Indian Agrochemical sector faces disruption in raw material supply from China

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By Nimish Gangrade | Krishak Jagat

01 October 2021, New Delhi: Logistic and shipping challenges are significantly impacting shipping costs and delivery schedules. The recent announcement by China on closing down factories and limiting working hours due to escalation in power usage will impact the global supply chain. The country has ordered its provinces to meet emission and energy goals while some provinces are deliberately reducing working hours due to lack of electricity and high coal and natural gas costs. 

Also Read: PMFAI requests intervention of Ministry of Chemical and Fertilizer on price increase of Acetic Acid

China has committed to head towards carbon neutrality by 2060 and peak carbon dioxide emissions before 2030. President Xi Jinping has vowed to halt new coal fired power plants. In order to meet the compliance and work towards its commitment to United Nations on CO2 Emission and carbon neutrality, the Chinese government has decided to take strict measures. The government has classified provinces in Red, Yellow and Green zones based on electricity consumption. Yunnan and Jiangsu province of China are the hotspots for agricultural manufacturing in the country. Both the provinces have been classified in the Red Zone. The manufacturing units in the provinces are either temporarily closed or are facing electricity cuts.

UPL Ltd., one of the leading global agrochemical company, announced its decision to revise volume allocation as well as price based on the global market conditions.

Yunnan province is also the largest yellow phosphorous producer in China. The agrochemical industry has already faced severe shortage and price jump in September 2021. The industry is further expected to face shortage of key raw materials for products such as Glyphosate, Glufosinate, Acephate, Metal Phosphdes and Pyrethroids. 

Pesticide Manufacturers & Formulators Association of India (PMFAI) has raised the issue of price rise of Acetic Acid, one of the key raw material for agrochemicals with Indian Ministry of Chemicals and Fertilizers and requested intervention. The situation is expected to get worse by the end of October and November as most of the shipment from Chinese suppliers are expected to be cancelled.

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