Hunan Haohua Chemical Co., Ltd. – First Public Disclosure of the Environmental Impact Assessment for the 3,600-ton-per-year Furfuryl Phenol Pesticide Intermediate Project

The pesticide industry is expected to experience an upturn in 2024.

In 2023, the pesticide market was generally in a destocking and downward cycle. By the fourth quarter of 2023, this destocking phase had nearly come to an end, and we are optimistic about an upturn in the pesticide sector in 2024. Additionally, considering factors such as deglobalization, geopolitical conflicts, and climate change, we believe that sovereign nations and farmers will become more motivated to stockpile and plant crops, resulting in relatively strong demand rigidity for pesticides over the next two to three years. Strong Demand Rigidity and Continued Consolidation Over the long term, pesticide demand is positively correlated with population growth. According to World Bank data, the global population reached 7.832 billion in 2020 and is projected to hit 10 billion by 2050. With population growth and economic development, global food demand continues to rise. However, limited arable land and environmental changes pose significant challenges to food production. To enhance agricultural productivity, pesticides are indispensable inputs. Consequently, as population growth drives increased food demand, pesticide consumption is expected to grow, steadily expanding the overall pesticide market size. In the medium term, amid deglobalization and geopolitical tensions, pesticide demand remains robustly rigid, while supply-side structural reforms continue to gain momentum, boding well for the sector’s prospects. First, global food security concerns will boost pesticide demand. Russia and Ukraine are major grain producers and exporters, renowned for wheat, corn, barley, and oats, playing pivotal roles in world food trade. The Russia-Ukraine conflict has significantly impacted both countries’ grain output and exports, severely disrupting global food supply chains. Moreover, since 2020, global health crises have adversely affected food production and supply, while rising temperatures and increasingly frequent extreme weather events further threaten food security. Affected by recurring extreme weather and the Russia-Ukraine conflict, global crop yields declined in 2022. According to FAO data, total global cereal production fell to 2.789 billion tons in 2022, down 1% year-on-year; coarse grain output decreased to 1.469 billion tons, a 2.7% year-on-year drop. Therefore, in the medium term, under the backdrop of deglobalization, geopolitical strife, and climate change, major economies worldwide are placing greater emphasis on food security, boosting planting enthusiasm globally, and reinforcing the rigid core of pesticide demand. Second, supply-side structural reforms are likely to further increase industry concentration in China. China is a key producer of pesticide intermediates and generic active ingredients/formulations, yet overall industry concentration remains low, characterized by a “large industry with small enterprises” structure. Since 2017, deepening supply-side reforms have presented significant opportunities for the sector. Data from the National Bureau of Statistics show that China’s chemical pesticide API production peaked at 3.78 million tons in 2016 but declined to 2.5 million tons in 2022. As China’s environmental and safety standards gradually align with those of developed countries, outdated production capacity is expected to exit the market, benefiting leading companies like Yangnong Chemical as industry consolidation advances. (Data source: Compiled from publicly available information) The Market Chill of 2024 Is Fading, with Prospects for Recovery At present, we believe that the pesticide market’s destocking phase may be nearing its end, signaling a gradual easing of market pressures. Following the impact of global health crises—marked by logistical disruptions—downstream buyers actively replenished inventories. By the fourth quarter of 2022, as pandemic-related challenges and logistics risks subsided, high inventory levels triggered a sharp decline in market demand, initiating a destocking cycle. By late November 2023, the pesticide market had remained sluggish for over a year. As of March 2024, opinions still diverged regarding the extent of destocking progress. However, we have detected encouraging market signals: the chill is lifting, demand is steadily recovering, and resilience appears