For the Quarter Ending September 2023
North America
The prices of Metformin HCL experienced a consistent decrease during the third quarter of 2023. The third quarter witnessed a deceleration in the growth of US business operations as a result of reduced demand from both local and global markets. In the United States, inflation rose to 3.7% in August for the first time since June 2022, as a sharp increase in energy prices pushed prices higher toward the end of the summer, weighing on consumer confidence even more. Inflationary pressures indicate that the US economy is drifting further away from the Federal Reserve's 2% target rate, prompting officials to consider raising interest rates later this year. The Federal Reserve raised its key policy interest rate in July by 0.25 percent, the eleventh time in 17 months, to confront persistent inflation in the US economy, resulting in decreasing market demand. In September, rising gasoline costs and high-interest rates further contributed to increased economic uncertainty and lowered consumer confidence. Manufacturers reported a further decline in new orders, with the rate of contraction being the fastest, contributing to the negative trend. As a consequence of this, businesses have been compelled to sell off their accumulated inventory and stock in order to sustain profitability.
Asia Pacific
In September 2023, there was a gradual decline of 1.81 percent in the prices of Metformin HCL in China when compared to the values in July. The vibrant Chinese economy encountered novel hurdles and challenges, leading to a deceleration in its economic impetus. The official manufacturing PMI (Purchasing Managers' Index) stood at 49.3 in July, according to the National Bureau of Statistics (NBS). However, this figure stayed below 50, indicating shrinkage rather than expansion. Business operations and production activities have experienced a significant decrease due to a decline in international orders and sales. Furthermore, the prevailing inflationary pressures and escalating interest rates across the United States, Europe, and key export markets have further dampened Chinese demand. This is evident from the sustained decrease in the new export order sub-index, with August marking the sixth consecutive month of decline. In September, China's manufacturing purchasing managers' index (PMI) was 50.2, returning to the expansion zone. This data shows that market demand in the manufacturing sector has gradually improved, and company operations have risen at a quicker rate. However, sluggish foreign demand continued to weigh on the outlook even as output grew, which maintained the Metformin HCL market on the weaker side. With the termination of Q3, the prices settled at USD 5155/MT USP FOB Shanghai.
Europe
In Germany, the prices of Metformin HCL have experienced a downward trend since the start of the third quarter, with a 2.40% decrease observed in September. The purchasing managers' index (PMI) in Germany stood at 41 in July, suggesting a persistent decrease in fresh orders from both local and global markets amid sufficient stocks available among market participants. Additionally, the month of August witnessed a sustained lack of confidence among consumers due to the consistent increase in interest rates, soaring inflation, the prevailing energy crisis, and the intricacies of geopolitical affairs. The persistent surge in inflation, primarily driven by the exorbitant prices of energy resources and oil, had a detrimental impact on the purchasing power of consumers and further contributed to the downward trajectory of Metformin HCL prices. Germany's industrial sector, which accounts for around one-fifth of the country's economy, remained in a slump in September owing to sluggish demand and quickly declining output, which also led to a drop in Metformin HCL prices. The European Central Bank agreed to increase interest rates for the tenth time in a row in September to combat stubborn inflation, which has further kept market demand on the lower side and supported the downward trajectory. With the termination of Q3, the prices settled at USD 3665/MT USP CFR Hamburg.
For the Quarter Ending June 2023
North America
In the US, Metformin HCL prices showed a mixed trend in the second quarter. The manufacturing PMI (Purchasing managers' Index) settled at 48.4 in May, reflecting a slowdown in the US manufacturing sector. This indicates that supply from manufacturers and suppliers has been restricted due to the decline in business activity. However, consumer demand remained strong, resulting in metformin HCL prices rising in May. In addition, prices were reduced in June compared to the previous month. Manufacturing PMI fell to 46.3 in June from 48.4 in May, suggesting weaker demand from end-user healthcare and pharmaceutical industries with a decline in purchasing activity and new orders inquiries, leading to a decline in Metformin HCL prices. The consumer price index (CPI), a measure of inflation, rose only 0.2% in June compared to 0.1% in May, suggesting that high-interest rates by US Federal Reserve slowed inflation in June, resulting in lower demand for Metformin HCL in the US market. This further added downward pressure on Metformin HCL prices.
