Glufosinate Is Driven by Multiple Points, And Industry Expansion Needs to Be Cautious

Glufosinate is a broad-spectrum contact killing herbicide with a white crystal appearance and is easily soluble in water, which can inhibit plant synthetase, interfere with plant metabolism to cause death. It has the advantages of broad-spectrum, high killing, low toxicity, and low environmental pollution.

As early as the mid-1970s, Hearst successfully synthesized glufosinate. After being introduced to the market in the mid-1980s, the sales of glufosinate have not been ideal. With the rapid promotion of genetically modified crops in the 1990s, the glufosinate market has rapidly developed. At present, Glufosinate has become one of the three major non-selective herbicides in the world together with glyphosate and paraquat.

Global Market Analysis of Glufosinate Industry

With the promotion and application of transgenic technology, glufosinate has become the world's second-largest herbicide for genetically modified crops. According to statistics, the market size of glufosinate reached 920 million US dollars in 2019, ranking No. 2 among herbicides. The compound growth rate of the global market in the past 6 years was 6.16%, which is the fastest-growing non-selective herbicide. The sale of glufosinate is expected to exceed the 1 billion US dollars in 2020.

In terms of production capacity, the global glufosinate production capacity in 2019 was 40,600 tons, with an average compound growth rate from 2014 to 2019 was 43.2%. The production capacity is mainly distributed in Germany, the United States, China, and India.

In 2019, the global production capacity of glufosinate was about 42,000 tons. Among them, China's glufosinate production capacity accounts for the largest proportion, reaching about 60%. Other major producers include France, Germany, and India. Judging from the average annual price fluctuations in the past ten years, the highest price of glufosinate technical material appeared in 2014, which was 315,000 yuan per ton. And there were two low points, 117,000 yuan per ton in 2016 and 98,000 per ton in 2019.

GMO-Resistant Crops Become the Primary Driving Force for the Growth of Glufosinate

Since 1995, glufosinate-resistant and multi-resistant genetically modified crops have been promoted and applied. International companies including Aegfor, Aventis, Bayer, DuPont Pioneer, and Syngenta have jointly developed glufosinate-resistant crops and successfully commercialized them, especially in field crops such as soybeans, rape, and cotton, with a high penetration rate. In the next 5 years, genetic modification will be the largest growth point in the demand for glufosinate, with a CAGR of 22%.

The Banning of Substitutes Is A Secondary Growth Point for the Growth of Glufosinate

In 2018, the market share of non-selective herbicides accounted for 95% of the total non-selective herbicides, including glyphosate, paraquat, glufosinate, and diquat.

However, paraquat has been banned by many countries due to its toxicity. China, Brazil, and Thailand have explicitly banned the progress. After September 25, 2020, China completely bans its sales and use.

Glyphosate has been questioned due to root damage and resistance. Diquat's poor weeding effect has problems with rejuvenation. Global demand for glyphosate has been frustrated. In 2019, the global demand for glyphosate hit a nearly seven-year low, compared with the demand in 2015. The volume peak dropped by more than 8%, and the demand was shrinking.

The use of glufosinate is sprayed on the stems and leaves of plants, which can be quickly absorbed into the plant body. The herbicide is fast and the grass control time is long. The glufosinate sprayed on the soil surface can be quickly decomposed by microorganisms, which will not affect the non-target organisms. Therefore, the prohibition of paraquat and glyphosate is mainly beneficial to glufosinate.

The Application of Glufosinate and Glyphosate Compound in Traditional Fields Is Another Growth Point of Glufosinate

The use of glufosinate and glyphosate in genetically modified crops is a long-term growth point in the future. Glyphosate is the world's largest herbicide that has been used for many years. The problem of glyphosate-resistant weeds has become increasingly severe due to long-term application. The cost of applying glufosinate alone is higher, but glufosinate and glyphosate Phosphine compounding can well solve the problems of cost and application effect. Most of the approved glufosinate/glyphosate compound formulations have a content ratio of 1 to 5.

China has a huge production capacity of glufosinate, but many of them are backward in technology and pollute the environment. As the environmental protection policies become more stringent, some backward companies in the glufosinate industry may be shut down, or have a low operating rate, and the overall effective production capacity of the industry is relatively small. The leading companies in the glufosinate industry in China, such as Lier Chemical, Shandong Yisheng, and Yongnong Biological, have become increasingly competitive, and the glufosinate market is gradually moving closer to the leading companies.

The leading domestic and foreign companies of glufosinate are Lier Chemical and BASF. In 2019, BASF's glufosinate production capacity was 12,000 tons, accounting for 27.8% of the total global production capacity. The production facilities are located in Frankfurt and Michigan, USA. In the same year, Lier Chemical's total production capacity was 12,000 tons, accounting for 27.8% of the world's total production capacity.

Benefiting from the increased resistance of weeds to glyphosate, the ban on the use of paraquat, and increasingly stringent environmental protection policies, China's glufosinate industry has ushered in development opportunities, in which the market scale will continue to expand rapidly. At this stage, the domestic glufosinate industry is prosperous, but it is worth noting that the industry needs to be alert to the crisis of decline in corporate profitability caused by overcapacity since the amount of capital entering the layout continues to increase due to the high profit.