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Prices of pesticide formulation at terminal market don’t synchronize with technical in early 2018

Since the second half of 2017, under the effect of the environmental protection examination, chemical enterprises had to stop or restrict production, which caused serious short supply of pesticide technical and intermediates and low operating rate of technical enterprises. Moreover, some producers engaged in trading raised the pesticide technical prices and by Nov. 2017, they reached the highest and didn’t fall. Except for some price reduction of some special products, most pesticide technical products maintained at a high price level though the prices didn’t go up to a large extent.

 

The price surge in 2017 enhanced the prices of most pesticides to another level. Compared with the same period last year, the increase of some pesticide technical even exceeded 100%. However, the price surge only happened to technical, formulation and trading enterprises, which exerted no synchronous influence on distributors. Some of them raised the selling price indeed, but many maintained the same.

 

There were four main reasons behind the situation.

1.          Distributors couldn’t judge if the price surge would last long and so didn’t take any hasty measures.

2.          Some distributors had many inventories in the past years and some formulation enterprises also had inventories. Most formulation enterprises didn’t synchronize in the price surge as they were not short of supply.

3.          Most formulation enterprises have to maintain their sales volumes and dare not raise the price too much, especially to their large clients. Moreover, wholesalers don’t raise the price much to their terminal retailers, or at all to acquire the competitive advantage in the terminal market. Therefore, formulation enterprises and wholesalers have to lower their profits to offset the negative influence exerted by the pesticide technical price surge.

4.          Pesticide users at the terminal end, farmers, are not sensitive about the price surge, which makes it hard for retailers to raise the price easily.