promising. It is worth noting that formulation manufacturers are closer to downstream customers than raw material producers, often sensing market conditions earlier. For instance, Runfeng Co., Ltd., a leading Chinese pesticide brand specializing in formulations, saw its first-half 2023 performance decline year-on-year due to broader market trends, but its third-quarter results showed clear signs of recovery. Latin America and the United States represent the largest overseas markets, their conditions reflecting global market sentiment. Starting with Latin America, according to Chinese customs data, China’s pesticide exports to Brazil and Argentina fell by 68% and 49%, respectively, in the first two quarters of 2023. However, by the third quarter, shipments rebounded, posting a 12% year-on-year increase—even if volumes were lower than before. We interpret this as evidence that Latin American inventories have largely normalized, with demand showing noticeable recovery. In contrast, destocking in the U.S. market has been slower. Public data indicate that, as of September 2023, U.S. agrochemical factory inventories remained elevated but were below 2022 levels and trending downward. Typically, the U.S. agrochemical market experiences peak destocking during the first quarter; thus, we anticipate that by the end of Q1 2024, U.S. inventories will return to more normal levels. Furthermore, we have observed rapid declines in stockpiles of glufosinate‑ammonium API, accompanied by price increases—indicating the current market’s heightened sensitivity to supply and demand dynamics. Overall, we conclude that the pesticide market is now in the final stages of destocking, with demand poised for sustained recovery. Beyond the disruption caused by inventory adjustments, demand remains strongly rigid amid deglobalization, geopolitical tensions, and climate change, while ongoing supply-side structural reforms are gradually shaping the contours of the next pesticide market cycle. (Source: Agricultural Inputs & Market Official WeChat Account)

Announcement of the Ministry of Finance and the State Taxation Administration on the Individual Income Tax Policies Pertaining to Equity Incentives for Listed Companies

Announcement on Individual Income Tax Policies Related to Equity Incentives for Listed Companies Ministry of Finance and State Taxation Administration Announcement No. 2 of 2024 In order to support enterprise innovation and development, the following individual income tax policies regarding equity incentives for listed companies are hereby announced: I. For stock options, restricted stocks, and equity awards granted by domestic listed companies to individuals, upon filing with the competent tax authority, individuals may pay the corresponding individual income tax within a period not exceeding 36 months from the date of exercising stock options, unlocking restricted stocks, or receiving equity awards (hereinafter referred to as “exercise”). If a taxpayer leaves employment during this period, all outstanding taxes must be paid prior to departure. II. For the purposes of this announcement, “domestic listed companies” refer to joint-stock companies whose shares are listed and traded on the Shanghai Stock Exchange, the Shenzhen Stock Exchange, or the Beijing Stock Exchange. III. This announcement shall be effective from January 1, 2024, through December 31, 2027. Taxpayers who exercise their rights during this period shall comply with the provisions set forth herein. Taxpayers who exercised their rights after January 1, 2023, but have not yet paid all applicable taxes, may also apply the provisions of this announcement; the installment payment period shall commence from the date of exercise. IV. The securities regulatory authorities and the tax authorities shall establish an information-sharing mechanism, providing quarterly updates on equity incentive-related information of listed companies to the tax authorities. The finance, tax, and securities regulatory departments shall work together to ensure proper implementation of these policies. V. The following documents or provisions are hereby repealed simultaneously: (1) Paragraph (1) of Article 2 of the “Notice of the Ministry of Finance and the State Taxation Administration on Improving the Income Tax Policies Concerning Equity Incentives and Technology-Based Equity Contributions” (Cai Shui [2016] No. 101). (2) The “Notice of the Ministry of Finance and the State Taxation Administration on the Policy of Installment Payment of Taxes for Equity Incentives in the Core Area (Haidian Park) of the Zhongguancun National Independent Innovation Demonstration Zone” (Cai Shui [2022] No. 16). This is hereby announced. Ministry of Finance and State Taxation Administration April 17, 2024

