For the Quarter Ending March 2024
North America
During the first quarter of 2024, there has been a notable escalation in Glutamic acid prices across North America. This upward trend can be attributed to strategic initiatives undertaken by key industry players, who have placed substantial orders to meet the burgeoning demand and facilitate increased purchasing activities.
A significant driver behind this price surge is the mounting costs of raw materials, particularly Corn starch, in primary producing and exporting zones. North America, a major importer, has mirrored the pricing trends of these exporting regions to uphold competitiveness amidst evolving market dynamics. Adding complexity to the situation are geopolitical uncertainties and trade disruptions, further complicating market sentiments. Export hurdles, such as the redirection of shipping routes via the Cape of Good Hope to bypass the Red Sea, have triggered a chain of repercussions. These include escalated shipping expenses, order cancellations, and delays in container transit times.
Furthermore, in March, external environmental factors came into play, with the National Oceanic and Atmospheric Administration (NOAA) issuing warnings about potential bottlenecks along the Mississippi River for the third consecutive year. This advisory, attributed to warm, dry spring conditions and diminished winter snowpack, has raised concerns regarding future shipment disruptions. Consequently, market participants in the US have intensified communications with exporting nations, amplifying the upward pressure on prices.
Asia
The pricing landscape for Glutamic Acid in the APAC region during Q1 2024 has undergone notable shifts influenced by a variety of factors, resulting in substantial price fluctuations. In China, Glutamic Acid prices have followed a volatile path, experiencing a quarterly uptick of 0.51%. The most recent quarter-ending price for Glutamic Acid in China stands at USD 2510/MT FOB Tianjin.
The onset of Q1 2024 saw a surge in demand, particularly from the downstream sector, catalyzing heightened purchasing activities. This increased demand was met with insufficient inventories, exacerbated by a temporary slowdown in trade during the Lunar New Year festivities, leading to constrained product availability. The observance of the Chinese Lunar New Year and Spring Festival further contributed to a slowdown in production, exacerbating supply limitations. Adding to these challenges were rising freight and transportation costs, which increased logistical complexities and made product acquisition more challenging. Post-holiday season, a resurgence in purchasing activities ensued, driven by substantial domestic and international procurement orders. This renewed market confidence, coupled with the devaluation of the Chinese currency (CNY) against the USD, reinforced the upward price trend and bolstered market resilience.
However, the price trajectory experienced a downturn in the latter half of Q1, attributed to quarter-end destocking activities as a response to decreased demand and ample inventories, exerting downward pressure on prices. These destocking efforts were also undertaken to create space for replenishing with fresh inventories in the upcoming months. Western and Northern markets similarly witnessed reduced orders post-holiday season, intensifying competition among producers. Furthermore, Corn starch prices, a pivotal raw material, experienced a decline due to weak demand, further impacting Glutamic Acid prices.
Europe
During the first quarter of 2024, the European Glutamic Acid market witnessed a notable upturn in prices, primarily propelled by a surge in demand from downstream sectors. This increased demand prompted key industry players to strategically engage in significant bulk procurement to meet escalating requirements and accommodate heightened purchasing activities within the sector.
One of the key drivers behind this price escalation was the upward trend in raw material costs, particularly Corn Starch, in major producing and exporting regions. This rise in input expenses added a layer of complexity to market dynamics, offering positive cost support that reverberated throughout the supply chain. The European region, a substantial importer of Glutamic Acid, mirrored the trends seen in exporting regions to uphold competitiveness.
However, challenges arose in export activities as shipping lines rerouted vessels via the Cape of Good Hope, bypassing the Red Sea where geopolitical tensions were disrupting trade routes. These changes in shipping routes resulted in increased shipping costs, order cancellations, delays in container movement, and an overall sense of uncertainty regarding future developments. The surge in container freight rates also had a significant impact on pricing dynamics, particularly affecting industries reliant on maritime transport for their supply chains. These rising shipping costs compounded the challenges faced by market participants. Furthermore, the devaluation of the Euro against the US Dollar added additional strain to market conditions.
