For the Quarter Ending March 2024
North America
In the first quarter of 2024, the pricing dynamics of Lactic acid in the North America region, particularly in the USA, were shaped by a diverse range of factors extending beyond traditional market drivers. Throughout this period, the pricing trend for Lactic acid in the USA exhibited notable volatility and fluctuations, characterized by a combination of upward and downward movements.
The market conditions within the USA played a pivotal role in shaping these dynamics, with various factors such as consumer sentiment and economic indicators exerting influence on both demand and prices. The quarter began with a decline in prices, primarily attributed to cautious consumer sentiment amid sluggish retail sales and a backdrop of rising inflation. This cautious stance among consumers translated into reduced spending, consequently leading to a decrease in demand for Lactic acid. Moreover, uncertainties stemming from inflationary pressures prompted consumers to adopt a more conservative financial approach, further dampening demand. However, prices experienced a notable increase in February and March, driven by an improvement in business sentiment fueled by a steady rise in new orders from end-users. This surge in demand outpaced the available supply in the domestic market, thereby driving Lactic acid prices upwards. Additionally, challenges emerged in the supply chain, with disruptions at critical shipping chokepoints such as the Red Sea and the Panama Canal causing delays in product delivery, including Lactic acid and other goods. These disruptions contributed to supply constraints in the USA market, further pushing prices upward.
Overall, the pricing environment for Lactic acid in Q1 2024 witnessed fluctuations influenced by a combination of demand dynamics, supply chain disruptions, and prevailing economic conditions. However, it is important to note that the final quarter's price for Lactic Acid 88% Liquid CFR Los Angeles in the USA was recorded at USD 1300/MT.
Asia Pacific
In the first quarter of 2024, the pricing dynamics of Lactic acid in the APAC region exhibited a mixed pattern, influenced by various factors including demand from key sectors like food, healthcare, and pharmaceuticals, as well as disruptions in the supply chain. Initially, prices witnessed a significant decline as reduced demand from downstream sectors negatively impacted the market. The manufacturing landscape in China faced challenges, characterized by a slow domestic recovery and subdued external demand. However, prices experienced a surge in February and March, driven by constrained inventories serving as a primary catalyst. The closure or reduced operation of numerous factories during the Spring Festival disrupted production, leading to a shortage in the market. This supply-demand imbalance naturally propelled prices upward as buyers competed for the limited available stock. Additionally, increased inquiries from major markets like the USA and Europe further contributed to price hikes. The final quarter's price for Lactic Acid 88% Liquid FOB Qingdao in China was recorded at USD 1130/MT. Overall, the pricing environment for Lactic acid in the APAC region during Q1 2024 has been volatile, with prices experiencing fluctuations influenced by factors such as supply-demand dynamics, trade dynamics, and international market conditions.
Europe
In Q1 2024, the pricing dynamics of Lactic acid in the Europe region exhibited fluctuations influenced by various factors. Initially, prices witnessed a decline, reflecting subdued consumer sentiments and concerns about the economy. This decrease in demand from key sectors such as food, pharmaceuticals, and healthcare contributed to the overall decrease in Lactic acid prices. However, prices surged in February and March due to several factors. Rising consumer demand, logistical challenges, and limited inventories within the domestic market all played a role in driving prices upward. Disruptions in shipping and logistics, typical during the Spring Festival in China, led to delays and increased transportation expenses. These additional costs were passed on to buyers, contributing to the upward trend of Lactic acid prices. Moreover, prolonged disruptions in the Red Sea further complicated trade routes between Asia and Europe, resulting in escalated freight costs that influenced the pricing landscape of Lactic acid in Europe. Additionally, the moderation of inflation in Europe spurred heightened spending by businesses and consumers, contributing to further price hikes. Looking ahead, the market outlook remains optimistic, with prices anticipated to continue increasing. Overall, the final quarter's price for Lactic acid 88% Liquid CFR Rotterdam in the Netherlands was recorded at USD 1220/MT.
