Feature: Prothioconazole bringing 3-year profitability to Chinese companies, followed by fierce competition (PART 3)

This article is initially published in 2024 China Pesticide Industry Watch magaznie , click to downlowd 

Prothioconazole is a broad-spectrum Triazolethione fungicides developed and launched by Bayer in 2004, which is of good systemicity, excellent protective and eradicative activity, long lasting and yield increase effects. Prothioconazole is widely used in plantation of wheat, soy, rape, rice, peanut and sugar beet, with excellent effect of control of almost all cereal fungal diseases, such as powdery mildew, gibberellic disease, sheath blight and rust, as well as control of rape and peanut soil-borne diseases and major foliar diseases like gray mold, brown spot, black spot, rust and black shank.

Structural Formula of Prothioconazole

Bayer’s compound patent expired in 2015 in most countries including China, where its vulcanization process patent also expired in 2018. In addition to the compound patent, prothioconazole is filed with the crystal form patents CN1680390A which expired on July 22 of 2022 and CN1681390B which expired on July 9 of 2023. Also, Maxim (now ADAMA) owns its crystal form patent CN200980122730, which will expire in 2029. Furthermore, Bayer has developed a number of prothioconazole-based formulations, all of which are covered by the EU Supplementary Protection Certificate (SPC) with the longest one having been extended until 2027.

Vigorous Growth of Global Prothioconazole Market

Prothioconazole has developed rapidly since its market launch, with prosperity in both supply side and demand side, which promise a positive trend of growth. Since 2013, its market position becomes higher and higher, having now become the second largest fungicide variety on the market and the first largest fungicide variety for application to cereals. According to data of Phillips McDougall, the global market value of prothioconazole has for many times exceeded US$1.2 billion in recent years, especially its arrival at the maximum global export value in 2023, beginning from the sharp increases since 2021. 

As shown by the trend of export of prothioconazole (Figure 1), the global export of prothioconazole began to increase in 2021, especially in 2023 when export of prothioconazole soared to nearly 7,000 tons. From 2012 to 2023, according to the trend of import and export of prothioconazole technical (Figure 2), up to 2023, the global prothioconazole technical material exporting countries were mainly Germany, China, Belgium, India, Israel and the Netherlands. It shows that Germany, where the original manufacturer is located, assumed majority of export of prothioconazole technical material. Before 2021, the export of technical material from China was relatively small, but from 2021 the export of technical material began to increase, especially in 2023, when export of technical material overtook Germany to become the world’s largest exporter of prothioconazole technical. The U.S. market and Latin American market are the main markets for application of prothioconazole. The figure 1 and 2 reveals that the importing countries of prothioconazole were mainly the United States and Latin American countries including Brazil, Argentina, Paraguay and Colombia. It is worthy of note that Brazil’s import of prothioconazole has increased rapidly in the last two years, overtaking the United States, attributable possibly to multinational’s active development of the prothioconazole market in Brazil in the last two years. 

Comparing the global export of prothioconazole technical with the export from China (Figure 3), the trend is quite consistent. Since around 2012, China has taken up the production of prothioconazole and continued to export its technical products. Beginning from 2021, China’s prothioconazole technical material export has increased significantly, which is expected to continue more significantly in the future with the gradual production run of the new capacity launched by Chinese manufacturers in the last two years.

Vibrant Development of Prothioconazole Industry in China

With the expiration of prothioconazole’s compound patent in China, the Chinese companies have started or increased the process of product registration, production layout and marketing of prothioconazole. According to the China Pesticide Information Network, up to now, there are 39 valid prothioconazole registrations in China, including 28 technical material registrations held by Hailir, Jiuyi, CAC International, Hebei Xingbai, Udragon, Shunyi, GREATCHEM, Lier Chemical and Xinyinbang. In terms of formulations, Hailir, Jiuyi, CAC International and Liyang Chemical have obtained registration of prothioconazole single agent/formulations in several types such as SC, OD and the EC for export. So far, these products are approved mostly for application to wheat and peanut crops for prevention and control of wheat scab, powdery mildew and rust as well as peanut southern blight. 

