Market Update: March 2021
by Tony Xue, General Manager, ingredientsonline.com China
As the COVID-19 vaccination rollout accelerates worldwide, an expectation of “back to normal” is on the rise, and things that were once in disarray are becoming stabilized. There are six key factors to highlight in the global ingredient market:
1. Policy: It has been two months since President Biden took office and his policy with China has become clearer. The talk in Alaska between the two sides is a demonstration of the confrontation in the new era. Although before his election Biden expressed that the U.S. would adopt another approach outside of a trade war, it is still believed he would use this as an option to put pressure on the Chinese government. Therefore, we expect the tariff situation will not change any time soon if at all.
2. Currency: From a macro and long-term point of view, the USD value has decreased. If we use RMB as the main foreign currency, one USD equaled eight RMB in 2006. Now, one USD equals 6.5 RMB as of 2021. There will be fluctuations over time, but we see this as a major trend in the coming years. The stimulus bill cash has come into the economy and the central banks in several countries have lifted interest rates on the deposits to avoid the overheated economy.
3. Transport: Finally, after months of strain, there is a sign of improvement. Freight costs have temporarily come down and vessel availability is slightly better as well. President Biden announced there would be enough vaccinations available for the U.S. population by May 1, and if that happens, we expect the situation will greatly improve for the second half of the year.
4. Pandemic: The impact of the pandemic to the supply chain is decreasing with most factories running normally.
5. Pollution control: Fewer cases of supply shut down due to pollution control are being reported. This outcome is encouraging, showing most factories can treat production waste properly. Cost may increase and there may be difficulties with relocation, but it is good for the environment, living standards, and beneficial for future generations.
6. Starting material: Corn and soy prices are not affected much this month, but raw oil and labor costs are on the rise in China. As for herbal products, that will depend on the harvest later this year. For now, most herbal raw material supply is stable.
Analyzing the ingredientsonline.com website trends, we have found the below products have been trending up during the pandemic:
|Ingredients to Boost Immunity||Ingredients for Mood and Sleep||Ingredients for Metabolism and Weight Management|
|Beta Glucan||5 HTP||Conjugated Linoleic Acid Triglycerides|
|European Bilberry||Gamma Oryzanol||Medium-Chain Triglycerides|
|Mushroom||Mucuna Extract (l-DOPA)|
|Selenium||Valerian Root Extract|
|Vitamin A (Retinol)|
|Vitamin C (Ascorbic Acid)|
|Vitamin D3 (Cholecalciferol)|
We see the popularity of these three categories conforming to consumer’s needs during and after the pandemic. We suggest stocking these ingredients in more abundance to cope with increasing demand. However, some ingredients were getting so popular that many manufacturers bought additional quantities before the Chinese Spring Festival. This may explain why the sales for some ingredients are quiet now, but we think it will not affect the long-term trend of increasing demand.
In the last month, we had several cases of customers taking all the stock of certain ingredients we such as Citrulline, Citrulline Malate, Tyrosine, and Valine. This is an outcome from the production at some factories being on a hold due to maintenance. We expect it could become better by the end of Q2.
We also want to make three predictions that we will continue to update in future articles:
1. Sports nutrition products will bounce back quickly by the end of Q2 with the full reopening of facilities for indoor and outdoor activities.
2. People’s awareness and care for high blood pressure, high blood fat, and high blood sugar will climb greatly because people who carry these diseases are the most vulnerable to COVID -19. More new ingredients and formulations will be introduced and designed with the aim to treat these diseases.
3. Different forms and dosages of ingredients are analyzed and designed before being used. With new technology, absorption can be better controlled such as where to digest, how long it can last, how to protect its effectiveness, and reduction of side effects.
Disclaimer: Information presented in this article are for customer reference only and subject to market fluctuations due to limited research and resources. Trends are current as of March 2021.
Tony Xue is the general manager of ingredientsonline.com China. His expertise supports market analysis, procurement forecasts, and vendor relationship management. Tony holds a bachelor's degree from Shanghai Foreign Studies University and has been working in the ingredient industry for 14 years.