The Most Comprehensive Guide to Pesticide Knowledge Ever (Collector’s Edition)

Pesticides are short for agricultural chemicals. According to the Regulations on Pesticide Management issued by the State Council on May 8, 1997, pesticides in China are defined as chemical compounds or mixtures of substances derived from biological sources or other natural materials, used to prevent, eliminate, or control diseases, pests, weeds, and other harmful organisms that damage agriculture and forestry, as well as to purposefully regulate plant and insect growth. There are many ways to classify pesticides, based on their origin, target organisms, mode of action, and other criteria. Classification by Mode of Action (1) Insecticides ① Stomach poisons: These agents enter the insect's body through the digestive system, causing poisoning and death. Examples include trichlorfon. Such pesticides are highly effective against chewing‑mouthpart and sucking‑mouthpart pests. ② Contact insecticides: These agents kill insects upon direct contact with their bodies, entering through the cuticle and causing poisoning. Most organophosphate insecticides and pyrethroid insecticides fall into this category. Contact insecticides can control pests with various mouthparts but are less effective against scale insects, psyllids, and whiteflies, which have waxy secretions covering their bodies. ③ Systemic insecticides: These agents are readily absorbed by plant tissues, transported throughout the plant, and distributed to all parts, or metabolized into more toxic compounds. When pests feed on treated plants, they become poisoned and die. Imidacloprid is an example. Systemic insecticides are particularly effective against piercing‑sucking pests. ④ Fumigants: These agents vaporize at room temperature into toxic gases, which enter the pest's respiratory system through spiracles, causing poisoning and death. Aluminum phosphide is a typical fumigant. Fumigants work best under sealed conditions; for instance, when using aluminum phosphide tablets to control wood‑boring pests, the entry holes should be sealed with soil. ⑤ Specific insect growth regulators: Classified according to their mechanisms of action, these include: 1) Insect growth regulators: These agents act via stomach poison or contact effects, interfering with chitin formation and epidermal development. As a result, molting and metamorphosis cannot proceed smoothly, hatching of eggs and emergence of adults are hindered, or the insects develop abnormally, achieving insecticidal effects. These agents are highly active, low in toxicity, leave minimal residues, exhibit strong selectivity, and are safe for humans, livestock, and beneficial organisms. However, their insecticidal action is slow, and residual effects are short-lived. Examples include diflubenzuron No. 3, Ulede, Yitai Bao, and Ditchongwu. 2) Attractants: These agents use trace amounts of volatile molecules to lure pests together for concentrated elimination. They are further divided into food attractants, sex attractants, and oviposition attractants. Sex attractants are the most widely used, such as those targeting peach fruit moths and grape berry moths. 3) Repellents: These agents protect crops by discouraging pests from approaching or inducing them to move away. Examples include mosquito repellent oils and camphor. 4) Antifeedants: After being ingested by pests, these agents disrupt normal physiological functions, reducing feeding rates or causing rapid cessation of feeding, ultimately leading to starvation and death. Neem extract and antifeedant amines are examples. These insecticides themselves are not highly toxic; rather, their unique properties enable them to exert specific effects on insects. Such agents are generally referred to as "specific insecticides." (2) Fungicides ① Protective fungicides: Applied before pathogenic microorganisms invade host plants, these agents form a protective film on the plant surface, blocking microbial invasion and thereby safeguarding the plant. Examples include Bordeaux mixture, zinc mancozeb, and Da Sheng. ② Curative fungicides: Used after pathogens have entered the plant, these agents suppress further spread within the plant or eliminate existing damage. Examples include triazolone, methyl