Market Analysis - Monthly Report - September, 2020 - Xanthan Gum

Market overview for this period

Raw materials

In September, the state-owned storage of stale grain was gradually released to supplement the market supply. The early weather factors and artificial rising factors led to the overall delay of the corn listing period in Northeast China. The overall tight supply of corn market has not been effectively alleviated, and the inventory of downstream processing enterprises is generally low. In order to ensure the production, the price of corn in domestic production and marketing areas is high again.

After the double festival, the overall high price of domestic corn rose again, and the cost of raw materials continued to rise. The downstream trade subjects were worried that the future market price would rise again. The replenishment demand increased. With the support of downstream demand and cost, the domestic corn starch ex factory price went up as a whole.

It is expected that under the support of cost and demand, corn starch price will continue to be strong in the short term.

In terms of cost, the price of corn has increased by nearly 300 yuan per ton. One ton of corn produces 0.69 tons of starch, and 1.6 tons of corn starch are needed to produce one ton of xanthan gum. The cost of xanthan gum is increased by more than 500 yuan per ton due to the impact of the rising price of raw materials.

Factory condition

Fufeng: affected by the rising price of corn, the price of Fufeng this month has increased by 50 US dollars as a whole. There are few food grade orders this month, and there is still room for price negotiation. Industrial orders are full, so we are considering further price adjustment. At present, the price competition between Fufeng and meihua is fierce, and the price difference space is obviously narrowing. Fufeng pays more attention to the Russian market, especially the industrial level competition in the Russian market. At present, the policy is still biased towards the terminal and has an ambiguous attitude towards traders.

Meihua: in August, there were many food grade orders and tight delivery. In September, the production line was adjusted and one oil grade production line was changed to food grade. At present, three lines produce food grade xanthan gum and one line produces petroleum grade xanthan gum. After the revamping of the production line, the tight delivery situation of food grade xanthan gum has not been improved, which has resulted in tight delivery of petroleum grade xanthan gum, and the overall price has increased a lot.

Zhongxuan: the demand for xanthan gum is stable this month, and the price is stable, and the order received by Zhongxuan is slightly more moderate than that before. In terms of cost, due to the higher sales price of Zhongxuan, the impact of raw material price fluctuation is smaller than that of other factories, so the price policy of this month has no obvious change compared with that of last month.

Jianlong: at present, Jianlong company is affected by the rising price of corn raw materials, but the market price has not been raised rapidly. Jianlong continues to stop production and mainly sells inventory.

ECHEMI summary

In this period, the price of raw materials increased significantly, and the cost of xanthan gum increased more. September is expected to enter the peak season of oil-grade sales, with a substantial increase in oil-grade orders. The factory policy tends to produce more oil-grade products. The oil-grade price fluctuates greatly this month. There are competitive bidding orders, and the prices of various companies vary. The food grade did not come to the expected sales season of gold, silver and ten, only plum blossom because of the influence of bacteria infection before the food grade delivery was poor and out of stock, and other orders were executed normally. On the whole, the price has increased, and the overall market shows signs of improvement.Market forecast for the next period.

Market forecast for the next period

Raw materials

Since the three typhoons in September, the long speculative capital has been wildly pulling up the futures, and the purchase price of the spot end has been rising. The highest price of the main futures contract is 2595 CNY/ton, the mainstream purchase price of the port is 2450-2500 CNY/ton, and the Nantong wharf is more than 2500 CNY/ton. In a short period of half a month, the price rose by nearly 300 CNY/ton.

Spot market frenzy, excessive futures speculation, the emergence of market grain hoarding, farmers reluctant to sell, harvest delay, all become the reasons for "Crazy" corn market. At present, the corn market price has deviated from the reasonable range, which leads to the inevitable policy regulation.

From the perspective of increment, the supply and demand of Maize in 2020 / 2021 is in a tight balance, and there is a gap between production and demand. It is the existence of a tight balance between supply and demand. In addition, the typhoon has resulted in the reduction of production, the lodging has increased the harvest cost, and the harvest delay has caused farmers to be reluctant to sell. The grain hoarding demand of the market participants enlarges the gap between supply and demand in the short term, resulting in price fluctuations.

In the season when corn is on the market, no matter how much production is reduced or how hard it is sold, farmers should be able to sell 50% of corn before the Spring Festival. In addition, 30-40 million tons of auction carried forward, 10-20 million tons of imported corn and other cereals, 30 million tons of aged rice (10 million tons in the current period) and Wheat Substitution, etc., will make short-term supply and demand surplus.

With the harvest of corn in Northeast China, the weather in North China is improving, and the delivery month is gradually approaching. Downstream grain enterprises have built up basic stocks, ports are "full", and channels are "full". If futures can not "pull" spot prices up, futures are bound to "return".

Factory condition

Meihua: it is expected to readjust the production line in October, with 2 oil-grade production lines and 2 food grade production lines. The tight situation of oil-grade delivery will be partially eased, and the food grade may continue to fall into the dilemma of continuous tension.

Fufeng: according to the policy of Meihua, we will continue to make adjustments. We will fight price war between oil grade and plum blossom to strive for more market share. We will mainly maintain old customers at food level. We are expected to make a small adjustment according to the fluctuation of corn price.

Demand

It is expected that food grade demand will remain weak in October, mainly maintaining orders. Oil grade demand increases, and factories prefer oil grade production.

ECHEMI forecasts

The price of raw corn has exceeded the reasonable price range of the market, and the government's macro-control is likely to come. The price of corn in the next period is uncertain, and the possibility of continued soaring is low. When the cost of xanthan gum is stable, especially in the single quarter before Christmas, the price of the factory will be adjusted within a reasonable range to strive for stability. Customers will receive more orders. The future market will judge that the price is mainly stable, and it will not drop for the time being, and it is possible to rise slightly.