TOP5 citric acid products sold in china by 2024[Introduction] Since late May, spot prices at Qingdao Port have stabilized after rising, mainly due to weakened downstream demand. International prices continued their upward trend, driven by rising costs, limited supply, and limited immediate demand, widening the price gap between domestic and international markets. International prices are expected to remain firm in June, with market fundamentals balancing each other. Spot prices are likely to remain stable in the first half of the month, with a possible price increase in the latter half.
Insufficient Downstream Demand Leads to Stabilization of Spot Prices at Qingdao Port
In early to mid-May, domestic cassava starch spot prices continued to rise, supported by factors such as increasing import costs, tightening supply in the distribution chain, and increased downstream demand. Starting in late May, the phased restocking by end-user factories came to an end, and downstream demand weakened, leading to a stabilization of prices at the mainstream market, Qingdao Port. As of June 5th, the mainstream transaction price for Thai cassava starch in Qingdao was 4350-4450 yuan/ton, stable compared to May 20th, up 3.53% month-on-month, and up 31.34% year-on-year. The mainstream transaction price of Vietnamese powder in Qingdao is 4,100-4,200 yuan/ton, which is stable compared with May 20, up 6.14% compared with the same period last month, and up 44.35% year-on-year.
Driven by both cost and supply/demand factors, international cassava starch prices have remained firm and risen.
Since late May, international cassava starch prices have been on the rise. From a cost perspective, the price of raw material cassava has increased, further increasing factory production costs. From a supply perspective, cassava procurement has become more difficult, leading to a shortage of raw materials. Factories are operating intermittently or even shutting down, resulting in insufficient cassava starch production. From a demand perspective, domestic end-user inventories are limited, with large paper companies importing only small quantities. As of June 5th, the intended transaction price for Thai cassava starch was $620-680/ton FOB, an increase of $70/ton from May 20th, representing a 12.07% increase and a year-on-year increase of 66.67%. The mainstream intended transaction price for Vietnamese cassava starch was $535-570/ton CFR, an increase of $20/ton from May 20th, representing a 3.76% increase and a year-on-year increase of 55.53%.
The price inversion between domestic and international markets continues and is worsening.
Based on real-time international market prices, the theoretical import cost has been declining since late May, with domestic trade profits gradually decreasing. Taking Vietnamese pork powder as an example, international market prices have remained firm, while the RMB/USD exchange rate has fluctuated. Overall, as of June 5th, the theoretical average import cost had increased by RMB 128.93/ton compared to May 20th, while the spot price of Vietnamese pork powder in Qingdao remained unchanged.
According to Zhuochuang Information, as of June 5th, the theoretical gross profit in the trade sector was -RMB 226.68/ton, a decrease of RMB 118.93/ton from May 20th, a drop of 110.38%. The price difference between domestic and international markets is widening, and the price inversion is intensifying. In actual transactions, traders’ inventory costs are lower than market prices, allowing them to profit to varying degrees.
Cost and supply factors continue to drive prices, and domestic and international prices are likely to remain firm in June.
From an international perspective, Southeast Asia is in its rainy season, leading to a decrease in the starch content of fresh cassava and a further reduction in the supply of high-quality cassava. This results in persistently high procurement costs and significantly increased difficulty in acquiring cassava. International cassava starch production is expected to be insufficient until the end of June, potentially keeping international prices high and even allowing for further increases. Domestically, import costs continue to rise, with most traders holding back sales and limiting supply in the distribution chain. In the first half of June, end-user factories will focus on reducing inventory, resulting in weak downstream demand. Purchases in the latter half of the month may be driven by immediate needs. Therefore, the market fundamentals will be balanced in the first half of June, making stable spot prices more likely. However, rising costs and tightening supply will provide renewed support to the market in the latter half of the month, potentially leading to price increases of around 100 yuan/ton. During this period, it is crucial to monitor changes in the sentiment of trading players. A stronger commitment to maintaining prices could trigger price increases earlier than anticipated.
Source: Zhuo Chuang Information