thiophanate, and ethiprophos. ③ Eradicant fungicides: These agents directly and powerfully kill pathogenic microorganisms. Often intolerable to plant growth, they are typically applied only during pre‑plant soil treatment, dormancy periods, or seedling processing. Lime sulfur and fomesafen are examples. (3) Herbicides ① Selective herbicides: These agents selectively target certain plants while remaining relatively safe for others. Most herbicides are selective. For example, herbicides like Chao Cao Tong and Di Cao An belong to this category. ② Non‑selective herbicides: Lacking selectivity or exhibiting very limited selectivity, these agents kill nearly all green vegetation. While capable of eliminating both weeds and crops, extreme caution is required when using them. Glyphosate is a representative non‑selective herbicide, commonly employed for weed control on fallow land, field edges, and embankments. When used for field weeding, directional spraying is recommended. Classification by Target Organism Herbicides, insecticides, acaricides, fungicides, nematicides, rodenticides, and plant growth regulators are among the categories. (1) Insecticides Agents used to control insect pests. Abamectin: Its insecticidal, acaricidal, and nematicidal activities are enhanced by 10–100 times, broadening its spectrum of action. Primarily acting as a stomach poison with some contact effects, it causes irreversible paralysis in pests, halting feeding and resulting in death within 2–4 days—relatively slow but long‑lasting efficacy (10–15 days for insects, 15–25 days for mites). It lacks systemic activity but can penetrate the epidermis. Highly effective against lepidopteran pests, mites, coleopterans, homopterans, and thrips, with little risk of developing resistance. Readily degradable in soil and extremely safe for crops when used at recommended doses or higher in protected environments. A second peak of insecticidal activity emerges after 10 days. Imidacloprid: A nicotinic compound, combining contact, stomach poison, and systemic actions. Causes paralysis and death quickly, delivering high efficacy within one day, with residual effects lasting about 25 days. More effective in warm temperatures, especially against piercing‑sucking pests. Easily absorbed by crops and redistributed upward, with root uptake. Diflubenzuron: Promotes molting in lepidopteran larvae, counteracting other mechanisms that inhibit molting. Effective for both older and younger larvae, stopping feeding within 6–8 hours (stomach poison effect), faster than molting inhibitors, with death occurring after 3–4 days. No phytotoxicity, safe for crops, leaving no residue. Malathion: Toxicity decreases in low temperatures, allowing for increased dosage or concentration. Effective against chewing‑mouthpart and piercing‑sucking pests, with contact and stomach poison effects, plus some fumigation and penetration. Strong knockdown effect, especially in heat. Short residual life. Prone to phytotoxicity on sorghum, legumes, pears, grapes, cherries, etc., requiring cautious use. Discontinue 10 days before harvest. Diflubenzuron: Best applied during early larval stages; efficacy declines with increasing age. Inhibits chitin synthesis, acting as a stomach poison that penetrates insect and egg epidermis, though lacking systemic absorption. Spray on the underside of leaves. Long-lasting efficacy over 30 days, resistant to rain washout. Safe for natural enemies, highly effective against lepidopterans and fly larvae. Death begins three days post‑treatment, peaking after five days. Ineffective against adult insects. Quinalphos: Combines insecticidal and acaricidal actions, with stomach poison and contact effects, but no systemic or fumigation capabilities. Good penetration, some ovicidal effects, rapidly degrades on plants, with short residual life. Effective against chewing‑mouthpart and sucking‑mouthpart pests. Acetamiprid: A chlorinated nicotinic pyridine compound, offering contact and stomach poison effects, with excellent systemic activity. Blocks acetylcholine receptor activity, effectively controlling aphids, leafhoppers, whiteflies, scale insects, and leaf miners, as well as moths, small caterpillars, and beetles. Granular formulations suitable for soil treatment, controlling underground pests. Fast‑acting, long‑lasting efficacy up to 20 days. Thiamethoxam: Inhibits chitin synthesis and disrupts metabolism. Takes effect after 3–7 days, with no direct lethal impact on adults, but can shorten lifespan, reduce egg