Pesticide boom cycle restart, industry take-off is just around the corner

Under the influence of weakening overall demand, continued price declines of agricultural products (11.
79 +0.
26%, buy), volatile climate, credit crunch, political instability, and high inventory levels of distributors in many countries, the second half of 2014 Since then, the global pesticide market has continued to decline
.
The growth rate of the main business income and total profit of the pesticide industry dropped from 17% and 30% at the beginning of 2014 to 5% and 4% at the end of 2015.
At the same time, the growth rate of pesticide fixed asset investment completed dropped from 13% in 2014 to 2015.
3%
.
On the other hand, the serious overcapacity phenomenon in the industry and the continuous high pressure of national environmental protection, serious pollution, backward production technology, and production capacity of highly toxic pesticides will be shut down one after another, driving the continuous contraction of supply
.
Since 2016, the overall inventory market has continued to decline, and the effect of destocking has been significant.
By the fourth quarter, most of the pesticide listed companies' inventories were already at an extremely low level, and the destocking was almost over
.
On the one hand, in the domestic market, crude oil prices and agricultural product prices have always had a relatively high correlation.
Crude oil prices have entered an upward path, and agricultural product prices are likely to bottom out and rebound: the prices of wheat, barley, corn, rice, and peanuts have been prices in the past 10 years.
At the bottom, there is a high probability that the bottom will rebound in the future, while the prices of soybeans, rapeseed oil, sugar, cotton, and rubber have rebounded in the near future, indicating that the bottom of the price is basically proven
.
The improvement of the international agricultural product market will help form a bottom support for the demand for pesticides; on the other hand, although the growth rate of the total sown area of ​​crops in the country continues to decline, it has reached a record high of 166,000 hectares in 2015 and is expected to reach 167,000 in 2016.
Thousands of hectares, the continuous increase in the planting area indicates that the rigid demand for pesticides is relatively stable, and the bottom safety margin is clearly constructed
.
Overseas agrochemical market mergers and acquisitions intensified, Syngenta, Bayer, BASF, Dow Agrochemicals, Monsanto, DuPont six multinational companies (if the merger is completed, it will form Bayer + Monsanto, ChemChina + Syngenta, Dow + DuPont , BASF's top four) constitute the first group in the international pesticide industry, occupying nearly 77% of the market
.
After more than two years of industry downturn, the inventory of the six multinational agrochemical giants has declined to varying degrees.
As of the second half of this year, destocking has basically been completed
.
Replenishment of inventories has brought a rebound in overseas demand.
In January 2017, the export of herbicides increased by 47.
05% year-on-year, the export of pesticides increased by 42.
55% year-on-year, and the export of fungicides increased by 16.
90% year-on-year
.