The rising freight costs driven by the increase in oil prices are continuing to rise, which is having an impact on the global agrochemical market. The price increase for formulation products could reach up to 10% per kilogram.
When analyzing the recent market trends, it was pointed out that both enterprises that process imported raw materials locally and companies that directly purchase finished products have been re-evaluating their cost structures since the energy market has pushed up logistics costs over the past week.
This situation contrasts with the relatively cautious wait-and-see attitude shown by Chinese exhibitors at recent CAC shows – at that time, both buyers and sellers demonstrated restraint. However, in the current environment, many Chinese exporters and local enterprises have temporarily stopped accepting new orders and quotations, and will resume sales only after the release of updated price lists reflecting higher freight charges.
The direct impact on prices
According to estimates, the cost pressure is not evenly distributed across all stages of the value chain: the price increase for finished products can reach up to 10%, while that for raw materials can reach up to 5%. These differences may directly determine whether a company makes a profit or incurs a loss. The profit margin in the agrochemical industry is usually thin and highly sensitive to input costs.
In this context, he suggests that enterprises not only suspend new purchase orders but also suspend pending sales agreements that have not been officially confirmed in the internal system. During periods of price fluctuations, pricing discipline is of utmost importance.
Supply and Cost: No shortage, but higher prices
Despite market concerns, the possibility of an impending supply shortage has been ruled out. Instead, he characterizes the current issue as a cost-driven adjustment across the supply chain. He states that there is no shortage in supply – only costs linked to oil prices are rising. Geopolitical changes could quickly reverse this trend. If the war ends tomorrow, oil prices could drop significantly, and companies that purchase in advance would face the risk of losses.
Therefore, he advises against speculative purchasing or hoarding behavior. In past cycles – especially from 2022 to 2025 – holding high-cost inventories has placed a huge financial burden on many companies.
Agricultural production is facing broader cost pressures.
The increase in the prices of agrochemical products driven by transportation costs has further exacerbated the inflation trend already present in the agricultural input sector. Especially for fertilizers such as urea, the price increase has exceeded 50%. At the same time, the continuous rise in fuel, labor, and operational costs is continuously squeezing farmers’ planting profits.
This cost escalation occurred during a period when commodity prices had not yet risen in tandem. According to historical patterns, commodity prices are usually positively correlated with rising oil prices, but currently, the prices of crops such as soybeans and corn have not shown the expected upward trend, resulting in a mismatch between input costs and farm income.
Risk Management and Outlook
In response to the current market fluctuations, it is recommended to adopt a conservative risk management strategy: including avoiding forward purchases, minimizing inventory exposure, and adopting the “on-demand purchasing” approach. Considering the uncertainty of input costs and the trend of commodity prices, producers can consider hedging the sale of grains to protect their planting profits.
As the market responds to the cascading effects of rising energy prices, the key challenge lies in how to strike a balance between supply chain stability and cost control – while avoiding falling into the financial traps that occurred during previous cycles of agricultural input price fluctuations.
Post time: Apr-21-2026