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MARKET UPDATE By Tony Xue | Shanghai General Manager | ingredientsonline.com™

Since our last update, we’ve frequently been asked about the trade war’s impact and specific duty change in our daily communication with customers. The product list for increased tariffs will be finalized by the end of August and we will be proactively and closely working with our customs clearance agency to get first-hand information that will keep our customers and suppliers updated. For current details as of August 3, 2018, read this article by Steve Myers, Senior Editor at Informa - http://bit.ly/uschinatradewar U.S. manufacturers will see increased cost because we greatly depend upon materials coming from China. For instance, Coca-Cola just announced a price increase due to packaging from imported aluminum whose cost is affected by the new tariff policy from the current administration. In our industry, some of the key ingredients are only, or mainly, produced in China. U.S. manufacturers who use all kinds of ingredients are hard-pressed to be exempt from this duty change.

Ace K

Betaine Anhydrous/Betaine HCL

Calcium D-Pantothenate

Price is going to increase slowly and methodically because of the already known demand. Attempting to increase profits to balance the loss of other products is also a reason for the price increase.

Price is currently very stable.

Price is currently stable, and supply and demand are in balance between factories, distributors and customers.

Production of B5 is not very stable. The factories in Shandong Province just completed the first round of pollution control inspection and may face the second round soon. Most of the factories have shut down production for the summer and they also have advised that the demand is soft.

Caffeine Synthetic/Theobromine

Choline Bitartrate/Choline Chloride

Prices are stable at a high level, and the supply and demand are balanced.

Price is currently very stable.

B12 The market for B12 is still very high and the availability is very limited for both Methylcobalamine and Cyanocobalamine. The key reason is still the limited output from the factory due to pollution control. It is hard to improve during summer time, and this trend will continue until the end of the year.

BCAA BCAA is moving very quickly now mostly due to the tight supply of Leucine. L-valine and L-isoleucine are still stable but Leucine has become hot since the middle of June. Leucine is hot for these reasons: 1. The fermentation grade is always tight and very limited in supply 2. The hydrolyzed Leucine production is affected by the pollution control 3. The hydrolyzed Leucine producers are trying to lift the profit of Leucine to balance the loss of their other products such as Arginine, Tyrosine, etc.

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INGREDIENTSONLINE.COM™ • FALL 2018

Biotin

Chondroitin/Collagen Calcium/Magnesium/Manganese Sodium/ Potassium Gluconate/Zinc The cost from China is stable, but the antidumping issue and trade war bring much uncertainty for Gluconate salt. We think price may increase to some extent in Q3.

Calcium/Magnesium/Sodium BHB (Beta Hydroxybutyrate) The usage of BHB salt is the new trend in the dietary supplement industry and demand keeps increasing. The factories have immense backorders, and the earlier you order, the better chance you have to get supply.

Calcium Citrate/Magnesium Citrate Price is currently stable, but the India origin product is currently replacing product from China.

The Chondroitin market is currently stable. Collagen is becoming more popular and customers are trying to use different types and different sources to reach the best delivery value and results. Currently, it is a good time to lock orders in for this ingredient as this product fluctuates often and with no warning.

Citric Acid Anhydrous Our material comes from Thailand Sunshine International which is the largest producer exporting to the U.S. market. Sunshine has an 80,000mt total annual output with Citric Acid Anhydrous accounting for about 40,000mt. Due to antidumping, the price has been increasing since last year but is currently stable and is expected to remain that way for the rest of the year. Also due to antidumping, the Citric Acid from Glanbia and Belgium have currently


ABC walked away from the U.S. market. The major importation comes from Sunshine and also Cofco Thailand.

CLA Oil and Powder Price increased a little but may remain generally stable.

CoQ10 Supply and price are currently stable.

Creatine Mono Price is currently stable for these reasons: 1. Production is not normal at various factories due to pollution control. 2. Output this year is only 70% of what it was last year, even though some new factories stepped in. 3. The demand for Creatine Mono is reducing in 2018, but Creatine derivatives, such as Creatine HCL and Creatine Nitrate, are needed more than before.

Folic Acid The price was soft from last year to early this year and has started to increase step by step. The pressure from pollution control is very intense for this product and we think it will increase in Q3.

GABA Production output is better than earlier this year and price is coming down a little bit but is generally stable in Q3.

Glucosamine As mentioned in the last report, the price increased a little bit but is stable. The factories keep a good balance of supply and demand.

Inositol The market is becoming soft now in comparison with a more stable market in Q2. It seems as if the demand is not as great as it was the same time last year.

L-Arginine/L-Citrulline Since CJ’s Indonesia factory stepped into production, the price has become soft step by step even though the starting material (Glucose) cost increased. Currently, the profit margin for Arginine is very low. Over the years, some new applications/formulations have developed with Arginine such as becoming the key ingredient in P&L toothpaste for anti-allergy purposes, and as the starting material to produce Citrulline and other derivatives, etc. These have led to a shortage and tight supply for some time, but generally, the output from Shinestar and CJ currently exceed demand.

