[Introduction] The decline in xanthan gum market prices narrowed in the first quarter of 2024, mainly due to tighter market supply and improved overseas demand. In addition, the stop of falling raw material prices also provided certain support for xanthan gum prices. It is expected that xanthan gum prices may stop falling and rebound in the second quarter, driven by improved demand.
Xanthan gum price decline narrowed in first quarter
In the first quarter of 2024, the market price of xanthan gum continued its downward trend, but the amplitude was narrower than that in the fourth quarter of 2023. The average market price of xanthan gum in the first quarter was 24,344 yuan/ton, a decrease of 22.82% from the previous quarter and a decrease of 50% from the same period last year. Taking the Shandong market as an example, the high point was 28,000 yuan/ton in January and the low point was 21,000 yuan/ton in mid-March. The price amplitude in the first quarter was 33.33%, which was 57.58 percentage points narrower than the fourth quarter of 2023.
The operating rate of manufacturing enterprises is not high, and the market supply is tightening
The market price of xanthan gum has been declining since the second half of 2023, which has led to a decrease in the intention of upstream production companies to start operations. Especially after the price fell below 25,000 yuan/ton, some small and medium-sized manufacturers stopped producing xanthan gum. At present, no new production capacity has been put into production in the industry, the market supply has turned from loose to tight, and there is no obvious supply pressure on upstream production companies.
Prices of main raw materials have stopped falling, and cost support has been strengthened
The prices of corn and coal, the main raw materials for xanthan gum production, stopped falling and stabilized in the first quarter. Although corn supply was relatively loose in the first quarter, traders and downstream companies built warehouses in March to increase demand. The supply and demand relationship in the corn market improved in stages, and prices stopped falling and rebounded slightly. The national average price of corn in March was 2,332.27 yuan/ton, an increase of 40.46 yuan/ton from the average price last month, and a month-on-month increase of 1.77%. Thermal coal performed weaker than corn. The average price of thermal coal in March was 639 yuan/ton, a month-on-month decrease of 5.47%, but a year-on-year increase of 1.7%.
Exports increase, and demand for overseas orders from companies improves
Data from the General Administration of Customs shows that the cumulative export volume of xanthan gum from January to February 2024 was 32,800 tons, an increase of 34.43% and 0.27% respectively compared with the same period in 2022 and 2023; the average export price of xanthan gum from January to February was US$6,435/ tons, an increase of 22.11% and 2.48% respectively compared with the same period in 2022 and 2023. Due to the dynamics of the overseas situation, the main downstream areas have increased purchasing demand in order to resist industry risks. After the Spring Festival, the upstream xanthan gum production enterprises received orders for the better, especially the increase in overseas orders was more obvious. At the same time, the increase in xanthan gum export prices has also stimulated the export enthusiasm of manufacturing companies.
Prices may stop falling and rebound in the second quarter
Judging from the seasonal fluctuation patterns of xanthan gum prices from 2018 to 2023, although the market price increase in the second quarter may shrink compared with the first quarter, there is a probability that xanthan gum prices will rise in the latter part of the second quarter. This is mainly due to the peak season for export demand and expectations of rising raw material prices.
Based on the xanthan gum market situation in the second quarter of 2024, there is currently little inventory pressure on upstream production companies, and companies mainly focus on executing order contracts. Judging from the current order intake and production plans of major trading partners, xanthan gum exports are expected to be good in the second quarter, and supply and demand are relatively balanced. Superimposed on the high probability of rising raw material corn prices in the second quarter and enhanced cost support, the market price of xanthan gum is expected to stop falling and rebound in the second quarter.
Source: Zhuo Chuang Information)