China's pesticide industry expected to recover from sluggishness

Date:04-01-2009

After experiencing a period of overall market slide, China's pesticide industry is expected to recover and register modest growth in 2009, analysts say.

In large part due to the global financial crisis, the pesticide market in China slumped into sluggishness since the fourth quarter last year, as marked by price falls, imbalance of demand and supply, slower industrial growth, export slump and weak market confidence.

However, the production of pesticide plants has gradually returned to normal and the domestic pesticide market is beginning to stabilize since February. It is optimistic to forecast that the pesticide industry is to rebound when the weather turns warm and the demand for pesticides increases.

The pesticide product structure is further improved In terms of the output mix of pesticides, the product structure of China's pesticide industry has changed profoundly.

Pesticide is one of the main products in agricultural chemicals.

The production and use of five high-toxic agricultural chemicals had been prohibited since 2008.

The market quit of former widely-used high-toxic products will definitely leave a vacancy in agricultural chemical market. As a result, low-toxic and high-efficient pesticides will become popular products in the agricultural chemical market.

Chinese government's strong support for the industry's development Seen from the policy environment, the documents, like the central government's proposals on making the 11th Five-Year Plan (2006-2010), the National Guidelines on Medium and Long-Term Program for Science and Technology, and the government's policy on further construction of a new socialist countryside, all show that pesticide industry has become the core topic.

In view of the current situation of the pesticide industry and relevant guiding policies, the 11th Five-year Plan for pesticide industry will attach great importance to adjusting the industrial structure, enlarge the scientific research investment and control environment pollution.

The policy for readjusting national pesticide industry structure will have crucial influence on the future trend of the domestic pesticide market, under which the pesticide companies complying with national industry policies and adjusting their product structure in time will gain higher profit margins in the future.

Moreover, Chinese government had taken some favorable measures including raising export rebates for pesticide in 2008.

Although difficult pricing environment and market maturity may still restrain margins of the pesticide industry, it will enjoy a better outlook in the rest months of 2009.