1. Market review: Citric acid prices fell slightly in May, with limited decline
Recently, downstream demand for citric acid has been weak, the transaction atmosphere is light, and demand support is insufficient. However, given the high cost, some companies are in a loss-making state, and there is insufficient room for prices to continue to fall. The trend has temporarily returned to a stable state. As of May 28, the ex-factory price of monohydrate citric acid of the leading enterprises in Shandong production area is 5300-5700 yuan/ton, the ex-factory price of anhydrous citric acid is 5700-6200 yuan/ton, and the ex-factory price of sodium salt is 5300-5900 yuan/ton.
As of May 28, the average ex-factory price of citric acid monohydrate of domestic citric acid enterprises this month is 4,842 yuan/ton, down 2.48% from the previous month and down 2.18% from the previous year; the average ex-factory price of anhydrous citric acid this month is 5,300 yuan/ton, down 1.21% from the previous month and down 0.6% from the previous year.
Domestic citric acid enterprises have sufficient supply, weak downstream demand, and low willingness to replenish stocks. Affected by this, citric acid manufacturers mainly adjust prices to promote orders. (Note: This chapter mainly presents FOB prices, and does not deduct 13% export tax rebate)
2. Driving factors: Decline in industry operation to ease supply pressure
According to Zhuochuang Information data, the estimated operating rate of the citric acid industry in May was 67.5%, and the estimated monthly output was 151,000 tons, a decrease of 15.6% from the previous month. This month, downstream demand performed poorly, industry inventory remained high and difficult to reduce, and the cost of raw materials was high. Enterprises adjusted their operations to reduce supply pressure, resulting in a rapid decline in the industry's operating load, and the industry's inventory reference was 100,000-126,000 tons.
The overall demand for citric acid in the market declined in May. On the one hand, overseas demand was weak and exports were lower than expected. In addition, the domestic market was not very active in purchasing goods, and the purchase was mainly based on basic rigid demand. In addition, the prices of some enterprises fell in the middle of the month, and the downstream mentality was wait-and-see. The loss of the citric acid industry in May increased. After hedging the by-products, the profit of the citric acid industry this month was -317.8 yuan/ton, and the profit was 192.4 yuan/ton lower than the same period last month.
3. Market Forecast: The citric acid market may temporarily stabilize next month
From the supply and demand perspective, the citric acid market has sufficient spot goods recently, and most companies have reduced supply pressure by adjusting production. The demand side is mainly rigid demand, and the downstream is not willing to replenish stocks in large quantities. The mentality side is cautious and wait-and-see, and the transaction remains rational for the time being. Raw material prices may rise slightly in June, and there is still some support on the cost side. Comprehensive cost, supply and demand, and mentality, the supply pressure of the citric acid market in June will be reduced as the production starts. Prices may continue to stabilize, and the average price of citric acid monohydrate is 4,800 yuan/ton. From July to August, as some raw material prices fluctuated and rose, the cost pressure of enterprises increased. In addition, as the weather became hot, the domestic beverage industry increased the use of citric acid, market confidence may pick up, and some low prices may have a slight upward adjustment expectation. Pay attention to the changes in the industry's production.
Source: Zhuo Chuang Information)