For the Quarter Ending December 2023
North America
The North America region faced pricing challenges for Lactic Acid in Q4 2023, influenced by various factors. Initially, prices rose with increased demand from downstream industries but experienced a mid-quarter decline due to weak market sentiments. However, prices surged again towards the end of Q4, propelled by a notable increase in inquiries from the food and beverage sectors with the arrival of Festive holiday season. Furthermore, the overall economic conditions in the region were mixed, with manufacturing and business activity showing signs of contraction.
The U.S. manufacturing PMI remained below the growth threshold, indicating a decline in operational conditions within the sector. The logistics index also contracted, reflecting a reduction in warehousing and transportation capacity. Among the countries in the region, the United States experienced the most significant changes in Lactic Acid prices. Prices declined by 3.54% in November due to reduced demand and excess supply in the market. The slowdown in inflation, lower energy prices, and the maintenance of high-interest rates by the Federal Reserve also contributed to the decrease in prices.
Overall, the North America region faced hurdles in the Lactic Acid market during Q4 2023, with logistics challenges, economic uncertainties, and high-interest rates impacting prices. The quarter-ending price of Lactic Acid 88% Liquid CFR Los Angeles in the USA for this period is USD 1295/MT.
APAC
The fourth quarter of 2023 for the APAC region's Lactic Acid market was characterized by various factors that impacted prices and market dynamics. Firstly, subdued demand on both domestic and international fronts played a significant role in influencing prices. The manufacturing sector experienced a decline in new orders, particularly from key export markets such as Europe and the USA, primarily due to higher interest rates and geopolitical tensions. This resulted in a weak market demand for Lactic Acid. Additionally, ample supply in the Chinese market, driven by intense market competition and a dearth of substantial orders, led to market participants offering products at reduced price quotes. Furthermore, the corn starch market, a key feedstock for Lactic Acid production, remained subdued due to diminished procurement from downstream industries, contributing to the overall decrease in prices. In terms of China, which saw the most significant changes in prices, the market experienced a decline of 3.03% in November, with prices settling at USD 1120/MT FOB Qingdao. This decrease was primarily attributed to the subdued demand from both domestic and international markets, as well as the ample supply in the Chinese market. The manufacturing sector in China contracted for the second month in November, indicating weakening momentum in the economy. The decline in new export orders and the continuous drop in the export sales component further contributed to the decrease in prices. The latest quarter's price of Lactic acid in China was USD 1060/MT FOB Qingdao, marking a decrease of 7% from the previous quarter. Additionally, there was a decrease of 8% in prices during the second half of the quarter compared to the first half, indicating a downward trend in prices.
Europe
The fourth quarter of 2023 was challenging for the Lactic Acid market in Europe. The market experienced a decline in prices due to subdued demand and surplus supply. The Netherlands, in particular, faced a decrease in new orders and sales, leading to a decrease in pricing. The overall market sentiment was bearish, with the manufacturing sector witnessing a decline in output and new business. The inflation rate in the Netherlands decreased significantly, primarily driven by lower energy prices. This resulted in a decrease in shipping and operational costs, further impacting the prices of Lactic Acid. In the Netherlands, the market experienced a decline in prices from the previous quarter, with a percentage change of -3%. Additionally, there was a price decrease of -5% when comparing the first and second half of the quarter. Faced with the prevailing decrease in demand, market participants found themselves compelled to deplete existing stock levels to make room for the introduction of fresh batches into the market. The price of Lactic Acid in the Netherlands at the end of the quarter was USD 1160/MT.