L-Carnitine The starting materials of Carnitine Epichlorohydrine and Trimethylamine HCl are both very tight. Currently, the major factories in China are all running production, but the outputs vary from time to time due to environment control pressure. Most factories have significant backorders and need to plan for the demand and POs in advance.

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INGREDIENTSONLINE.COM™ • FALL 2018

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MARKET TRENDS

L-Cysteine/L-Histine HCL/L-Tyrosine These hydrolyzed amino acid prices are stable now.

L-Glutamine Supply is tight and price is very firm. Again, the output has been fully booked and factories have no more output to supply. We think it will continue until the end of the year.

Province is impacted by pollution control and some of the key factories are not running production smoothly.

has started to increase. Some of the traders are trying to sell the stock on hand to get better cash flow.

MSM

Generally, the price is not as high as that of early this year, but supply is still tight due to inadequate production output.

The price of MSM keeps increasing and the factories are working on a large amount of backorders until September.

Riboflavin

Due to the unstable starting material supply and unstable production, there are only two factories left in the market able to produce MSM, and it is greatly suggested to plan for stock in advance to avoid a shortage in your production.

After hitting the bottom in June, price has started to lift a little bit. Guangji announced a production shut down for two months since July. However, with many new factories on board, the price will fluctuate a little but not too much.

Niacin/Niacinamide

Sodium Hyaluronate

Availability is good now and price is currently at a low level.

The prices of Niacin and Niacinamide have been at a low level for some time. With the release of new output, the trend will continue for about one to two months.

L-Tryptophan

Pyridoxine

The shortage for L-tryptophan is still ongoing. The feed grade production in Shandong

Factories are frequently being inspected by the government due to pollution control and price

Supply is still very tight, but we think the trend may last for another two months and then the supply should get better. The production capability is still very large in China and it is easy to increase the output. The HA factories are very well developed with high standards and are usually not impacted by pollution control inspection.

L-Glutathione Reduced Availability has improved a little, but supply is still tight. Some new production capacity will begin to for the second half of 2018 and we will see the supply get a little better in Q3.

L-Lysine

BetaGlucan

Keratin

Shanghai KangXin Chemical Co., Ltd.

Chondroitin Sulfate

Collagen

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MARKET TRENDS

Spirulina

Taurine

Vitamin A/Vitamin E

Price is staying at medium level and supply and demand are currently balanced.

The current price is lower than that of last year but is staying at a medium level. It is now summer time and we have not learned of any shut downs or availability issues. We predict the price will stay stable in Q3.

The BASF lemon Aldehyde factory has officially announced that the Force Majeure Clause for production shutdown has come to an end and availability has been continuously improving. NHU shutdown production for 10 weeks starting in mid-July and price continues to fluctuate a little.

Stevia There are a few big steps left for Stevia to move forward as the major sweetener in food and drinks, not only in the U.S. and Europe, but China as well. As mentioned in the last report, the factories have gained good harvest of the starting material, so generally the price is stable. There is also a trend that customers like the taste to be customized, so the factories usually keep the starting material and produce the final bulk ingredient based on the customers’ requirement.

Sucralose Sucralose’s price has touched the bottom and some of the factories are having a hard time making ends meet. The price has increased a little bit but generally it is stable at a historically low level.

Epimedium Extract Tribulus Extract Rhodiola Extract Garlic Extract Resveratrol Siberian Ginseng Extract Ginger Extract St John’s Wort Extract Valerian Extract Reishi Mushroom Extract Goji Berry Extract Pine Bark Extract Grape Seed Extract Ginkgo Biloba Extract Echinacea Extract Tannin/Tannic Acid 82%

Thiamine The availability of the Mononitrate form is a little better than the HCL form. Tianxin has announced a shut down for three months starting in July while Brother Group resumed production. In the market, Thiamine HCL’s price is not as high as earlier this year, but availability is very limited. The factories are experiencing extensive backorders and advise the supply will get better by the end of September.

Turmeric The Turmeric harvest is good this year and demand increased due to good marketing and promotion. However, there are a great number of suppliers as well in the market, so the price is currently soft.

Vitamin C Price has not changed too much and is currently stable at a low level. The domestic demand in China is soft while exportation to the U.S. and Europe remains in good quantities. Ascorbic Acid is not on the list of duty change and will stay at its current level in Q3.

Xylitol/Xylitol DC There is no improvement on supply, and factories are mostly trying to fill blank orders from big gum companies while the spot purchase is not as easy as the past few years.

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ingredientsonline.com™ Market Trends | Fall 2018  

ingredientsonline.com™ Market Trends | Fall 2018