For the Quarter Ending December 2023
North America:
During the fourth quarter of 2023, the North American market for Glutamic acid witnessed significant price fluctuations. Commencing in October, prices surged due to heightened demand from the domestic market's downstream sector. This uptick was further influenced by its status as a major importer, with pricing trends shaped by escalating costs in exporting nations.
Notably, recent trade tariff developments between China and the US, coupled with a notable reduction in maritime congestion, played pivotal roles in shaping market dynamics by curbing expenses. Moreover, heightened freight costs added resilience to the Glutamic acid market, rendering shipment and exporting more expensive. Market players strategically placed bulk orders to replenish inventories, contributing to the prevailing pricing trend. Additionally, the Panama Canal port congestion scenario further exacerbated the situation, as transit restrictions began to impact containerships.
Furthermore, in December, the threat broadened to all ships passing through the Red Sea, even those with no links to Israel, due to missile attacks, further tightening the market situation in the North American region. Later in December, sodium bicarbonate prices experienced a decline. The primary catalyst for this reduction was the year-end destocking activity undertaken to clear existing stock at lower prices, preparing for the replenishment of inventories with fresh stocks in the ensuing months.
Asia Pacific:
The Glutamic Acid market in the APAC region faced significant challenges during the fourth quarter of 2023. Various factors impacted both the market dynamics and prices during this period. Firstly, a robust demand for Glutamic Acid emerged due to economic growth and increased consumer spending, leading to a tightening of market sentiments and a surge in prices. Furthermore, escalating ocean freight costs and labor shortages in different sectors contributed to the upward trend in export prices. Concurrently, the Chinese domestic market exhibited a combination of weaknesses and positive developments, marked by a slight contraction in the manufacturing sector and a slowdown in retail sales growth.
Despite these obstacles, the overall market outlook remained positive, with industry players strategically replenishing inventories to maintain a balance in supply-demand dynamics. The depreciation of the Chinese Yuan against the USD added another layer of complexity, intensifying financial pressure on manufacturers grappling with heightened production costs. This devaluation resulted in elevated domestic commodity prices, compounding the challenges faced by industry participants.
Regarding pricing trends, Glutamic Acid prices experienced an 8.52% average quarterly increase, culminating in the current quarter's price of L-Glutamic Acid FOB Tianjin in China at USD 2500/MT. The primary driver behind this price hike was the strong demand, necessitating adjustments in pricing strategies to sustain profits.
Europe:
During the fourth quarter of 2023, the European market for Glutamic acid witnessed significant price variations. Commencing in October, prices surged due to heightened demand from the domestic market's downstream sector. This uptick was further influenced by Europe's status as a major importer, with pricing trends shaped by escalating costs in exporting nations.
Concurrently, market players strategically placed bulk orders to replenish inventories, contributing to the prevailing pricing trend. Moreover, heightened freight costs added resilience to the Glutamic acid market, rendering shipment and exporting more expensive. Notably, recent trade tariff developments between China and Europe, coupled with a notable reduction in maritime congestion, played pivotal roles in shaping market dynamics by curbing expenses.
Later, in December, sodium bicarbonate prices experienced a decline. The primary catalyst for this reduction was the year-end destocking activity undertaken to clear existing stock at lower prices, preparing for the replenishment of inventories with fresh stocks in the ensuing months. Furthermore, during the festive season, prices decreased due to a stable demand outlook from the downstream sector. These multifaceted factors underscore the complex interplay of market forces, both domestically and globally, in influencing the Glutamic acid market during the specified period.
For the Quarter Ending June 2023
North America
In Q2 2023, glutamate prices in the US market showed volatility in price developments. Prices fell across the board, but improved supply and demand dynamics drove prices higher at the beginning of the first month. Trade between Asia and the United States has increased since the exit from the zero-tolerance policy. A rise in raw material corn also further supported the rise in market prices. Subsequently, the US glutamic acid market faced weak market sentiment due to declining demand from local downstream industries. Amid weak demand, inventories remained excessive, forcing suppliers to sell at lower prices. Inflation in the United States is also declining, according to many economists and economists. Traders are reluctant to place large orders as the price drop is expected to get worse by the big players in the US glutamic acid market. On the other hand, oversupply and rising production rates cause commodity prices to fall. No restocking by dealers or suppliers is observed as the inventory is excessive and must be consumed first.
