Core Viewpoint - The report from Kaiyuan Securities indicates a positive outlook for the glyphosate industry, driven by sufficient order backlogs and low inventory levels among major companies since May 2025, leading to continuous price increases for new orders [1] Supply Side - Global glyphosate production capacity is approximately 1.18 million tons per year, with Monsanto's overseas capacity at 370,000 tons (31.4%) and China's capacity at 810,000 tons (68.6%). Major producers include Xingfa Group, Fuhua Chemical, Xin'an Chemical, and Jiangshan Chemical, with the top four companies accounting for 70.7% of the total capacity, indicating a high concentration in the industry [2] - New glyphosate production facilities in China are classified as restricted projects, suggesting limited new capacity in the future [2] Demand Side - Glyphosate's downstream markets include agricultural (over 90%) and non-agricultural sectors, primarily for genetically modified crops. Non-agricultural uses include lawn care, forestry, and shrub weed control. Since May 2025, there has been a significant increase in orders from South America, with major companies reporting strong order intake. The market demand for glyphosate is expected to grow due to the increase in genetically modified crop planting areas and the ban on other herbicides like paraquat [3] Price Review - Since 2020, global agricultural price fluctuations due to the Russia-Ukraine conflict and significant cost increases in raw materials like yellow phosphorus, liquid chlorine, and caustic soda have led to a substantial rise in glyphosate prices from Q4 2021 to mid-2022. However, since the second half of 2022, as major manufacturers have gradually restored production and the overseas market has digested previous inventory, glyphosate prices have entered a downward cycle. Since May 2025, major companies have maintained a strong pricing stance, with new order prices continuing to rise [4] Industry Outlook - In 2023, the EU's renewal of glyphosate regulations has imposed higher purity standards. A special meeting on the "anti-involution" phenomenon in the glyphosate industry was held in Beijing on March 13, 2025, aimed at addressing issues of excessive competition, resource duplication, and shrinking profit margins to promote sustainable industry development [5]

Investment Rating - The industry investment rating is "Overweight," indicating that the industry index is expected to outperform the CSI 300 index by 10% or more over the next six months [16]. Core Insights - The report highlights that Bayer is seeking a settlement regarding the Roundup herbicide litigation, which could impact the demand for glyphosate in North America and potentially benefit domestic glyphosate producers in China [7]. - Glyphosate and glufosinate prices are currently at low levels, with domestic prices for glyphosate (95%) at 23,500 CNY/ton and glufosinate (95%) at 46,000 CNY/ton as of May 25, 2025 [7]. - The report suggests that if Roundup sales are restricted, China's glyphosate export demand may increase, providing a short-term boost to the domestic glyphosate industry [7]. Summary by Sections Industry Overview - The report discusses the potential long-term benefits for glufosinate as it may replace glyphosate as a primary herbicide due to its unique mechanism of action and environmental safety [7]. - Historical price trends for glyphosate are reviewed, showing significant fluctuations influenced by production capacity changes and market demand [7]. Price and Inventory Analysis - As of May 25, 2025, domestic glyphosate and glufosinate inventories have decreased from their peak levels, with glyphosate inventory at 60,300 tons and glufosinate at 9,870 tons [7]. - The report indicates that glyphosate prices have been volatile, with a notable increase in 2020 due to supply chain disruptions and rising raw material costs [7]. Investment Recommendations - The report recommends focusing on companies such as Xingfa Group, which has the largest domestic glyphosate capacity (230,000 tons/year), and Lier Chemical, which produces 23,500 tons/year of glufosinate [7].