For the Quarter Ending September 2023
North America
Lactic acid prices fell by 4.25% in September 2023 as compared to July levels. Business activity in the United States fell in the third quarter due to weaker demand from both local and foreign markets. In the United States, inflation rose to 3.7% in August for the first time since June 2022, as a sharp surge in energy costs drove prices higher at the end of the summer, weighing even more on consumer confidence. Inflationary pressures imply that the US economy is drifting away from the Federal Reserve's 2% target rate, prompting authorities to consider raising interest rates later this year. The Federal Reserve raised its key policy interest rate by 0.25 percent in July, the eleventh time in 17 months, to battle persistent inflation in the US economy, which has resulted in decreasing market demand. Inflation remained high in September, owing mostly to increasing gas and rental prices, which put further burden on households. New orders declined for the sixth consecutive month, but at a lesser rate, causing Lactic acid prices to fall. Prices concluded at USD 1240/MT CFR Los Angeles at the end of Q3.
Asia Pacific
Lactic acid prices in China fell 4.60 percent in September compared to the previous month. The Chinese economy was met with additional hurdles and challenges, slowing economic growth. The official manufacturing PMI (Purchasing Managers' Index) was 49.3 in July, according to the National Bureau of Statistics (NBS). However, this score remained lower than 50, indicating shrinkage rather than expansion. Lower overseas orders and sales have hindered business and industrial activities. Inflation and increasing interest rates in the United States, Europe, and key export markets continue to weigh on Chinese demand, with the new export order sub-index falling for the sixth consecutive month in August. In September, China's manufacturing purchasing managers' index (PMI) was 50.2, returning to the expansion zone. According to this data, manufacturing market demand has gradually improved, and corporate operations have expanded at a quicker rate. However, Chinese exporters have faced political challenges as well as a concerted worldwide campaign to lessen dependency on China, resulting in a drop in demand from abroad markets. Prices stabilized at USD 1140/MT FOB Qingdao at the end of Q3.
Europe
The price of Lactic acid in Netherland has reduced by 5.14% in September since the beginning of the third quarter. Lactic acid prices fell in July due to increasing supply and lower offtakes. As a result, an excess supply of Lactic acid has flooded the international market, causing a significant reduction in its market value. Furthermore, consumer confidence remained low in August as a result of repeated rate hikes, rising prices, the oil crisis, and geopolitical events. The persistence of strong inflation, caused by high energy and oil prices, hurt consumer spending power and assisted the drop in Lactic acid prices. Lactic acid prices fell in September, owing to a combination of low demand and a surplus supply in the market. Furthermore, economic activity has slowed due to a decrease in new orders and sales. Moreover, inflation has reduced, owing primarily to lower energy prices. This fall in inflation caused a decrease in shipping and operational costs, which resulted in a decrease in Lactic acid pricing. Furthermore, the poor performance of the feedstock corn starch added to the negative trend. With the termination of Q3, the prices settled at USD 1200/MT CFR Rotterdam.
For the Quarter Ending June 2023
North America
In the second quarter of 2023, Lactic acid prices in the US market showcased oscillation in the trajectory of the price. The price was valued at the end of Q2 2023, representing an average quarterly decline of 1.93%. Collectively the prices dropped but at the commencement of the first month, the prices increased because of improved dynamics of supply and demand. Since the zero-tolerance policy was abandoned, trade between Asia and the US has increased. Also, increased raw material corn further supported the upward market situation. Later, the US Lactic acid market faced sluggish market sentiment due to demand cuts from the local downstream industries. Stocks remained in excess amount among weakening demand that insisted the suppliers sell at a lower price. Also, the US inflation rate is dropping, according to many economists and business experts. The distributors are hesitant to place large orders due to the ongoing decline in price, which is expected to be increased further by the major players in the US Lactic acid market. Meanwhile, the price of feedstock dampens through having a surplus supply and increased production rate. The restocking by distributors and suppliers is not observed as the inventories are surplus and need to be consumed first.