Asia Pacific
In China, metformin HCL prices decreased slightly in April by 0.39% due to decreased demand from end-user healthcare and pharmaceutical industries coupled with sufficient supply among market providers. But the prices of Metformin HCL increased in May by 0.97% from April. The official manufacturing purchasing managers' Index (PMI) dropped to 48.8 in May from 49.2 in April. This indicates that factory activity decreased due to operational activity leading to a high cost of production, resulting in increased prices of metformin HCL in May. Furthermore, the PMI values were settled at 49 in June, compared to 48.8 in May, suggesting weaker demand from end-consumers with declining purchases, export sales, and new orders. Moreover, the Chinese yuan depreciated against the US dollar in June, suggesting that declining consumer confidence is slowing China's post-pandemic recovery. Also, Russia's invasion of Ukraine continued to hamper exporters and disrupt supply chains. This increased supply in the Chinese domestic market, further increasing downward pressure on prices. Market vendors focused on reducing inventories to maintain profit margins.
Europe
The metformin HCL price in June fell 4.21% from its April level. Low purchasing activity and ample inventories in the German market, among other factors, contributed to this decline. In Germany, the manufacturing PMI (Purchasing Managers Index) for June 2023 fell to 41 from 43.2 in May and 44.5 in April, indicating a slump in manufacturing due to the impact of the COVID-19 pandemic. Weak end-user demand led to a more rapid decline in new orders. According to the Federal Statistical Office, inflation, as measured by the CPI (Consumer Price Index), rose to 6.4% in June, representing a rise of 0.2% compared to May. This has increased food and energy prices. The European Central Bank raised interest rates to keep inflation down, resulting in lower consumer demand. Also, the appreciation of the euro against the US dollar has made imports cheaper and increased the availability of metformin HCL in the German market. This gap between supply and demand had put downward pressure on metformin HCL prices.
Metformin Hydrochloride prices followed the trend of Asia Pacific in the first quarter of 2023. However, prices continued to rise until February before commencing to decline at the same rate as the first quarter of 2023 came to an end in March. Up until February 2023, the price of Metformin Hydrochloride inclined due to an increase in domestic demand and tight supply among market players. Consumer demand showed a weaker trend by the end of the first quarter, which caused traders and local suppliers to concentrate on placing orders in accordance with necessities. Also contributing to the downward trend in the market for Metformin Hydrochloride is a slowdown in trade activity.
Throughout the first quarter of 2023, Metformin Hydrochloride prices showed an inclined market trend. Early in January, the market sentiments in China, which had a holiday-shortened month January, started to improve somewhat. This was primarily due to better demand after the Lunar New Year, as both consumption and production significantly increased after the government abandoned its zero-COVID policy. Up to the middle of the first quarter of 2023, increased local demand and inquiries from the overseas market helped to support the overall market trend for metformin hydrochloride. In contrast, as March 2023 got underway, the price of Metformin Hydrochloride started to reduce steadily, which was helped by a decline in domestic demand from downstream industries as well as ample stocks that could fulfill the total needs. This has an impact on the cost of Metformin Hydrochloride, which got stabilized at USD 5150/MT in China.
Metformin Hydrochloride prices started the first half of the first quarter of 2023 on a bullish note due to an increase in orders from end-user sectors, but they ended on a remarkably bearish note. Because of lower inflation and lower energy prices, which gradually increased consumer confidence, German consumer prices started to rise in early January and kept rising until the middle of the first quarter. Additionally, the market has begun to demonstrate signs of strength in support of an increase in the flow of trade from China to Europe in comparison to the previous month, which has bolstered the general market sentiments for Metformin Hydrochloride in the German market. In spite of this, end-user industries placed few orders, and the suppliers had enough stockpiles keeping the market feeble towards the termination of the first quarter. Overall, the prices of Metformin Hydrochloride were assembled at USD 4210/MT in Germany.
