Glycine supply and demand tightly promoted the definite rise of glyphosate

Since the start of this year, the price of glycine has seen a significant upward trend. Currently, industrial-grade glycine is being sold at 15,000 yuan per ton, representing a 20% increase from the beginning of the year. Analysts believe that with the rising prices of glyphosate, listed companies in the sector are expected to perform better, potentially leading to renewed market interest in the glyphosate industry.

The sharp rise in glycine prices can be attributed to a combination of factors, primarily driven by a tight supply and demand balance. According to Luo Ting, an analyst at China Securities, one of the key reasons for the price surge is the limited supply caused by strict environmental regulations. Many producers have been forced to halt operations due to non-compliance with environmental standards, which has led to a decrease in overall production capacity.

Additionally, the increasing demand for glyphosate, which relies heavily on glycine as a raw material, has further fueled the price increase. As glyphosate prices climb, so do the costs associated with glycine, creating a ripple effect throughout the industry. Moreover, several companies involved in glycine production have faced legal consequences due to environmental violations, adding to the pressure on the market.

Environmental protection measures have become increasingly stringent since last November, and this trend is expected to continue. Since the beginning of this year, two major glycine producers have shut down operations due to environmental issues, collectively reducing the total production capacity by 70,000 tons. Currently, only about 250,000 to 300,000 tons of glycine are being produced at full capacity nationwide. The total production capacity of the industry stands at around 562,000 tons, with an estimated demand of 310,000 tons. This imbalance highlights the current shortage in supply.

Leading companies in the glycine industry account for more than half of the total production capacity, with two firms having over 50,000 tons of capacity each. However, these companies have also been affected by environmental regulations. Smaller producers, who typically lack the resources to invest in advanced wastewater treatment systems, are struggling to remain operational. A single upgrade to meet environmental standards can cost over 10 million yuan, making it unfeasible for many small-scale operators.

As environmental policies tighten, smaller enterprises are either exiting the market or facing delays in restarting operations. Larger companies, while better equipped to handle these challenges, still require time and investment to bring their facilities up to standard. This ongoing shift is reshaping the glycine industry, favoring those with stronger financial backing and compliance capabilities.

Another factor influencing the glycine market is the recovery of exports, which has had a direct impact on the availability of industrial-grade glycine. With export demand picking up, the domestic supply is under even more pressure.

Analysts predict that the combination of low glyphosate inventory, rising production costs, and increased demand will lead to a strong price rebound in the near future. Given the critical role of glycine in the production of glyphosate, its continued price increase is likely to push up glyphosate prices as well. This dynamic could result in higher profit margins for companies in the sector, especially those with control over key production assets.