Global Malic Acid Prices Likely to Decline in November 2023 Due to Oversupply
Global Malic Acid Prices Likely to Decline in November 2023 Due to Oversupply

Global Malic Acid Prices Likely to Decline in November 2023 Due to Oversupply

  • 07-Nov-2023 6:34 PM
  • Journalist: Robert Hume

In early November, the Malic Acid market witnessed a significant decline in prices across the globe. This drop is primarily a result of deflation within the Chinese market and increased production due to excessive investments. These factors, combined with decreased raw material costs, have led to an oversupply issue in the market.

Particularly, the reduced prices of maleic anhydride, a key raw material, have weakened the market conditions for Malic Acid. This price reduction has relieved cost pressures for manufacturers, allowing them to lower the prices of their Malic Acid products. Consumers, who had previously faced high prices due to rising raw material costs, have welcomed this price adjustment.

Given these circumstances, suppliers in the APAC region have found themselves with excess inventory as they struggled to match their production with demand. This surplus situation has exacerbated the market imbalance, prompting suppliers to reconsider their pricing strategies to clear the surplus inventory.

The deflation in the Chinese market plays a pivotal role in the declining prices of lic acid in the APAC region. China's decision to reduce retail prices for gasoline and diesel in response to international oil price fluctuations has had a ripple effect on energy prices. This, in turn, has lowered production costs, as energy is a critical component in Malic Acid manufacturing. Gasoline and diesel prices have been reduced by 70 yuan per tonne, as per the directive from the National Development and Reform Commission. China's major oil companies have been instructed to maintain stable production and ensure consistent supply by facilitating transportation.

Furthermore, an increase in production in the APAC Malic Acid market has resulted in an oversupply problem. Excessive investments in the sector have led to a surplus of Malic Acid products. However, the demand from both domestic and international downstream markets has not kept pace with the heightened production levels, causing a market imbalance and exerting downward pressure on prices.

Moreover, the European and North American regions are also experiencing reductions in the prices of Malic Acid. These declines can be attributed to several factors. Exporting countries have lowered their Malic Acid prices, adding downward pressure to the global market. Additionally, as inflation rates rise, market participants in these regions are cautious about placing bulk orders due to limited domestic consumption aimed at curbing inflation.

It is anticipated that Malic Acid prices will remain relatively stable on the lower end worldwide as suppliers adjust their pricing strategies to adapt to changing market dynamics. This downward price trend is expected to persist in the short term as the industry grapples with excess supply and weakened demand.

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