06/08/2009
August 2009 - Market Report
GENERAL UPDATE
As we enter the month of August we have seen numerous factory closures from producers of products across our portfolio. Reasons ranging from GMP maintenance to environmental upgrades have been given and we are likely to see restricted supply for those products affected – please see individual items for more details. It is also apparent that stocks in Europe for many of our traded items are at unusually low levels as both consumers and traders strive to reduce inventories, this will also contribute to potential supply restrictions over the coming couple of months.
It seems that China’s “active fiscal policy and moderately loose monetary policy” has continued to help their economy and manufacturing output. Figures show that this July China’s manufacturing output reached its highest levels in over a year. It seems that the combination of growing domestic demand and renewed buying interest from abroad have all contributed to the increase.
We continue to see bullish market sentiments in the oil industry as traders believe that further economic recovery will fuel an increase in demand. Some industry experts are suggesting that prices will nudge over $80 a barrel by January.
At the time of writing the GBP had climbed to a 9 month high against the USD, trading at levels just under $1.69. The GBP had also strengthened against the EURO hitting levels of 1.18.
VITAMINS & DERIVATIVES
ASCORBIC ACID & DERIVATIVES
Further to our last report, the long anticipated Chinese factory closures have now begun and although each factory has indicated at closing for different lengths of time it is most likely that all will be closed for a minimum of 60 days.
As previously advised, although all producers are giving assurances that they will have built up sufficient levels of inventory to cover their contractual obligations over this period, we know from previous years when shutdowns have taken place that these can lead to higher prices if there are insufficient inventory positions in place.
If this proves to be the case on this occasion, then there is a possibility that the market could find itself short of material in October when the Chinese factories resume production. This would coincide with what is traditionally the heaviest demand period as the winter approaches.
We will continue to monitor the situation and would suggest that our customers keep in regular contact with the sales team at Premium for the latest market information.
VITAMIN B1 HCL & MONO
As reported in our last report, both products have recently increased in price, however, at the time of writing we have seen the market stabilise.
VITAMIN B2
Due to the current level of demand, prices are quite firm at present and availability is somewhat restricted. It is advisable to check prices and availability before making any forward commitments.
VITAMIN B6
Demand for this product remains low and it would seem that the price tendency is weak moving forward.
DL-ALPHA-TOCOPHERYL ACETATE
Further to our previous market report both of the principal Chinese producers (ZMC and NHU) have closed for maintenance. As per the information on ascorbic acid above both factories have stressed that they have enough inventory on hand to cover all forward orders, however, we are likely to see a squeeze in supply over the next couple of months. We have already seen prices firm in Europe in the last few weeks and we recommend that buyers ensure they have enough cover.
FOOD & BEVERAGE INGREDIENTS
ERYTHORBIC ACID & SODIUM ERYTHORBATE
As per our June news article, one of the two principal Chinese producers remains closed and prices on both products have increased recently as a result of reduced availability. We have restricted quantities of both products available in stock and would therefore suggest our customers check availability before making any forward commitments.
CITRIC ACID
The market is stable at present and the most likely influence on pricing at this time would be any further increases to sea freight rates ex China.
POTASSIUM SORBATE
The market for this product is stable both in terms of price and demand.
CAFFEINE
Since our last report there has been a slight firming of the price which would indicate that the predicted raw material cost increases have taken place in China.
QUININE
Currently the market is stable and supply is good.
AGAR
The month of Ramadan will be starting in Indonesia towards the end of August, so please get your orders in ASAP to ensure timely shipment ahead of this period.
SUCRALOSE
More Chinese and Indian offers are appearing in the European market, prices can only go one way as new suppliers jostle for position in the market.
NUTRACEUTICAL & COSMETIC INGREDIENTS
GLUCOSAMINE
The market has been settled since our last report. However, seasonal price rises are being indicated as demand picks up as we head towards the autumn months, we anticipate price rises of 3-5% to be proposed from China. India reports that the chitin supply is adequate and recent offers are bringing Indian material in line with China. We are able to offer Glucosamine Sulphate and HCL powders of various mesh sizes. We can also offer Direct Compression grades, that are offered with PVPK and HPMC as the binder.
CHONDROITIN
EU and British customs are making it very difficult to import Chondroitin from China and many other sources. There is much confusion at the ports regarding documents and tariff headings. Companies using Chondroitin in the UK are being left with less and less supply options as a result and we hope the authorities will give clearer guidelines on this product for the future. Premium has both Chicken and shark origins available from stock.
BILBERRY EXTRACT
As we approach the harvest period in Europe it seems likely that we will see some improved pricing from September onwards for this product. We are able to offer authentic European Vaccinium Myrtillus extract with a proven HPLC “fingerprint” providing a guarantee that the material is of the named fruit and not adulterated with any colours or anthocyanidins boosters. Our suppliers Ginnovay® brand material is highly stable with a 36 month shelf life, we welcome your enquiries.
MSM
Prices in dollar terms have been steady with no changes.
CURCUMIN
Prices continue to rise and have increased by ~$12/KG since the beginning of the year with another low harvest in India and increased domestic use being the main reason for these rises. Demand from the traditional large markets of the UAE and Iran has not declined despite price rises which is keeping the market firm. Powder and granular grades are available.
L-GLUTAMINE
It has been reported by both the Beth Israel Deaconess Medical Centre in Boston and the Massachusetts Institute of Technology that Glutamine in the diet may help with prevention of stomach ulcers. This recent finding and the subsequent publicity is likely to result in an increase in enquiries and demand for Glutamine.
