The ex-works price of
xanthan gum witnessed an obvious downtrend in 2013, especially during H2 2013.
For example, the ex-works price of xanthan gum of Fufeng Group Co., Ltd.
(Fufeng Group), a leading xanthan gum manufacturer with a capacity of around
50,000t/a, fluctuated at a relatively low level during H1 2013, according to
data from CCM. The average ex-works price decreased from USD5,190/t during H2
2012 to USD5,149/t during H1 2013. Since then, Fufeng Group continued to
decrease the price of xanthan gum to USD4,275/t in Dec. 2013, down a
significant 17% compared with that in June 2013, due to the downturn in the
market for xanthan gum.
The following factors forced producers to
decrease the price of xanthan gum in 2013:
First of all, the increasing supply of
xanthan gum. Tight supply caused higher prices in 2012, but expanding capacity
led to oversupply in 2013. Deosen Biochemical Ltd. (Deosen Biochemical), Fufeng
Group, Inner Mongolia Jianlong Biochemical Co., Ltd. and Meihua Holdings Group
Co., Ltd. all put xanthan gum production lines into operation this year. Each
of these production lines has a capacity of around 10,000 t/a. And it is estimated that the new capacities
of xanthan gum in 2013 totalled around 60,000 tonnes. The expansion intensified
the competition in the xanthan gum market, so manufacturers had to decrease
their prices to take up more market share.
Second, the slow growth in demand from
overseas markets. Generally, China's xanthan gum is an export-oriented product.
While, the demand growth of xanthan gum from overseas was not satisfied. The
export volume of xanthan gum was around 102,000 tonnes during Jan.-Nov. 2013,
just at the same level as that in 2012. Moreover, in May 2013, the US
Department of Commerce imposed dumping margins on Chinese xanthan gum, ranging
from 15.09% to 154.07%. The high anti-dumping margins negatively impacted the
xanthan gum export.
Third, the less competitive advantage. In
2013, the price of guar gum, a substitute of xanthan gum, declined in the overseas
market, especially since July. According to data from China Customs, the
average import price of guar gum from India (China's major import origin of
this product) was around USD4,993/t during Jan.-Nov. 2013, down from around
USD6,533/t in 2012. The low price of imported guar gum attracted more
downstream enterprises to use this product. China imported around 4,472 tonnes
of guar gum from India in the first eleven months of this year, 1,074 tonnes
more than that in 2012.
Fourth, the weak cost support. In 2013, the
price of corn starch in China remained low and it has undergone a downtrend
since Aug., due to the increasing supply of corn. In detail, the average
ex-works price of corn starch in North China was around USD469/t in 2013,
USD8/t lower than that in 2012.
It is predicted that the price downtrend of
domestic xanthan gum will persist in 2014, due to further capacity expansion.
Specifically, the third phase of the xanthan gum capacity expansion of Deosen
Biochemical will be finished in early 2014. Then, the company's xanthan gum
capacity will increase to around 90,000 t/a from present 78,000 t/a, becoming
the largest producer of this product in China. Similarly, Fufeng Group also has
a desire to enlarge the market share of xanthan gum.
China returns 2,000 tonnes of GM DDGS to the
US
Chinese corn products Imp. & Exp., Nov.
2013
Export volume of China's furfural rebounds,
Oct.-Nov. 2013
Price update of corn products, Jan. 2014
Review of the ex-works price of corn germ
meal, H2 2013
Ex-works price of xanthan gum decreases
sharply in 2013
Guangji Pharmaceutical suspends partial VB2
production line
Shandong Longlive opens online flagship shop
at Tmall
Frequent outbreaks of avian influenza
challenges poultry industry again
Edible ethanol industry undergoes downturn in
2013
Market price of wheat in China enjoys marked
uptrend, June-Nov. 2013
Corn
Products China News, a monthly publication
issued by CCM on 20th, features “Supply and Demand”, “Import and
Export Analysis”, “Price Update”, “Market & Company Dynamics”, “Policy”,
“Corn Supply” and other more information researched and reported by CCM’s
professional journalists. It is a reliable intermediate for you to know more
about the corn industry in China even in the globe.
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