[Introduction]: The domestic I+G market exhibited a phased trend in the second quarter of 2026, initially rising and then falling. In June, downstream food consumption entered the off-season, with end-user companies having sufficient prior inventory and low restocking intentions, resulting in weak demand and a price decline from its high point. In the third quarter, with the start of pre-holiday stockpiling for the Mid-Autumn Festival and National Day holidays, downstream demand is expected to recover, coupled with stable cost support and limited industry supply release. The I+G market is likely to stabilize and recover, exhibiting a narrow range of fluctuations with a slightly upward trend.
The I+G market saw a slight decline after an initial rise in the second quarter.
From January to May, leading domestic I+G producers maintained their prices, coupled with steadily rising raw material costs, leading to a month-on-month increase in market transaction prices. However, in June, market prices entered a period of fluctuation and decline. This was mainly due to persistently weak end-user demand. Downstream food processing companies, such as those producing condiments, had sufficient inventory from earlier periods, and June was primarily focused on depleting their existing stock. Market demand was weak, and manufacturers proactively lowered their prices to stimulate sales and alleviate inventory pressure, resulting in an overall price decline and ending five consecutive months of price increases. As of June 29, the market price for bagged I+G was around 51-52 yuan/kg, a month-on-month decrease of 4.6%. The average price of nucleotides from January to June was 52 yuan/kg, a decrease of 18.6% compared to 63.9 yuan/kg in the same period last year.
Supply and demand were tight initially but eased later, with cost support remaining stable.
Throughout the second quarter, the I+G market experienced a tight supply and demand situation initially, followed by a period of easing as demand weakened. During the second quarter, some companies underwent maintenance shutdowns, limiting the effective increase in supply. On the demand side, the steady recovery of the catering industry after the holidays led to a steady release of pent-up demand, resulting in a slight tightness in supply and demand, which supported market price increases. Entering June, end-user food consumption entered a period of seasonal low, with downstream condiment and food processing companies experiencing insufficient order growth and declining purchasing activity. Coupled with price reductions by some companies and competitive bidding, market sentiment was mixed, leading to a slight decline in high prices.
On the cost side, I+G companies faced increasing cost pressures during the second quarter, which also provided strong support for market prices. Domestic corn and starch prices fluctuated upwards during the second quarter, while prices of chemical auxiliaries and packaging materials rose slightly. This, coupled with a steady increase in domestic energy and logistics costs, further pushed up the overall production costs of companies. The overall upward shift in the industry's production cost center compressed profit margins, becoming the core support for this round of I+G price increases. The persistently high cost level limits the potential for a significant price decline in the I+G market.
I+G Prices May Weaken Initially and Then Strengthen in Q3, with Improved Market Sentiment Expected
Looking ahead to the third quarter of 2026, the I+G market is likely to experience a weakening initially and then strengthening trend, with improved market sentiment expected. On the supply side, the hot weather in the third quarter, coupled with anticipated summer maintenance shutdowns at fermentation plants, will lead to a slight decline in industry operating rates and a decrease in supply compared to the previous quarter. On the demand side, the third quarter marks the traditional peak season for food consumption, with pre-holiday stockpiling for the Mid-Autumn Festival and National Day holidays, releasing demand from downstream condiment and food processing companies, thus strengthening demand support. On the cost side, corn and starch, as well as chemical raw material prices, are likely to remain high, with little chance of a sharp decline, and rigid cost support will continue in the third quarter.
Overall, with the Mid-Autumn Festival and National Day holidays approaching in the third quarter, downstream end-users will gradually begin pre-stocking, and demand is expected to recover. Coupled with the rigid support of raw material costs and limited increase in industry supply, the I+G market price may first decline and then stabilize and rebound, with transaction activity steadily increasing, and the industry's supply and demand pattern may once again tend towards a tight balance.
Source: Zhuo Chuang Information