Working with around 2,000 US customers and with over 100 leading manufactures globally, GWI understands the fluctuating market can easily affect your business. Therefore, we keep you updated with industry news, manufacturer information and market trends of major ingredients.
We observed several trends that have affected the cost of raw materials.
- With the low cost brought by latest production technologies, certain product prices have been stabilized at a low level.
- New factories entered the business contributed to market competition, so surplus products such as Vitamin C, Taurine, L-Arginine and etc. are still maintained at low price level.
- Most importantly, the overall economic impact of China 2015 Environmental Protection Law has resulted in short supply and increased costs of products as manufacturers had to adjust production to reduce emissions.
The Impact of China 2015 Environmental Protection Law
With increased environmental awareness and current pollution issues, China has been gradually walking away from the image of “the world’s factory”. Therefore, the government is determined to improve environment condition and strict restrictions will be implemented. We predict the impact would be ongoing for the next few decades.
Many factories have been shut down or limited production due to the government control, which directly resulted in price increasing and shortage in the market. Vitamin B12 and Folic acid are extremely popular in the current market. All raw materials production in China have been facing increased cost due to environmental protection law. However, the level of impact depends on how manufacturers have engaged in the environmental protection, and the strategies they have adopted in the past. With the constantly changing market, Amino acids pricing may not be affected right away, but the additional procedures taken to protect environment will definitely add to manufacturing cost.
Precaution Taken By GWI
GWI has been running strict quality control procedures from beginning to the end, so for us quality is never a concern but a guarantee. Fortunately for us, we’ve been paying attention to environmental protection since two years ago, and we have been conducting emission evaluation during factory auditing. So basically all GWI suppliers are not impacted as they already invested ahead of time. With the market shortage and the ongoing port issue, the crisis becomes our opportunities as we have done the control and laid out the strategies since a long time ago.
The market update is categorized by products that will experience price increases, decreases, or are expected to remain stable.
PRODUCTS WITH PRICE INCREASES
The supply has been short and price has been increasing at a rate of around 5-10% in the past months. The current output of a major supplier is very limited, and the lead time will be over 30 days. Another major supplier has even stopped production and started selling stock. Despite all this, with our past experience of working with manufacturers, we believe market supply will get back on track soon, and the factories will resume production when stock is low.
Due to the low price and slim profits, one of the major factories has been reluctant to produce the product and has almost ceased production. As the stock quantity goes down, they may start to raise the price.
Price is still at low level, but may begin increasing soon. The starting raw material EtO (Ethylene oxide) has increased several rounds this year, which makes it hard for factories to gain profits with the current price.
Chondroitin Sulfate Sodium
Most Chinese Chondroitin factory are based in the city of Linyi. Recently, 325 factories in Linyi have been temporarily shut down or limit production by the EPA due to environmental issues, and many of them are Chondroitin manufacturers. The situation will directly result in price increase and supply shortage in the upcoming months.
PRODUCTS EXPECTED TO REMAIN STABLE
With the ongoing competition between fermentation and hydrolysis material, traditional hydrolyzed L-Leucine factories has been maintaining low price level since last year (30%-40% lower than its fermentation counterparts). We believe the trend will be ongoing during the second half of the year.
With an abundant supply, L-Leucine price and L-Valine prices are stable at a low level. However, L-Isoleucine supply is tightening and price is rising. Thus, Instant BCAA price is maintained at a relatively low level, and the market demand keeps expanding.
Ascorbic Acid USP/DC97
The high emission reduction cost and low profits has resulted in the price increase of Ascorbic Acid. In March 2015, Vitamin C factories increased VC series quotation, but experienced rejection from the market due to the oversupply from the previous year. Thus, the current market will remain stable.
Glucosamine HCL /2KCL
Prices are stable at the lowest point with abundant supply. We would strongly recommend lock in blanket orders.
The market is stable.
Supply is stable, while price is at a low level.
Price and supply keep stable. Current price is steady at a low level but manufacturers should also have reasonable profit. We predict price and supply will remain stable in the coming months.
The stable cost of starting raw materials for the product ensured a stable market. We predict that price and supply will keep steady in next few months.
The current market is very stable.
Price is still at a low level, and should stay firm in the coming months.
Supply has been short due to a major supplier has been reducing output since April, 2014. Price has increased about 5% in this year. The supplier will increase its output from June 2015, which will contribute to a more reliable supply.
Surplus supply with historically low prices.
The majority of market demand is from feed industry, and the recent demand is very strong. Thus, factories have been focusing on producing feed grade products, which results in a longer lead time (1-2months) and a stable pricing of Food grade products.
PRODUCTS WITH PRICE DECREASES
Supply and price have been stabilized at the current stage. With the latest technology, new factories will step into this product category with good costs. So the price may still have more room to decrease.
The market price is almost stable. However, some factories are adopting new technology, which will directly result in supply increase and cost reduction. In this case, we predict the price will slide in the upcoming months.
Price is steady at a low level, while the current market is experiencing surplus supply with fierce competition among factories. We predict that the current price will go down even further.
The price is very likely to decrease due to fierce competition in the market.
With the abundant supply in the current market, price will drop continuously in the near future. But we are expected to witness further expansion of the market size.
Current supply has exceeded market demand. New factories are stepping into market with lower prices, which means more space for the price to decline.
With technology updates, more factories are enjoying lower manufacturing costs. The price will decrease continuously in the 2nd half of the year.