For the Quarter Ending June 2023
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.
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.
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
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.
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.
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.