The pesticide market saw a sharp rally followed by a correction in May 2026. Unlike the panic-driven price surge in February triggered by the closure of the Strait of Hormuz, the May market was defined by two core dynamics: sustained high raw material costs and persistently sluggish market demand. As a result, prices of most technical-grade pesticides retreated from their peaks, pushing the market into a new phase marked by stagnation at high levels and divergent bargaining games.

On the shipping front, the Shanghai Containerized Freight Index (SCFI) kept climbing throughout May, with freight rates jumping substantially across all four major ocean trade lanes.

On June 9 local time, the US announced strikes against Iranian military targets; Iran responded by shutting down the Strait of Hormuz on June 11, sending geopolitical tensions soaring. Yet between June 14 and 15, the US and Iran officially confirmed successively that they had finalized the text of a memorandum of understanding, with the Strait of Hormuz set to fully reopen.

This dramatic U-turn unfolding within just one week at the start of June has injected extreme uncertainty into the outlook for shipping lanes, pointing to sharp volatility in freight rates in the short term.

Most carriers will stick to the conservative route via the Cape of Good Hope for safety and insurance reasons and will not rush back to the strait immediately, though some vessels may still opt to transit the Strait of Hormuz.

The actual trajectory of the Q3 agrochemical shipping market hinges on two factors: confirmation of geopolitical stability and absorption capacity of rerouted vessel capacity. Our Pricing Team’s detailed assessment is outlined below:

Despite the US-Iran detente and the reopening of the Strait of Hormuz, most carriers will continue rerouting around the Cape of Good Hope in the near term pending safety verification and insurance clause reviews.

Accordingly, the cost drivers that previously pushed freight rates higher have not been fundamentally reversed.

Xinhua News Agency reported that bunker fuel costs surged nearly 70% during the strait’s closure: ultra-low-sulfur fuel oil prices at the world’s top 20 bunkering hubs rose 68% from mid-February, while high-sulfur fuel oil climbed 66%.

The CEO of Hapag-Lloyd stated that rerouting around the Cape of Good Hope drastically extended voyage durations, tying up 5%–9% of global available vessel capacity. This has led to acute container space shortages and unreliable transit times.

Raw material prices in May showed a pattern of price support without upward momentum:

In January 2026, China’s Ministry of Finance and State Taxation Administration issued a circular scrapping export VAT rebates for multiple pesticide technical materials including glufosinate-ammonium and L-glufosinate-ammonium effective April 1. The policy will phase out backward production capacity and cap overall domestic supply.

The US-Iran conflict created long-term structural strains on global supply chains, particularly sustained damage to Middle Eastern basic chemical production capacity.

Reuters reported attacks on Qatar’s Ras Laffan LNG complex cut export output by at least 10%, with QatarEnergy estimating full restoration will take 3–5 years.

Natural gas is the primary feedstock for methanol and liquid ammonia—both irreplaceable core intermediates in the pesticide value chain: methanol is a key input for glyphosate, while liquid ammonia is widely used in insecticide and nitrogen fertilizer manufacturing.

The LNG production shutdown has triggered an abrupt supply crunch for methanol and liquid ammonia across the Middle East, driving up global production costs for pesticide technical materials.

May marked the final peak of rigid weeding demand for orchards and non-cultivated land in China, as the spring planting season wound down. Formulation manufacturers maintained active restocking to fulfill future domestic and export orders.

From June onward, pre-stocking for summer weeding campaigns and autumn fertilizer procurement will kick off sequentially, lifting downstream purchasing sentiment. While fluctuating raw material costs have weighed on overall demand, rigid end-user consumption provides solid price support.