21/12/2009
December 2009 - Market Report
GENERAL UPDATE
As 2009 draws to a close there are worries that the Chinese export sector could face a tough year again next year with factories facing rising labour and overhead costs, and potential appreciation of the Yuan. If China does allow its currency to appreciate it will be at the risk of a growth slowdown and potential social unrest. However, if China does not allow its currency to appreciate there could be a major political backlash and large global macroeconomic imbalances. How China manages its gradual exit strategy from the large economic stimulus measures (mentioned in our last two market reports) which kept disaster at bay this year will also be very important to the world’s economy.

Although we are starting to see signs globally that the economic outlook is brightening the situation does remain very fragile with no clear drivers for economic growth. Currently, economists predict that the US, where labour and the financial system are starting to show signs of stabilisation, will outpace economic growth in Europe where unyielding high levels of unemployment is likely to sap the strength of recovery.

At the time of writing the US dollar was at a three month high against the EURO, with signs of the start of an economic recovery in the US giving investors the impetus to start buying dollars again. Oil prices remain relatively stable in the low $70’s per barrel for Brent crude at the time of writing. It is unlikely that we will see any major oil price fluctuations as it is predicted that the OPEC group will keep production levels unchanged when they meet later this week.

Finally, in our last market report of 2009 we take this opportunity to wish all our customers and suppliers a very Merry Christmas and a happy and successful New Year!

VITAMINS & DERIVATIVES
ASCORBIC ACID & DERIVATIVES
Following the factory shutdowns that took place during the summer, exports of Ascorbic Acid from China have declined considerably and as a result there are some shortages in the spot market at present with prices remaining firm.

Despite the fact that weaker prices are being offered into the market for 2010, we understand that all 5 major producers in China will be closing for 60-90 days in the first half of 2010. This is likely to keep exports tight for the next 4-5 months as each producer looks to build up their stocks to take them through the shutdown period.

Therefore, we anticipate that the market price will remain quite stable during this period.

VITAMINS B1 HCL & MONO, B2 AND VITAMIN B6
The market for these B vitamins remains stable and at this time there are no indications of any changes to come in the New Year.

FOOD & BEVERAGE INGREDIENTS
ERYTHORBIC ACID & SODIUM ERYTHORBATE
Both producers are now open but there is some uncertainty as to what the future price level will be. One of the Chinese producers currently has restricted availability as a result of increased demand over recent months. The second Chinese producer is trying to establish their price level now they have reopened. Therefore, it still remains to be seen whether we will see a reduction in the current price level or if the two producers will work to try to maintain the current higher numbers.

PHOSPHATES
Since our last report in which we stated  prices were close to a three year lows, we have seen yellow fertilizer and energy prices come back up, which has raised our prices on sodium and calcium prices by almost 10%. As for the beginning of 2010 we see prices stabilising.

I+G & IMP 
It appears the supply will be tight through first quarter 2010, limited sotcks are available so please contact us for more information.

MONOSODIUM GLUTAMATE 
Prices are still on the rise, mainly due to strong demand and increasing raw material prices.

CITRIC ACID
We have been informed that prices have recently increased by around 15% and, at the time of writing, the MIP (Minimum Import Price) for Q1 2010 has not yet been set. Therefore, we suggest that price and availability is checked before making any commitments.

CAFFEINE
Market conditions are stable, although prices do vary depending on which producer is offering.

POTASSIUM SORBATE
After a year of weak pricing for Chinese material, we are now seeing increases as the factories look to try and recoup some of the losses made. In addition, all basic raw materials for this product (the main one being Crotonaldehyde) have increased considerably recently. Therefore, we believe we will see firmer pricing during Q1 2010.

AMINO ACIDS
L-LYSINE MONO HCL
Feed grade prices in China have increased by around 40% in the past month and this has meant a similar increase in the prices for the food grade material that we offer. Availability is also tight so we would strongly recommend that orders for first half year are covered out now.

DL-METHIONINE USP
This product is similar in situation to the above. We can only offer contracts for delivery in March onwards and availability of material is very tight.

L-CYSTEIN HCL MONO & ANHYDROUS
Prices have risen recently and look set to increase further into 2010 as two of the main CYSTINE factories have stopped production. Several of the major suppliers in China are currently not offering at all and others are nervous of where the price will go. This will also push up L-Tyrosine, L-Leucine and L-Argenine prices.

TAURINE
Prices for this product are also moving upwards. The extremely low prices that we saw in summer/early autumn 2009 now seems to be a distant memory! The producers are keen to push prices back up to levels where the factories feel that they can make money again. Their declared intention is to continue with a steady price rise until at least mid 2010. We recommend that you take cover of this product for Q1 & Q2 if you have not already done so.

GLYCINE
Prices are increasing from the all time lows seen this summer. The factories were not making any money at these levels and could not continue with product long term. Prices have increased already and look set to rise further into 2010.

NUTRACEUTICAL INGREDIENTS
GLUCOSAMINE
Glucosamine prices started to rise in September and have increased by around $1.50 per kilo. Prices may change after Chinese New Year as with past years, however, at this stage it is hard to predict which way they will move. We are now able to offer direct compression grades with PVPK and HPMC as the binder. Indian origin material is also available.