production, and yield mostly infertile eggs; even hatched larvae often die quickly. Effective against half‑winged pests such as planthoppers, leafhoppers, whiteflies, and scale insects, with efficacy lasting over 30 days. Not suitable for soil application; avoid direct contact with cabbage or radish, as it may cause brown spots or greening. Isoprocarb: Offers contact effects, with some penetration and conductivity, and rapid action. Primarily used to control rice planthoppers and leafhoppers, also effective against thrips. Do not use concurrently with di-ben-hydroxy acid; maintain a 10‑day interval. Phytotoxic to taro, so avoid use. Phoxim: Broad spectrum, strong knockdown effect, mainly contact and stomach poison, no systemic action. Very effective against lepidopteran larvae and has some ovicidal effects. Light‑unstable, best applied at night or dusk, with short residual life. Residuals persist long in soil, making it ideal for controlling underground pests. Cucurbits, beans, and sweet potatoes are sensitive to phoxim, prone to phytotoxicity; sorghum is also susceptible, so avoid spray applications. Cornfields should use granular formulations to control corn borers, not sprays for aphids or sticky insects. Chlorpyrifos: Broad spectrum, stomach poison, contact, and fumigation effects. Particularly effective against underground pests, including beetles and lepidopterans, as well as mites. Sensitive to seedlings of cucurbits. Cypermethrin: Contact and stomach poison effects, with repellent properties, strong knockdown capability, fast action, and long residual life. Active against lepidopteran pests, with special effectiveness against moths, and moderate efficacy against aphids and leafhoppers. Less effective against mites and blind bugs. Residual life is relatively long, with weak penetration into fruits, causing minimal internal contamination. Bromcyhalothrin: Contact effects, combined with stomach poison, repellent, and antifeedant actions. Especially effective against lepidopteran larvae, but ineffective against mites. Weak penetration, affecting only the fruit peel. Fluvalinate: Strong contact and stomach poison effects, with repellent properties, fast action, and long residual life. Active against lepidopteran pests, with special effectiveness against moths, and moderate efficacy against aphids and leafhoppers. Less effective against mites and blind bugs. Residual life is relatively long, with weak penetration into fruits, causing minimal internal contamination. Fipronil: Strong contact and stomach poison effects, with repellent properties, fast action, and long residual life. Effective against lepidopteran pests, with special effectiveness against moths, and moderate efficacy against aphids and leafhoppers. Less effective against mites and blind bugs. Residual life is relatively long, with weak penetration into fruits, causing minimal internal contamination. Toxaphene: Broad spectrum, stomach poison, contact, and fumigation effects. Particularly effective against underground pests, including beetles and lepidopterans, as well as mites. Sensitive to seedlings of cucurbits.Resistant to rain washout; not suitable for soil treatment. Fluorochlorcypermethrin (Baishujuester, Baishude) Acts through contact and ingestion; highly effective against various Lepidopteran larvae; kills eggs; exhibits repellent effects. Bacillus thuringiensis Bacterial in nature; toxic upon ingestion, producing bacterial toxins; slower onset of action; residual efficacy lasts about 10 days; higher temperatures promote greater feeding and better results; effective against larvae of cabbage caterpillars, diamondback moths, beet armyworms, sweet potato cutworms, silverleaf night moths, and other Lepidopteran pests; requires temperatures above 30°C to fully exert its insecticidal effect; apply 2–3 days in advance. Avermectin A broad-spectrum antibiotic insecticide and acaricide; acts via ingestion and contact, with repellent properties. Metaldehyde Strong attractant; particularly effective during spring and autumn rainy seasons; recommended after sowing or transplanting seedlings; low temperatures (below 1.5°C) or high temperatures (above 35°C) reduce snail activity, thus affecting control efficacy. Dithiazolinone A thiourea-based insecticide and acaricide; used on cotton, fruit trees, vegetables, and tea plants; possesses both systemic and fumigant actions, converting into an active insecticidal compound under UV light; best applied on sunny days; effective against resistant