Technical material capacity expanding rapidly, a total of 56,700-ton capacity announced

The production layout and industry development of prothioconazole in China have progressed rapidly, with new capacity being put into operation by many enterprises including Hailir and Jiuyi. Among them, Hailir owns registrations of prothioconazole technical, several single agent and formulations in China. In 2019, Hailir was the first several Chinese enterprises granted registrations of prothioconazole technical and formulation as well as being granted independent or cooperative registrations in other countries including the EU equivalence determination and the independent registration in Brazil. In September 2020, Hailir’s annual 2,000-ton prothioconazole technical project was brought on stream, followed by trial run of its annual 3,000-ton prothioconazole technical project in December 2022; the Phase II of Hengning includes a production capacity of annual 8,000 tons of prothioconazole, with an envisaged future annual production capacity of 13,000 tons in total. Going forward, with the gradual increase of production capacity, China’s overseas market share is expected to expand rapidly. In March 2023, Jiuyi announced a fundraise of RMB938 million yuan for spending on synthesis of prothioconazole technical, which will facilitate the company’s prothioconazole production capacity to reach annually 5,000 tons, upon completion of the project.

Prothioconazole is still a blue ocean market in China, which is not completely saturated yet, in which lots of enterprises have made production layout over the last two years. With the gradual increase and the production run of new capacity, the price of prothioconazole technical has started to constantly decline, which was down 76% over June 2017 (Figure 4). From this product, the Chinese companies enjoyed 3-year highly profitable operations. However, with the significant expansion of production capacity, the market will be a crowded market and competition will be intensified. 

Newbuild of capacity of prothioconazole is currently still in the process. In the last two years, head companies including their subsidiaries, such as Hailir, Jiuyi, Hebei Xingbai, Lingang Chemical, CAC International, Rainbow and Xingfa have announced newbuild of prothioconazole technical capacity. According to the incomplete statistics of AgroPages, the total announced newbuild of capacity reaches 56,700 tons (Table 1).

Key intermediates capacity making up a complete industry chain

In the last two years, with the continuous expansion of the production capacity of prothioconazole technical, the market demand for intermediates has been growing. As a result of the strong downstream demand, pesticide companies with prothioconazole technical registration or key innovative technology advantages have made continued investment in production of the upstream intermediates and raw materials of prothioconazole, so as to promote a diversified and cost-effective strategic development. It is worth mentioning that China has built up a complete industry chain of prothioconazole, beginning from calcium carbide to the upstream raw materials/intermediates such as γ butyrolactone, α-acetyl-γ-butyrolactone, up to technical material and formulations.

For example, α-acetyl-γ-butyrolactone, the key intermediate of prothioconazole, embraced a planned new capacity of 35,000 tons in 2023, including 18,000 tons of Shaanxi Jinxinyi (26% stakes held by Hailir), 15,000 tons of Inner Mongolia Daoke Chemical and 2,000 tons of Gansu Xinweike Fine Chemical.

Formulation product registration sees promising future

In recent years, multinational companies such as Bayer, Syngenta, BASF and ADAMA have joined development of prothioconazole products and have made increased effort in product development, having successively launched several prothioconazole formulations, many of which contain novel pesticidal ingredients within the validity of patent. Multinationals’ choice of prothioconazole as one of the mixing  ingredients to develop and launch new products is a demonstration of the product’s excellent effect of control of diseases, which shows multinationals’ high recognition of prothioconazole’s compatibility and growth potential.

Up to February 20, 2024, there were only four prothioconazole formulation product registrations in China, being mainly tebuconazole and carbendazim. However, judging from the domestic prothioconazole-related patents (Table 1), the domestic pesticide companies have made full preparation in development of formulations in mix with prothioconazole, possible pesticidal ingredients with prothioconazole include fluxapyroxad, pyraclostrobin, kresoxim-methyl, trifloxystrobin, fludioxonil, penflufen, metalaxyl-M, chlorothalonil, difenoconazole, mefentrifluconazole, florylpicoxamid and Bacillus subtilis, which are very promising for future registration considerations (Table 2). These is no doubt that registration of formulation products will be a mainstream in future development of prothioconazole products in the Chinese market. 

To be continued.

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2024 China Pesticide Industry Watch