Analysis of Development Trends in the Pesticide Intermediates Industry: The High-End Market Sees Emerging Opportunities

　　 Pesticide Intermediates are classified as fine chemicals. Pesticide intermediates are produced through the processing of agricultural raw materials and serve as intermediate agents that combine two or more substances; in the context of pesticides, they function as synergists and constitute essential intermediate materials in pesticide manufacturing.
　　
　　As the battle to combat smog in the Beijing–Tianjin–Hebei region’s “2+26” cities has begun, local authorities have successively issued the “13th Five-Year Plan Work Plan for the Prevention and Control of Volatile Organic Compound Pollution.” The plan stipulates that, during the heating season, pharmaceutical enterprises involved in the production of active pharmaceutical ingredients, as well as pesticide manufacturers that use organic solvents in their processes, shall, in principle, suspend production. In cases where production is deemed necessary due to essential public‑service needs or other special circumstances, approval must be obtained from the provincial government.
　　
　　Pesticide intermediates face capacity constraints due to policy-related factors.
　　
　　Due to policy-related factors, the operating rates of pesticide manufacturers have declined significantly, naturally dragging down market demand for pesticide intermediates—the upstream segment of the industry—and resulting in a corresponding drop in overall market volume. According to the “China Pesticide Intermediates Industry Market Research and Investment Forecast Analysis Report” published by the Qianzhan Industry Research Institute, China’s demand for pesticide intermediates was estimated at approximately 4.65 million tons in 2017.
　　
　　Based on historical data and environmental policy frameworks, the Qianzhan Industry Research Institute projects that, over the next few years, the production of agrochemical intermediates will grow at a modest pace. In the past three years, China’s agrochemical usage has declined steadily, and with the goal of achieving zero growth in pesticide consumption proving increasingly effective, downstream demand for agrochemical intermediates has been constrained. Meanwhile, the emergence of higher‑value‑added products is expected to boost the per‑unit value and market prices of these intermediates. By 2023, China’s agrochemical intermediate output is forecast to reach approximately 5.3 million tons; at the current average market price of RMB 500 per kilogram, the overall market size for agrochemical intermediates is projected to approach RMB 2.7 trillion.
　　
　　Analysis of Development Trends in the Pesticide Intermediates Industry
　　
　　(1) Integrated solutions will become the new primary profit model in the agrochemical industry.
　　
　　The ceiling for both the innovative‑drug and generic‑drug business models of agrochemical giants has arrived. As is well known, these giants have operated under two distinct business models: one centered on the development of novel active ingredients, and the other focused on manufacturing generic products. Developing new agrochemical intermediates is highly challenging, demanding substantial technological expertise and significant capital investment; yet during the patent‑protected period, such innovations command exceptionally high profit margins. Multinational leaders adopt the innovative‑drug model, leveraging robust R&D capabilities and strong marketing networks to create a virtuous cycle in which profits fuel further innovation. Meanwhile, generic‑drug producers focus on manufacturing post‑patent and off‑patent formulations, relying on production scale, cost control, and investments in advanced equipment and process optimization to capture market share.
　　
　　Foreign giants Seed industry R&D investment has surpassed that of pesticides and pesticide intermediates, evolving into a comprehensive solutions‑based profit model. The world’s six major agrochemical giants… seed Around 2010, investment in the seed business had already surpassed that in crop protection products. International agrochemical giants have gradually shifted their strategic focus toward seeds. Given the high technological barriers associated with genetic engineering, the seed business not only sustains strong profitability but also ensures continued growth in related pesticide and intermediate product lines.
　　
　　(II) Environmental inspections have led to increased market concentration, and overseas markets will be the primary driver of industry growth.