Asia
The market price of Lactic 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 1.69%. The upward trend was largely driven by the increase in demand from end-use industries, including the food and beverage sectors. Also, increased production rates in order to refill the inventories with fresh stock and to cater to the upcoming demand market situation remained strong. Also, increased raw material corn prices further supported the market situation. China’s exports saw a better-than-expected in April as consistent inquiries from the domestic and international markets remained above average. The market trend for all commodities on the North Side has also been maintained as China has purchased Russian oil imports at prices higher than predicted affecting the manufacturing activity as per the traders. Later as the second month commenced the Lactic acid prices showcased a downward momentum in the Chinese market owing to the relapsing feedstock Glucose(corn) market trajectory amidst the uncertain downstream inquiries. The inventory level of the feedstock Glucose(corn), as well as Lactic acid, was at a higher edge due to abundant availability as they increased their production rate. The feedstock suppliers were offering feedstock Glucose(corn) at a cheaper price in the spot market which reduced the cost support for Lactic acid. Consumption recovery is weaker than expected. The demand for Lactic acid from the downstream food, chemical, and polymer industries declined amid uncertain economic conditions. The demand from the pharmaceutical sector was weak as the ongoing economic instability and increasing inflation rate halted the trade process. According to the major market players, the buyers were shying away from placing large orders as they suspected a further decline in price.
Europe
In the second quarter of 2023, the demand for Lactic acid collectively decreased, leading to a decline in market prices. The price was valued and acquired at the end of Q2 2023, with an average quarterly decline of 1.73%. In April, Lactic acid's price trajectory had a major upward trend. The market's fundamentals revealed that rising domestic demand was the main driver of higher prices for Lactic acid in April. The market in the Netherlands will likely be driven by new production in exporting nations in response to rising demand and high energy prices. Also, increased raw material corn prices further supported the hiked-up trajectory. Later with the commencement of the second month prices witnessed to decrease as India is the world's largest producer of Lactic acid, and the expansion of production capacity has led to an increase in the supply of Lactic acid on the global market. This has kept the market feeble. The demand for Lactic acid has decreased due to the global economy has slowed down. Speculators have been selling Lactic acid futures contracts in recent months, in anticipation of lower prices in the future. This selling pressure has also put downward pressure on prices.
For the Quarter Ending March 2023
North America
In the North American region, Lactic Acid followed the fluctuating price trajectory in the first quarter of 2023. The US Lactic Acid market started the first quarter off better, with prices rising in January. Prices of lactic acid in the US are under pressure due to rising import costs from EU countries. Rising inflation and the price of feedstock further hurt the market for the product. However, as a result of downstream firms' strong wait-and-see attitude, which forced US suppliers to decrease their pricing in order to increase orders, these values subsequently declined in February. The product's price had dropped towards the end of the quarter as a result of lower downstream pharmaceutical sector demand and available stockpiles. Thus, rising to USD 1420/MT in March from USD 1590/MT in January, an unstable market was seen in the prices of Lactic Acid.
Asia- Pacific
In the first quarter of 2023, Lactic Acid prices in the Asia Pacific region experienced a swing in the market, supported by a lingering downstream demand from a variety of end-user pharmaceutical and food sectors. Due to cost transmission in some locations, the lactic acid market in China started to grow strongly, with prices rising quickly to USD 1510/MT during the first month of the quarter. Lactic Acid inventories declined as a result of production activities being delayed in the domestic market due to a lack of supply among Chinese producers used as a feedstock. Prior to their collapse in March, prices started to stabilize towards the lower end as November approached. Since the price of lactic acid significantly dropped in H1 of Q1, the majority of downstream starch was. Thus, by the end of Q1, the FOB Shanghai prices for Lactic Acid in China were assessed at USD 1310/MT.
Europe
In the European region, the price of Lactic Acid displayed fluctuating price trajectory during the entire first quarter of 2023. The price fluctuated from USD 1575MT in January to USD 1380/MT in March. The manufacturing unit processing of Lactic Acid was impacted by decreased production in the United States and the European Union. A scarcity of starch quickly replaced the overabundance that had existed in the German market. The majority of Lactic Acid producers in Germany struggled to meet the demands of their current customers, leaving them a little potential for expansion. The last month saw a healthy and rising demand from end-user industries, including the local and international food and pharmaceutical sectors, according to trade sources, with values in Germany creeping up.
