Fangzheng Securities: The global glyphosate supply and demand pattern may be reshaped, and products like glufosinate ammonium are expected to benefit

According to the Zhitong Finance APP, Founder Securities released a research report stating that, according to media reports, Bayer is preparing a plan to address some large-scale lawsuits in Missouri related to the Roundup herbicide. If efforts fail, Bayer may also seek bankruptcy for its subsidiary Monsanto. The glyphosate industry may be undergoing a significant reshaping of the supply-demand pattern, and domestic glyphosate production companies are expected to take the initiative due to their complete industrial chain and cost advantages. It is recommended to pay attention to: Xingfa Chem, JSAC, Hebang Biotechnology, Yangnong Chemical, Guangxin Co., Ltd., etc. At the same time, the demand for glufosinate may experience rapid growth due to the changes in glyphosate, and it is recommended to pay attention to: LIER CHEMICAL, etc.

Founder Securities' main viewpoints are as follows:

Glyphosate is the most widely used herbicide in the world

As a non-selective herbicide, glyphosate can kill both weeds and crops simultaneously, so in the early days, glyphosate could only be used for pre-planting weed control and non-crop weed management. In 1996, the United States approved the planting of genetically engineered herbicide-resistant soybean, corn, and cotton varieties. With the emergence and widespread application of glyphosate-resistant genetically modified crops, the usage of glyphosate has surged. With advantages such as effective weed control, low toxicity, low price, easy decomposition in soil, and environmental friendliness, glyphosate has become the most commonly used and largest volume herbicide in global agricultural production. In 2020, the global market size of glyphosate reached USD 5.6 billion, accounting for approximately 23.3% of the global herbicide market share.

Bayer is the global leader in glyphosate; if Monsanto goes bankrupt, it may reshape the global glyphosate supply pattern

Currently, the global production capacity of glyphosate is about 1.18 million tons, of which Bayer's overseas capacity is 370,000 tons, while the remaining 810,000 tons are concentrated in China. If Bayer's glyphosate cancer lawsuits fail to settle and lead to Monsanto's eventual bankruptcy, it may result in the capacity clearance of leading glyphosate companies, potentially reshaping the global glyphosate supply-demand pattern. Domestic glyphosate production companies are expected to take the initiative due to their complete industrial chain and cost advantages. At the same time, the capacity clearance may bring a recovery in glyphosate profitability, and related companies are expected to achieve profit growth.

The United States is the second-largest consumer of glyphosate globally; a failed settlement may lead to increased demand for glyphosate alternatives in the U.S.

According to Phillips McDougall & KLEFFMANN, in 2019, global glyphosate demand reached 738,400 tons, with U.S. glyphosate consumption at 108,000 tons, making it the second-largest glyphosate consumer in the world, second only to Brazil. If Bayer's glyphosate cancer lawsuits fail to settle, it may lead to a decline in glyphosate sales in the U.S., and the demand for glyphosate alternatives such as glufosinate may experience rapid growth.

Risk Warning: Risks of U.S.-China trade tariffs, easing of Bayer's litigation events, emergence of alternatives, etc