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MARKET TRENDS

by Tony Xue, General Manager, ingredientsonline.com™ China as of 7/22/19

TRADE WAR The answer to the question regarding whether an additional 25% U.S. tariff will be on top of 300 billion Chinese products is “No” as of mid-July 2019, but not without uncertainty. After President Trump met Chinese President Xi Jinping at the G20 Summit in late June, both sides announced they would re-launch talks, and the potential tariff change scheduled for July 1 is now on hold. More and more people are beginning to conclude that it will be quite difficult to resolve the disputes between both countries. Many Chinese ingredient factories have done their homework during this tumultuous time trying to be proactive for their valued customers. Some factories have either partially absorbed the increase or completely absorbed it to keep their prices competitive. Other factories have had to pass the tariff increase onto U.S. buyers but without fear of losing them as customers due to their leading position in the global supply chain.

POLLUTION CONTROL In China, the government centralizes chemical and related factories into one industrial zone while enhancing the treatment capability of industrial waste and managing safety better. More factories will be pushed out of the market due to various factors, including poor location, inefficient production flow, high risk and too many pollutants. Therefore, the number of factories will be smaller, but quality will be better. Today, pollution control is based more on rationale. In the early stages, some factories were simply told to shut down until inspection was completed. Now, the government provides a time frame to upgrade and take corrective actions so that improvements can be done step by step. This will eventually lead to pollution being under more control and will also minimize the negative impact on business and the economy.

WEATHER Many factories will shut down for facility maintenance and to avoid China’s high summer temperatures during production.

5-HYDROXYTRYPTOPHAN (5-HTP) Supply and demand are well balanced, and the factories have planned well for the starting material from Africa. BETA GLUCAN Beta Glucan is a common and promising product with applications in both food additives and supplementation. There is still a lot of room for growth as Chinese material price is more competitive and Chinese factories are well developed.

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INGREDIENTSONLINE .COM™ • FALL 2019

BETAINE ANHDYDROUS/BETAINE HCL/CHOLINE BITARTRATE/CHOLINE CHLORIDE Starting material price increased slightly causing a hard time for Chinese factories. However, they are still trying to improve the production process to lower cost so the final sales price in the U.S. market can remain competitive. Cautiously, the production output will be kept the same as before and price is increased as little as possible.

BRANCHED-CHAIN AMINO ACIDS (BCAA) Due to the tariff impact, usage of Valine, Isoleucine and Leucine are decreasing. Usage of BCAA remains stable, but due to the decreased price of the starting material, the price of BCAA decreased. CALCIUM D-PANTOTHENATE (B5) Price remains stable at a mid to high level. It may change a lot in the next few months due to starting material and production status.


M A R K E T U P DAT E

CHONDROITIN Since our last update, price decreased slightly and we predict it will continue to go down. It looks as if the availability is better, but competition is getting fierce. CITRIC ACID ANHYDROUS Price is stable, but this is the busy season for Citric Acid sales—a time to fulfill blank orders used to produce various types of foods and beverages. Chinese factories find many ways to continue to do business in the U.S., including clearing customs on their own and providing final price to the customer. COENZYME Q10 (COQ10) CoQ10 is not on the tariff list and price remains stable. CONJUGATED LINOLEIC ACID (CLA) OIL AND POWDER Supply and price remain stable. CREATINE MONOHYDRATE Supply remains stable while factories and suppliers carefully deal with the increased cost and keeping their market share. There may be some changes in the next few months due to

pollution control. Some factories are closed, and some new factories have opened in the industrial zone to meet the market demand.

INOSITOL Supply still exceeds demand, and price is stable at low level.

FOLIC ACID The market remains the same; tight. Supply is very limited, and with the summer comes many factories shutting down.

L-ARGININE/L-CITRULLINE In order to compete with products coming from other countries, Chinese factories have decreased the price of Arginine to a historically low level. Due to this competition, we think the price will remain low for some time.

GAMMA-AMINOBUTYRIC ACID (GABA) Since our last update regarding a small price increase, price has been stable. We also need to know that the fermentation process can produce GABA, and it is mainly sold domestically in China at two and half to three times the cost of the synthetic one. GLUCOSAMINE With summer’s arrival, the harvest of the starting material (chicken lobster) is normal. Price remains stable and will remain so if there is no big change with pollution control. GREEN COFFEE BEAN 50% Supply and demand are balanced. Both China and India can supply, and there are no tariff issues so far.

L-CARNITINE As was with our last update, supply remains tight. It is strongly encouraged to plan ahead and get stock early to avoid any issues related to a production shut down. L-CYSTEINE/L-TYROSINE We predict prices for these ingredients will increase slightly due to the market depression of Arginine and so factories can still meet their bottom line. However, with the new fermentation technology for Cysteine and Tyrosine, the challenge for the hydrolyzed factory becomes greater and greater.

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JIANGYIN HUACHANG Food Additive Co., Ltd.

FACTORY-DIRECT

BE ENERGIZED

2,500 square meter factory

ISO9001, ISO22000, Kosher and Halal certified

Meets the sterile requirement of 100,000 levels GMP standard Founded in 2007, Jiangyin Huachang Food Additive Co., Ltd. is located in the center of the Yangtze Delta Economical Zone.

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M A R K E T U P DAT E

Shandong Jincheng Bio-pharmaceutical Co., Ltd is a publicly listed company in China and is honored as a National High-New Technology Enterprise. Main products are manufactured by microbial fermentation

L-GLUTAMINE The price of Glutamine will remain stable. Due to the fear of a duty increase, some suppliers prepared much additional stock. The Korean origin material also is taking this opportunity to gain more of a U.S. market share.

technology and advanced biological extraction and purification technology.

