China’s Xanthan Gum Market Remains in Doldrums in H1 2014

In H1 2014, the domestic xanthan gum market has been in the doldrums overall. China’s xanthan gum manufacturers continuously adopted price cuts to push sales. According to CCM’s investigation, the ex-works price of food grade  xanthan gum (80mesh) produced by Deosen Biochemical Ltd. (Deosen Biochemical) reduced from USD4,606/t in Jan. 2014 to USD3,718/t in June 2014. Besides, the ex-works price of food grade xanthan gum (80mesh) produced by Fufeng Group Co., Ltd. (Fufeng Group) was around USD3,577/t in June 2014, USD630/t lower than that in Jan. 2014. Deosen Biochemical and Fufeng Group were the two biggest xanthan gum manufacturers in China, whose xanthan gum capacity reached around 90,000 t/a and around 74,000 t/a respectively, according to Corn Products China News 1407 on July by CCM.

In H1 2014, the domestic xanthan gum market suffered a downturn for the following reasons:

First of all, the overcapacity of xanthan gum in China. In 2014, the xanthan gum manufacturers mainly include five big enterprises in China. They are Deosen Biochemical, Fufeng Group, Inner Mongolia Jianlong Biochemical Co., Ltd., Meihua Holdings Group Co., Ltd. and Zibo Cargill Huanghelong Bioengineering Co., Ltd., whose total output of xanthan gum is estimated to reach 200,000 tonnes in 2014. However, the domestic demand for xanthan only totaled 100,000 tonnes per year, along with 30,000-40,000 tonnes for exports per year. In China, the overcapacity may lead to a price war, because domestic xanthan gum manufacturers hoped to boost sales through price reduction.

Second, weak demand for xanthan gum. Under the current economic circumstance, the demand for xanthan gum from domestic food industry was mediocre. What’s more, the demand from overseas markets was also in slow growth. Generally, China's xanthan gum is an export-oriented product. While, the demand growth of xanthan gum from overseas was unsatisfied at present. The export volume of China’s xanthan gum amounted to around 48,687 tonnes during Jan.-May 2014, just up 3% year on year compared with that in the same period of 2013. 

Third, the weak competitive advantage. During Jan.-May 2014, the price of guar gum, a substitute of xanthan gum, declined in the overseas market. According to China Custom’s data, during Jan.-May 2014, China imported 7,281 tonnes of guar gum, a significant YoY rise of 76%. And its average import price was around USD3,245/t, sharply down by 49% year on year.

Fourth, the low cost support, especially in the first four months in 2014. The ex-works price of corn starch in North China fluctuated at USD450/t during Jan.-April 2014, while it was USD470/t in the same period of 2013.

Although the price of xanthan gum kept declining in H1 2014, the gross profit for xanthan gum manufacturing is still high, disclosed by industry source.

In fact, the market price of China’s corn kept rising since May 2014, on account of the tight supply of corn in China. However, the rising raw material price didn't boost xanthan gum market. In H2 2014, the domestic xanthan gum market would remain in a doldrums without favourable factors appeared in short period, as estimated by CCM. Affected by high cost and weak demand, in July 2014, Deosen Biochemical would conduct an overhaul of xanthan gum production line in Shandong Province, whose capacity is 42,000 t/a.

 

Table of contents: Corn Products China News 1407

Heilongjiang Government Subsidizes Corn Deep-processing Enterprises

China May Cancel Temporary Storage Policy on Corn

China’s Xanthan Gum Market Remains in Doldrums in H1 2014

Review of China's Corn Ethanol in H1 2014

Henan Lotus’ Brand Value Enhanced

Xiwang Foodstuffs to Launch New Product in H2 2014

DSM to Acquire Aland

Chinese Corn Products Imp. & Exp., May 2014

Export Value of China's Inositol Rises, Jan.-May 2014

China's Syrup Exports Falls during Jan.-May 2014

Price Update of Corn Products, July 2014

Increasing Price of Corn Germ doesn't Push Up Price of Corn Oil

News in Brief

Chinese Feed Output Decreases in H1 2014

Shutdown of Vitamin C Production Line in Northeast Pharmaceutical

Imports of Corn Falls in May 2014

Lysine Plant of CJ Group built in US

North China Pharmaceutical Gets Subsidy Granted by Government

Corn Starch Futures Forum Held in Shandong

Longlive Bio-technology Obtains Subsidy on Cellulose Ethanol Fuel

Guangji Pharmaceutical Suffers Net Losses in H1 2014

Changshouhua Food Witnesses a Fall in Net Profit in H1 2014

Recent Trade Friction Cases on China's Citric Acid & Citrate 

 

Corn products, including corn cob, corn straw feedstock and their downstream products, developed fast in recent years, especially corn deep-processing products. Corn products are widely used in feed, food, pharmaceutics, energy and chemical industries, which makes them closely related to our daily life. As China is the largest producer and exporting country of some corn products such as citric acid, monosodium glutamate, vitamin C and vitamin B2, etc., corn products in China attract great attention from all over the world. Even though the Chinese government has launched a number of policies to inhibit the precipitated development of the corn deep-processing industry, corn products are considered promising in the future. The government has also launched some policies to encourage the development of some corn products such as minority amino acids (amino acids except for glutamic acid and lysine), functional sugar, cellulose ethanol and corn oil, attracting great attention as well because it may be a good investment chance for multinational enterprises. On the whole, the Corn Products China News can give you quantities of market information and policies about food, feed, energy, pharmaceutics, chemical industries in China and let you find what you need.

 

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