CHONDROITIN
Finally we have been able to resolve the importation problems mentioned in our last report and we are now able to offer chicken and marine chondroitin from EU stock. Given the EU ban on Chinese pork and beef chondroitin it is hard to understand how some EU sellers are still offering material of these origins. We can only speculate that the material was imported in 2008 before the ban was enforced.

MSM
Prices in dollar terms have been steady and there have been no changes to the market.

CURCUMIN
Prices are now at much higher levels with prices around $20 per kilo higher than lever seen at the beginning of the year. New health benefits seem to keep emerging for curcumin and with research continuing we could see prices increase further in conjunction with this rise in demand.

FISH OILS
 We are working hard to register our factories in China to comply with the EU hygiene directive which came out this year which applies to all facilities outside of the EU producing both the oil and the soft gels. This legislation has led to shortages in the market and price increases. We hope to have a full range of fish oils available in the first quarter 2010 from stock.

TABLETS AND SOFT GELS
There is increased interest for finished tablets and soft gels that can be supplied from GMP and BRC factories abroad. PII can offer commodity tablets and soft gels in bulk  e.g.  Vitamin C, multivitamins, glucosamine and fish oils.

AROMA CHEMICALS
MENTHOL CRYSTALS AND PEPPERMINT OIL
Prices have remained firm from origin and currently the suppliers in India appear to be able to keep this going for the coming few weeks. Although there seems to be little foundation for these high numbers, there is no doubt that currency continues to play a part. In addition, some of the key producers are undoubtedly helping buoy the market. However, buying demand has only been moderate and as we go into seasonal shutdowns this is likely to remain so. It can only be hoped that the lack of purchasing will encourage more aggressive pricing in the New Year.
 
EUCALYPTUS/EUCALYPTOL
There seems to be no let up in the increases on this product. Offers from origin are moredifficult to come by and when you can obtain a firm price for a container the offers are very expensive and shipments are likely to be February at the earliest. In general it seems the farmers are just not motivated to collect leaves, however, there must come a point at these levels that the interest will be resurrected, at this time we would expect the market to weaken, but this is not in sight yet! Eucalyptol seems to be even more difficult given that they can sell all the eucalyptus nobody is keen to retain stocks to convert.
 
VANILLIN/ETHYL VANILLIN
Although prices from origin are stable there seem to be some cheap parcels offered in the European market. It is not clear why these offers are being put out, but customers should ensure that the commitment is long term by these sellers otherwise they could find problems later in the year. Although there is a significant new factory on line now for Ethyl Vanillin, it does not seem to have improved the price noticeably.
 
BENZYL ALCOHOL/BENZALDEHYDE
2010 price increases have just been announced and customers can expect to pay about $0.25KG more for both items as a result of currency and increasing prices for oil. European producers may see their business erode as India start to become more aggressive.
 
CINNAMIC ALDEHYDE
This appears to be "product of the month" in the USA as there are supply issues from one of the producers and others are struggling to pick up the slack. Prices from India are stable, but it won't take long for them to react to the increase in demand and capitalise on the opportunity.

COUMARIN
We are now stocking this in both Europe and the USA and welcome your enquiries.

MALTOL/ETHYL MALTOL
Offers remain stable for the time being.
 
METHYL CEDRYL KETONE
Prices have firmed a little recently and it is hard to see that this product will come down in the future.

RASPBERRY KETONE
Prices are attractive currently and we do not see that there can be much downside in covering requirements.

HELIOTROPIN
Prices remain very attractive and we believe that they will rise in the New Year when the lower priced inventory is cleared.

ESSENTIAL OILS
CITRONELLA OIL
The low prices of a month or so ago are now disappearing and we are seeing higher offers from all sources. It would be recommended that customers take they cover sooner rather than later.
 
CASSIA OIL
Prices are very firm and there is limited availability from China. We welcome your enquiries
 
LITSEA CUBEBA OIL/NATURAL CITRAL
Following the harvest prices were pretty low but we are already seeing some increases. At these levels we would encourage cover to be taken.
 
CLOVE LEAF OIL - MADAGASCAR
The supply situation is very tight at origin where we cannot get any large volume offers at the time of writing. The brief harvest of the delicate lychees in early December takes priority over any other crop, once this is finished the farmers and exporters then focus on the clove bud harvest which this season appears to be very small. As a result of this reduced crop supply has been affected and quotes are up by around 20-25%. This increase has also been fuelled by a continuous demand from Indonesian processors as their local crop does not cover their requirements.

CORIANDER OIL
The market price remains firm as the summer crop in Russia was poor. We do not anticipate any change in the present market level during the next 6 to 8 months as the demand is usually fairly constant.

GARLIC OIL
This has become very firm in recent months and even the Chinese are speculating on the bulbs. In China garlic is considered a good preventative medicine (especially for flu) and consequently domestic demand is high for the bulbs which is leaving little for conversion into oil. The price of the synthetic FCC Mexican garlic oil (which is increasing in price albeit more slowly than the natural) could be a more attractive option for those who are able to use it.

PATCHOULI OIL
Heavy rain falls in October and a subsequent lack of sun to dry the leaves are two of the factors which have hampered distillation. There is very little stock in the hands of the traditional exporters and farmers have been disinclined to sell in this bullish market

TEA TREE OIL
The market is currently firm and demand is strong in Europe with availability slow from Australia and China offering little material.