L-GLUTATHIONE REDUCED Supply is slightly better, and price is stable. If customers plan ahead, the factory can meet their demand.

MAIN PRODUCTS:

NEW PRODUCTS:

• L-Glutathione Reduced

• AA2G

• S-Adenosyl-L-Methionine (SAMe)

• L-Alanyl

• Ademetionine Disulfate Tosylate

L-LYSINE/L-THREONINE Price increased slightly in the last two months and we don’t think it will change much as supply remains sufficient.

• L-Hydroxyproline

• Ademetionine 1,4-butanedisulfonate • Pyrroloquinoline Quinine Disodium Salt (PQQ) α-Ketoglutaric Acid series of products Jincheng Pharm holds GMP, Kosher and Halal certificates. Glutathione has DMF registration in Japan, Korea and India.

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Shaanxi Jianhe

L-TRYPTOPHAN Supply is better than before mainly due to the decreased demand from the feed industry while price remains stable. LUO HAN GUO EXTRACT The harvest will be in October and November, and the factories usually update the price for next year in December. Production will begin in December and go until the following March while price is currently stable. LUTEIN The harvest was poor last year, and some factories are trying to stock up on the starting material, so the price will start to increase at the end of the year. METHIONINE The new NHU invested factory has been launched, and we think with increased output from the fermentation method, its price will remain soft.

Bio-Technology Co., Ltd

• Alpha GPC

• Beta Glucan

• Diindolylmethane

• Indole-3-Carbinol

• Isoflavones HPLC

• Kudzu Root 40%

• Melatonin • Olive Leaf P.E. 10%/20%/40% Oleuropein • Pine Bark Extract 95% (PROAN) • Policosanol 99% min. (Octacosanol 60%) • Pomegranate P.E. 50% Polyphenols • Quercetin Dihydrate 98%

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METHYLSULFONYLMETHANE (MSM) In May, there was an increase in price for a short period, but now it is stable. The starting material DMXO remains sufficient, and it is predicted that price will decrease by one to two cents USD/KG by the end of the year. PHOSPHATIDYL SERINE 20% is selling better than 50% and this may be due to cost. However, the product is on the tariff list, and price will increase after the stock is sold out in the U.S. PYRIDOXINE (B6)/THIAMINE (B1) The major factories announced their summer shutdown will last around 60 days. Availability is better now than this same time last year, but price is very firm. RIBOFLAVIN (B2) Price is soft, and some new factories are experiencing a dilemma between running production and shutting down to avoid further loss. This reflects on the fact that China’s new capacity has not been planned well based on the market demand. New factories joined in when the price was high but had a hard time with more output. SODIUM HYALURONATE It looks as if the factories can increase output, and as demand grows, output similarly grows with price remaining stable.


SPIRULINA Price remains stable, but we sense demand is increasing and may be strong this fall. Some new formulations have indicated Spirulina in them.

Shanghai KangXin Chemical Co., Ltd.

STEVIA The harvest was good from last year, and price remains at low level. However, it is expected to increase by the end of the year because since the harvest was too good last year, many farmers ceased growing this year. This may have led to a starting material shortage a few months later.

Creatinol-O-Phosphate

SUCRALOSE Price has increased since our last update, and supply remains stable.

Magnesium Beta Hydroxybutyrate

TAURINE Supply of the starting material EO tends to be tight and it will take one or two months to reflect in the Taurine price in the U.S. market. All the factories are keeping the price flat to face the increase from tariffs, but price may increase slightly due to the EO price increase. TONGKAT ALI EXTRACT Currently, price is tight mainly due to insufficient starting material supply which needs to be imported from overseas. When the starting material issue is fixed, price and supply will be back to normal and stable. VITAMIN A BASF announced to customers that its German factory stopped production in mid-June. The impact didn’t show up immediately but is reflected now. It is hard to get offers from factories, and supply is limited. VITAMIN B12 (CYANOCOBALAMIN AND METHYLCOBALAMIN) Price has been on a downward trend since the beginning of the year. Several vitamin factories announced their new production plan for B12 and this may bring the price even lower. VITAMIN C Price is at an historically low level. As mentioned in the last report, most factories will shut down for summer facility maintenance and will be cautious when setting up a time to resume production so they can keep output limited to stabilize the market. Now is a good time to purchase, and the room for further decrease is extremely limited. VITAMIN E Supply is still affected by the explosion in Jiangsu Province. The usage of the starting material is under strict inspection which makes the production difficult, so availability is limited. XYLITOL/XYLITOL DC Price is currently stable. As we learned from the CPhI trade show in Shanghai in June, some factories may face finance difficulties in Shandong Province, which may be one of the reasons why the price increased as much as it did in the past year. Now, supply and demand are balanced, and price will remain stable for a while.

Calcium Beta Hydroxybutyrate Sodium Beta Hydroxybutyrate Shanghai KangXin Chemical Co., Ltd. is a joint venture company founded in 2000 and is located in Shanghai, China, which covers 2000m2 and is one of the earliest manufacturers in China dedicated to providing high quality products of food additives worldwide. KangXin is a certificated company of “Food Additive Production/Health Permit” issued by the Ministry of Health as well as ISO9001 Quality Management System and kosher certificate.

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ingredientsonline.com™ Market Trends | Fall 2019  

ingredientsonline.com™ Market Trends | Fall 2019