Asia
The market price of Glutamic acid showcased an oscillating trajectory in the second quarter of 2023. The price was valued and acquired at the end of Q2 2023, with an average quarterly decline of 3.30%. This upward trend was primarily driven by increased demand from end-use industries, including the food and beverage sector. There was also a strong increase in production to replenish inventories with fresh stock and meet future demand market conditions. Higher raw material prices for corn also supported the market. Chinese exports beat expectations in April as domestic and foreign demand continued to outperform. Market trends for all commodities in the north also continued, impacting manufacturing activity as China bought crude oil imports from Russia at higher-than-expected prices, traders said. Then, at the beginning of the second month, glutamate prices showed downward momentum in the Chinese market due to weak glucose (corn) commodity markets and uncertain downstream demand. Inventories of glucose (corn) and glutamic acid, which are raw materials, increased due to ample supplies as production increased. Glutamate cost support was reduced as commodity suppliers offered commodity glucose (corn) at a lower price in the spot market. Consumption recovery is weaker than expected. Uncertain economic conditions have reduced the demand for glutamic acid from downstream food, chemical and polymer industries. Demand from the pharmaceutical sector was weak as the ongoing economic instability and rising inflation halted the trading process. Sources from key market participants said buyers were shying away from large orders out of fear of further price declines.
Europe
In the second quarter of 2023, overall demand for glutamic acid declined, leading to lower market prices. The glutamic acid price trend in April showed a clear upward trend. Market fundamentals indicated that increased domestic demand was the main reason for the rise in glutamate prices in April. The Dutch market could be boosted by new production in exporting countries in response to higher demand and higher energy prices. Higher maize raw material prices also continued to support the rise. Then, at the beginning of the second month, we saw a drop in prices as India was the world's largest glutamic acid producer and increased production capacity increased the supply of glutamic acid in the global market. This has left the market in a slump. As the global economy slows, demand for glutamate is declining. Speculators have been selling glutamate futures for months in anticipation of future price declines. This selling pressure is also putting downward pressure on prices.
For the Quarter Ending March 2023
North America
Glutamic Acid's price trend showed steady growth in the first quarter of 2023. Due to merchant supply to meet demand and continued purchases from the pharmaceutical end-user sector, prices increased at the beginning of Q1 2023 and remained up until the end of February. The market position also benefited from an increase in trade flow and simpler logistic costs compared to the previous quarter. On the other hand, prices stabilize from the start of February to the end of March as a result of adequate stocks, offtakes from the low-end consumer sector, and a decline in freight costs.
Asia
In the first quarter of 2023, Glutamic Acid prices in the APAC area showed signs of improvement. As domestic and foreign markets demanded that their stocks be refilled with fresh stock at the beginning of Q1 2023, prices increased significantly. The market situation remained stable thanks to increasing production activity as well. The Chinese pharmaceutical markets technically made a strong comeback with continuous orders from both the domestic and international markets at the beginning of February, following the Lunar New Year vacation. Factory and port operations started up as soon as the market was restored. Also, as the sugarcane output was not as impressive as anticipated, the market situation for feedstock Sugar bagasse was also reported to be feeble in the Chinese market. At the termination of Q1 2023, the settlement price of Glutamic Acid API accessed at USD 2220/MT FOB Shanghai with an average quarterly inclination of 2.36%.
Europe
In the first quarter of 2023, the price trajectory for glutamic acid continued to increase steadily. Prices grew at the start of Q1 2023 and persisted through the end of February as a result of merchant supply increasing to match demand and ongoing purchases from the pharmaceutical end-user sector. Additionally, a rise in trade volume and lower logistical expenses when compared to the prior quarter helped the market position. On the other hand, due to sufficient inventories, offtakes from the low-end consumer sector, and a drop in freight costs, prices stabilised from the beginning of February to the end of March.
