Since the beginning of the year, the price of glycine has risen strongly. Currently, the industrial grade glycine is offered at 15,000 yuan/ton, which is 20% higher than that at the beginning of the year. In this regard, analysts believe that CITIC, glyphosate prices will increase the operating performance of listed companies, so the glyphosate sector will once again behave.

Glycine supply and demand tension prices rose strongly

The data shows that since 2014, glycine prices have risen strongly. Currently, the industrial grade glycine is priced at 15,000 yuan/ton, up 20% from the beginning of the year, and the food grade glycine price is around 18,000 yuan/ton, from industrial grade glycine to food grade glycine. Decolorization and purification are required. There are many reasons for the rise in glycine prices. Luo Ting, an analyst at CSC, believes that the first and most important reason is the shortage of supply due to huge environmental pressures and insufficient supply; followed by the start of glyphosate due to insufficient supply of glycine. Inadequately, the increase in glyphosate price also promoted the rise of glycine prices to a certain extent. Finally, some enterprises related personnel caused by environmental problems were arrested, which also played a deterrent role to a certain extent. The environmental crimes were highly penalized, resulting in Glycine companies that do not meet environmental standards in the country are afraid to start work.

The impact of environmental protection on the glycine industry has been evident since November last year and is becoming increasingly stringent after the year. It is understood that two companies have stopped production due to environmental issues since the beginning of the year, involving a total capacity of 70,000 tons. At present, the production capacity of glycine that can be normally started in the country is about 250-300,000 tons. From our statistics, the total production capacity of glycine glyphosate is 562,000 tons, and the corresponding glycine demand is 310,000 tons. Currently, the supply of glycine is obviously insufficient.

At present, glycine industry leaders account for more than half of the production capacity, and there are two companies with production capacity of more than 50,000 tons. The two companies stopped production due to environmental issues. One is self-produced and the rest are 1 to 2 Million tons of small capacity. In the glycine industry, large amounts of wastewater are used for treatment and the cost is high. Only one-time input of the wastewater reform will require more than 10 million, and small enterprises cannot afford it. In the past, environmental management was relatively loose, and many companies did not make environmental protection investments. Now that environmental protection policies are increasingly stringent, small enterprises can only basically withdraw. Slightly larger enterprises have to re-enter environmental protection facilities before they can start construction. It will take some time.

It is worth noting that the recovery of the export of glycine for 14 years will also affect the supply of industrial grade glycine.

Glyphosate price deterministic increase recommended overweight industry leader

According to analysis by Luo Ting, an analyst at China CITIC, according to the monitoring data of its glyphosate inventory model, the domestic inventory of glyphosate is at a relatively low level. The arrival of domestic spring plowing and the arrival of the peak season in North America will surely drive the demand for glyphosate. Low inventory will bring a strong rebound in prices.

As the main raw material for glyphosate, glycine price has recently risen strongly. The tight supply and demand are the logical basis for the increase of product prices. The glycine industry has been de-capacity in recent years, and the demand for glyphosate in the downstream has continuously increased. The supply and demand of glycine have been achieved. In a tightly balanced state, environmental issues such as wastewater treatment in the glycine production process will also suppress the operating rate of the glycine industry; supply is limited, demand is strong, and glycine prices will continue to rise strongly, which will surely increase the production of glyphosate. The cost will push up the price of glyphosate, and the shortage of glycine will affect the operating rate of the glyphosate industry. Therefore, under the combined effect of low inventory, cost promotion, and demand-pulling, the price of glyphosate will rise decisively in the near future.