDASichuan Beier Group 四川贝尔 Sichuan 0.5 2.2 IDAHebei Golhil Chemical 河北奇峰 Hebei 0.3 0.8 Aminoacetic AcidJiangsu Changshu Agrochemical 常熟农药 Jiangsu 0.3 0 Aminoacetic AcidHebei Wuhan Zhong Xin Chemical 武汉中鑫 Hubei 0.3 0 IDAShanghai Kaipu Fine Chemical 上海开普 Shanghai 0.3 0 IDAHenan Anyang Anlin Biochemistry 安阳林药 Henan 0.2 0 Aminoacetic AcidAnhui Haifeng Fine Chemical 安徽海丰 Anhui 0.2 0 IDAHebei Baoding Zhongyuan Green Agrochemical 中原绿农 Hebei 0.1 0 Aminoacetic AcidAnhui Guangxin Agricultural Chemicals 安徽广信 Anhui 0 2 Aminoacetic AcidJiangsu Yangnong Chemical Group 扬农化工 Jiangsu 0 1.5 IDA







Positive outlooks for the following common crops and energy resources indicate a confident future for the glyphosate market.

Production Trends

70,000

80,000

90,000

100,000

110,000

120,000

130,000

1990 1993 1996 1999 2002 2005 2008

Cotton(thousand 480-lb bales)

500,000

520,000

540,000

560,000

580,000

600,000

620,000

640,000

660,000

680,000

1990 1993 1996 1999 2002 2005 2008

Rice(thousand tons)

100

120

140

160

180

200

220

240

260

1990 1993 1996 1999 2002 2005 2008

Soy Bean(million tons)


19,000

20,000

21,000

22,000

23,000

24,000

25,000

26,000

1990 1993 1996 1999 2002 2005 2008

Wheat(million bushels)

4,500

5,000

5,500

6,000

6,500

7,000

7,500

8,000

1990 1993 1996 1999 2002 2005 2008

Coal(million short tons)

65,000

70,000

75,000

80,000

85,000

90,000

1990 1993 1996 1999 2002 2005 2008

Crude Oil(thousand barrels per day)

Glyphosate market study data sources.

Data Sources

United States Department of Energy

MonsantoMonsanto is an agricultural company producing leading seed as well as small-acre crops like vegetables. Monsanto also produces leading in-the-seed trait and the world's best-selling herbicide. Seeds and Genomics & Agricultural Productivity are the two main business segments.

United States Department of AgricultureThe USDA’s mission areas include: Farm and Foreign Agricultural Services; Food, Nutrition and Consumer Services; Food Safety; Marketing and Regulatory Programs; Natural Resources and Environment; Research, Education and Economics & Rural Development.


United States Department of EnergyThe Department of Energy's overarching mission is to advance the national, economic, and energy security of the United States; to promote scientific and technological innovation in support of that mission; and to ensure the environmental cleanup of the national nuclear weapons complex.

Thomson ReutersThomson Reuters is the world’s leading source of intelligent information for businesses and professionals. It combines industry expertise with innovative technology to deliver critical information to leading decision makers in the financial, legal, tax and accounting, scientific, healthcare and media markets, powered by the world’s most trusted news organization.

United States Environmental Protection AgencyEPA's mission is to protect human health and the environment. To accomplish this mission, the US EPA develops and enforces regulations; gives grants; studies environmental issues; sponsors partnerships; teaches people about the environment & publishes related information.

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