CO ENZYME Q10
Prices remain stable despite the now confirmed closure of the Japanese Asahi factory. China has easily picked up the gap in the market which is why pricing and availability have so far been unaffected.
FISH OILS
China is emerging as a supplier of good quality fish oils at competitive prices. China is the largest buyer of fish oils which have to be imported from Peru, with lower processing costs making China a worthwhile alternative to other sources in the market. We are currently working with refiners for supply of Omega 3 products complying with all EU regulation standards and can offer material in bulk and also in softgel form.
GINKGO BILOBA EXTRACT 24/6/5
We are now offering Ginnovay®brand Ginkgo Biloba Extract, which has reached EGB761 specification levels. This specification guarantees 24% flavone glycosides (primarily quercetin, kaempferol and isorhamnetin) and 6% terpene lactones (2.8-3.4% ginkgolides A, B and C, and 2.6-3.2% bilobalide). Bilobalide is key nuro-functional ingredient which is extremely hard to replicate with other ingredients.
JOJOBA OIL
The Polar frost which hit Argentina at the end of July could have possible detrimental effects on the 2010 jojoba nut harvest. It is too early to predict exactly how much damage will be caused but any reduction in the crop size is likely to affect the market price for material of all origins.
LYCOPENE
This year the EU has formally approved the wider use of many Lycopene products which now can be used in foods. Premium has teamed up with suppliers from India to offer competitive products of high quality. A full range of Lycopene products is available and suitable for supplements and food use.
AMINO ACIDS
L-CYSTEIN HCL MONO & ANHYDROUS
The product remains relatively stable at present. Prices have increased from the very low levels earlier this year and have held at the higher levels. The factories are all indicating that raw material prices are increasing and that they are looking to increase their prices further as we move forwards. These higher prices are holding even with the lull in demand during the summer months, whether the prices increase further will depend on whether demand picks up from September and whether any more L-Cystine manufacturers decide to cease production.
D-XYLOSE
Prices are at very low levels currently and we can make some attractive offers. We have both Futaste (former Yucheng Futian) and Anhui Koyo material available from stock from August onwards.
TAURINE
This is another product which is currently at very low price levels, this has been brought about by overcapacity in China. We are now back at levels last seen around 8-10 years ago. Therefore as long as there are no major movements in raw material costs and/or production problems at any of the factories we cannot see prices going up again in the short term.
L-PROLINE / L-VALINE / L-ISOLEUCINE
All three of these aminos are very short currently as demand has outstripped capacity, and with several factories having closed down in the last year the effect is now being felt. If you have any uncovered requirements for second half 2009 we would suggest taking cover now.
L-LYSINE MONO HCL
We are currently validating a new supplier NINGBO DAIXIE (a sister factory of Ningbo Haide who we know well) and will be offering their material from stock from autumn onwards. They are very competitively priced and their quality has been approved by several major accounts already. We would be pleased to send samples & quotations and welcome your enquiries.
DL-METHIONINE FOOD GRADE
We have seen a reduction in price since the highs of last year, however, this product does remain somewhat volatile! Material will again be available from PII from September onwards.
AROMA CHEMICALS
MENTHOL/PEPPERMINT OIL
Prices have reduced slightly in the past few weeks but are now starting to show signs of increasing The offers from India seem to reflect a fairly good crop (although limited carryover), a desire of producers to sell product and the more balanced currency exchange rates. At this time it is hard to see what will drive up pricing further in the coming months, but as we all know, menthol is notorious for proving us all wrong!
Peppermint Oil DMO prices are following the line of Menthol but the main issue is quality of product which appears to have become erratic and widely variable. It seems there is no longer a “standard” product and nearly all offers ask for a specification before submission.
MALTOL/ETHYL MALTOL
Not much movement has taken place on these items for the past month or so and we would expect prices to remain stable.
CAMPHOR POWDER (SYNTHETIC)
Offers on this item are limited and prices are firm. Material on the spot is selling quickly and news of changing laws regarding this product seems to be activating the local market. Customers would be advised to review their needs and ensure adequate cover is taken
ISO BORNYL ACETATE
News of the European production problems is now well-known in China and as a consequence offers are more difficult to come by and prices have edged up a little. It is unclear if this is a temporary problem or likely to go on for some time, we recommend buyers ensure they have sufficient cover over the coming couple of months.
METHYL SALICYLATE
Market remains relatively stable and there is no problem with the availability of material.
METHYL CEDRYL KETONE
Offers for good quality material remain quite firm although cheaper grades are available. It is unlikely this product will decrease in price as the Chinese continue to try to clean up the environmental damage of the cedarwood oil processing.
VANILLIN/ETHYL VANILLIN
Further small decreases now make these products very attractively priced.
ESSENTIAL OILS
EUCALYPTUS/EUCALYPTOL
Offers from China continue to be high with no sign of relief. Demand locally is buoyant as it seems that many have been reluctant to buy forward at the high prices so stocks in the market are quickly depleted.
LITSEA CUBEBA OIL
We will soon have some indication on the expected crop for this year. Prices have been steadily declining for a few months now and any material in the market will be from 2008 crop.
ANISEED OIL
Prices remain firm and the outlook is for short supply at high prices.
PATCHOULI OIL
Offers from origin seem to have stabilised a little now and those who have held off purchasing should review their requirements.