　　
　　To advance ecological progress and environmental protection, the CPC Central Committee and the State Council have established an environmental inspection system. This system has driven the pesticide industry to phase out outdated production capacity; small-scale facilities that fail to meet environmental standards have been forced to suspend operations or undertake rectification. As a result, smaller producers have gradually been eliminated, leading to a contraction in overall supply, higher market concentration, and improved performance for large‑scale enterprises that comply with environmental regulations—benefiting from increased orders and rising product prices. According to statistics, the operating rates of major pesticide manufacturers have remained low; as of September 2017, Glyphosate The average operating rate of production enterprises remained at 41.81%, while the operating rate of chlorpyrifos manufacturers stood at 22%. Imidacloprid Manufacturers’ operating rates stand at around 21%, while the operating rate for azoxystrobin technical‑grade producers is approximately 20.5%. In 2016, the CR4 indices for glyphosate and imidacloprid increased by 4.33 and 2.63 percentage points, respectively, compared with 2015. Prices for glyphosate, imidacloprid, mancozeb, and carbendazim all rose.
　　
　　Driven by environmental policies that align China’s pesticide market with the environmental standards of developed countries in Europe and North America, overall supply has contracted, leading to a market consolidation around companies that meet these stringent environmental requirements. Domestically, demand is constrained by the “Action Plan for Zero Growth in Pesticide Use,” making substantial growth unlikely. Meanwhile, the global market is recovering, and as multinational corporations shift production capacity to China, overseas demand will become the primary driver of industry growth going forward.
　　
　　(3) With the global pesticide industry entering the post‑patent era, domestic high‑end generic pesticides and advanced intermediates are poised to seize new market opportunities.
　　
　　As R&D costs rise among industry giants and the launch of new agrochemicals and intermediates slows, a global peak in the number of patents expiring is approaching. Multinational agrochemical leaders are gradually reshaping their production portfolios, ramping up capacity for high‑value‑added agrochemicals and intermediates and continuing to shift these operations to China. Following mergers, major players are increasingly engaging in custom synthesis, processing, and export of active ingredients, effectively relocating overseas production capacity to domestic markets to sustain robust profitability. Meanwhile, domestic firms that partner with these giants leverage their established customer networks to proactively develop products whose patents are about to expire, initiating strategic positioning well before patent protection ends, securing product registrations ahead of competitors, and capitalizing on technical expertise and customer relationships cultivated through collaborations with major international clients to secure priority rights to patent transfers once protection expires, thereby seizing market leadership. In this evolving landscape, agrochemical intermediate companies with strong R&D capabilities, deep technological reserves, and a steadfast commitment to high‑value‑added, differentiated product strategies are poised to emerge as frontrunners.
　　
　　(4) Traditional products are increasingly becoming redundant, while non‑patented products remain the mainstream.
　　
　　Major players are gradually divesting from traditional products that have seen declining profitability. Judging from the current product portfolios of leading agrochemical intermediates companies, the share of sales from new products is steadily rising. With the exception of glyphosate, paraquat, and dicamba—whose sales remain robust thanks to the widespread adoption of genetically modified crops—the majority of patented pesticides developed before the 1980s have largely lost their market presence. The world’s five largest multinational corporations drive demand through innovation, and their proprietary formulations command a strong position in the pesticide market; even so, non‑patented products continue to dominate and play a crucial role in these markets.
　　
　　Not only are patent‑drug manufacturers seeing the share of revenue from their traditional products steadily decline, but Nufarm, a generic‑drug producer, is also witnessing a year‑over‑year drop in the gross‑margin contribution of its glyphosate business. The displacement effect of new products on established offerings is becoming increasingly pronounced. Slowing profitability and a sharp erosion of market share have prompted major international agrochemical companies to scale back or divest their legacy product lines, redirecting resources toward R&D for next‑generation innovations.
　　
　　The modernization of China’s traditional pesticides and pesticide intermediates must follow an environmentally friendly development path, adhering to four key principles: first, low specific gravity, high purity, and ultra‑low application rates; second, high selectivity; third, lightweight and convenient formulations—such as capsules, crystals, soluble powders, and tablets—that are completely safe for human health and plant growth; and fourth, being non‑toxic, odorless, and free from environmental pollution.