aphids, leafhoppers, and whiteflies; controls damage caused by small cabbage moths, cabbage whites, and noctuid moths. Chlorfluazuron Inhibits chitin synthesis; renders adult insects infertile, exhibiting toxic effects on larvae, pupae, adults, and eggs; especially effective against Lepidopteran and Dipteran larvae. Flufenoxuron Exhibits strong insecticidal and ovicidal activity, with rapid action, particularly effective against cotton bollworms; slows down feeding rates of various Coleoptera, Diptera, and Homoptera insects; provides quick knockdown effects. (2) Acaricides Agents used to control mites. These include specialized acaricides as well as insecticidal-acaricidal products that also target insects. Pyridaben Broad-spectrum, highly efficient, contact action; effective against eggs, nymphs, and adult mites; fast-acting with long residual protection; ensure even spraying on both sides of leaves. Etoxazole Contact and stomach poison; less effective against eggs; performs best above 20°C, with reduced efficacy at lower temperatures; residual life can last 15–25 days; use low concentrations under hot and humid conditions. Tetradifon Sprayed before winter egg hatching, effectively controlling plant‑feeding mites throughout the season; particularly effective against elm spider mites (apple red spider mites), while having no adverse impact on predatory mites or beneficial insects; an organic nitrogen heterocyclic compound; contact action, killing eggs, larvae, and nymphs but less effective against adults; residual efficacy lasts 50–60 days; for apple red spider mites, apply during early hatching of overwintering eggs before flowering; for mountain apple red spider mites, apply after flowering during peak egg-laying period of overwintering generations; slower onset of action—maximum acaricidal effectiveness appears 2–3 weeks after application; timing is flexible regardless of temperature; can be mixed with lime sulfur preparations; store away from freezing and direct sunlight. Hexythiazox Penetrates plant epidermis without systemic translocation; strongly kills eggs and nymphs, ineffective against adult mites, but inhibits hatching; non‑temperature‑sensitive, maintaining efficacy for around 50 days; slower onset of action, so apply earlier rather than later; compatible with Bordeaux mixture, lime sulfur, and many other pesticides; good control of leaf mites, but less effective against rust mites and gall mites. Triazolotin Strong contact action; broad spectrum, eliminating nymphs, adults, and summer eggs, but ineffective against winter eggs; photostable with long residual life, safe for crops; when sprayed on sweet oranges above 32°C, may cause phytotoxicity to tender new shoots and leaves; avoid use during hot seasons. Cyfluthrin Contains a neurotoxic agent with some acaricidal activity but lacks fluorine; relatively long residual life; repels feeding and egg-laying, non‑temperature‑sensitive; primarily used for Lepidopteran pests; not intended exclusively as an acaricide; residual efficacy lasts about 10 days. (3) Fungicides Agents used to prevent and treat plant pathogenic microorganisms. Zinc mancozeb Broad spectrum; effective against downy mildew, late blight, anthracnose, and other pathogens; best applied early in disease development, with shorter residual life; useful for controlling sudden death, damping-off, angular leaf spot, wilt, anthracnose, and downy mildew in cucurbits. Manganese zinc mancozeb Effective against anthracnose, blight, downy mildew, leaf spot, black spot, and other diseases in cucurbits; avoid application during high temperatures; no need for re-spraying after rainfall. Thiophanate-methyl Broad spectrum; protective and curative; effective against gray mold, powdery mildew, anthracnose, brown spot, leaf mold, etc.; root irrigation helps control wilt; compatible with alkaline fungicides such as lime sulfur, but should not be mixed with copper-based formulations or used immediately before/after them; avoid prolonged standalone use; discontinue 14 days prior to harvest; applicable to sweet potatoes, peaches, and rice during young panicle formation to heading stages to help prevent blast and sheath blight; for rapeseed, spray during peak flowering to control sclerotinia; for soybeans, spray during pod-setting stage to manage gray leaf spot. Chlorothalonil Broad spectrum; pre‑emptive…

Yin Chaohui, Secretary of the Yanling County Party Committee, and his delegation visited Hunan Haohua to assess the development of the chemical industry.