Fangzheng Securities: The demand for glyphosate is increasing, suggesting attention to LIER CHEMICAL

According to the Zhitong Finance APP, Founder Securities released a research report stating that as the second most used herbicide globally, the market demand for glufosinate has significantly increased in recent years, mainly due to the ban on paraquat and the expansion of its restricted use, as well as the worsening resistance issues faced by glyphosate. Glufosinate occupies an important position in the pesticide market due to its unique herbicidal mechanism and the combination of paraquat's rapid action and glyphosate's long-lasting effects. The firm suggests paying attention to LIER CHEMICAL (002258.SZ) (with a glufosinate production capacity of 23,500 tons), among others. Founder Securities' main points are as follows: Glufosinate is the second most used herbicide globally Glufosinate, a broad-spectrum contact herbicide, was first commercially launched by the German company Hoechst (now part of BASF) in 1986. It has established an important position in the pesticide market due to its unique herbicidal mechanism—by inhibiting the enzyme glutamine synthetase in plants, leading to ammonia accumulation and disrupting cellular metabolism, ultimately causing weed death. Glufosinate combines the rapid action of paraquat and the long-lasting effects of glyphosate. With the increasing ban and restriction of paraquat and the ongoing worsening of glyphosate resistance issues, the market demand for glufosinate has significantly increased, with a global market share of USD 499 million in 2024. China is the largest producer of glufosinate According to Baichuan Yingfu data, China's total glufosinate production capacity is expected to reach 151,000 tons by 2025, with major producers including Inner Mongolia Ling Sheng Crop (75,000 tons), Shandong Yisheng (24,000 tons), LIER CHEMICAL (23,500 tons), and Gansu Binong (10,000 tons). Major overseas producers include BASF and UPL, with BASF announcing the cessation of glufosinate production at its Knapsack and Frankfurt production sites by the end of 2024 and stopping the production of glufosinate formulations at the Frankfurt plant in 2025, along with the closure of these two production bases. UPL's production capacity in India is only 8,000 tons. Release of overseas demand is expected to drive price recovery According to Baichuan Yingfu data, as of July 14, 2025, the average market price of 95% glufosinate raw powder is 43,700 yuan/ton, which has fallen below the industry cost of 56,900 yuan/ton. On the supply side, mainstream factories are operating well due to cost advantages, while some small and medium-sized factories in Hebei and Shandong remain shut down, leading to tight spot supply of glufosinate. As of the week ending July 11, 2025, industry inventory of glufosinate decreased by 8.94% compared to the previous week, down 27.3% from the year's peak. On the demand side, recent demand releases from regions such as South America and Southeast Asia have led some companies to schedule orders into late August. The firm believes that some companies in the glufosinate industry are operating at a loss, and the current price decline space is limited. Additionally, current industry inventory is at a low for the year, and there may be expectations of price increases driven by strong phase demand. Risk Warning: Risks from China-U.S. trade tariffs, ongoing new capacity investments, and the emergence of substitutes