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

Market overview for this period

Raw materials:

Domestic corn prices continued to fluctuate upward in November. The average price of yellow corn on November 1st and 3rd was 2371.43 CNY/ton, and the average daily price on November 30th was 2422.86 CNY/ton, up 2.17% in the month.

In early November, the region continues to increase supply of corn and the storage of corn to outbound market supply, domestic corn market supply tight overall situation eased, corn deep processing enterprises inventories have been cut corn prices were slightly after supplement, drives the domestic corn high rushed back slightly after the whole market price shocks.

In mid-november, a lot of snow weather, north of domestic food sales increased difficulty at the grassroots level slightly lower compared to the maize market supply, price rised supplies trading main body quite obvious, the general market brisk buying and selling of domestic corn tight supply situation, demand, market prices for corn sustained concussion higher. Producing area corn rises continuously, port and sell area corn price rises accordingly, domestic corn price rises as a whole concussion.

In November, the overall domestic hog price rose 3.53%, the egg price fell 1.41%, the recovery speed of hog stock slowed down, and the demand for corn feeding was stable in the future.

Factory condition:

Fufeng: The price of Xanthan gum in this period continues to rise, rising once a week, $50 a time the speed of rapid expansion. The main reason for the price rise is the price of raw materials, unexpectedly, the Meihua not only did not and Fufeng rebel price cut to seize the Fufeng market, footstep is also very consistent and Fufeng price together, more increase the confidence of fufeng to price. The news said that Fufeng has received the next annual oil grade 2W tons of tender orders, food grade has also received thousands of tons of annual orders, from next year's production consumption, Fufeng does not worry about sales, so this price rise is also the trend, imperative.

Meihua: the price rise of Meihua in this period is surprisingly consistent with that of Fufeng, with weekly price increases ranging from 300 to 500 RMB. The price once rose to the level of Fufeng or even slightly higher. Due to the rapid rate of price rise, Meihua early low order can not be executed in accordance with the original price, if the need to ship the goods, customers need to supplement the high order with high low price delivery. On the whole, the supply of food grade is tight, the supply of petroleum grade is fair, the food grade mainly produces European and American standard, and the national standard is relatively scarce in this period.

Deosen: With the price of Fufeng and Meihua both rising, Deosen finally announced the price adjustment at the end of the month, with the overall price increasing by $100. Before the price increase, we should give enough time for customers to sign orders, which is full of sincerity. At present, the xanthan gum market has changed the normal, Deosen price has become the lowest price in the whole industry, so the price level led to this period many swing customers tend to sign orders in Deosen, Deosen or the biggest winner of the price war.

Jianlong: At present, the price of Xanthan gum has risen rapidly, jianlong may restart. It is said that Jianlong is likely to resume work this month and join in the competition of xanthan gum market.

ECHEMI summary:

Affected by corn raw materials, the current price of xanthan gum to achieve quadruple rise even five even rise, prices quickly rose to the highest level in recent years, relatively strong demand and xanthan gum at this time, foreign customers have signed up for tender years, price increases time conform to the right place, right time, and finally let the price of xanthan gum line away from the cost, making a big hit.

Market forecast for the next period

Raw materials:

At present, the domestic corn market as a whole has entered the stage of long-short game, and the deep processing enterprises in northeast China collectively raise the price of grain sharply, pushing the price of grain to set a new record, which is amazing. Since the second quarter of this year, the amount of Corn purchased by China from the United States has increased significantly. In the later period, China may import about 5 million tons of Ukrainian corn, and the amount of corn imported by China in 2020/2021 (October/September) may reach 20 million tons. Imports will help increase domestic corn supply and stabilize market prices.

In the general context of low enterprise inventory and procurement difficulties, the price of corn is easy to rise and difficult to fall. In December, as the source of grain is further concentrated in social stocks such as grain dealers and traders, the game between supply and demand will become more intense. In the short term, only through high price can the use of corn be restricted, and the strength of corn cannot be changed. The overall market purchase and sales flourishing, the domestic corn market prices continue to rise in November, demand support, is expected to continue to run strongly in December domestic corn market prices.

Factory situation:

Meihua: it is expected that Meihua will continue to rise in December, and the increase rate will be slightly less than that in November. At present, the inventory of petroleum grade is in the majority, and the food grade is relatively tight. It is expected that the order sales of petroleum grade will be the main one, and the price of food grade will be relatively firm.

Fufeng: December fufeng price trend is not good judgment, such as raw material prices remain high, Fufeng price is expected to continue to pull up, but last month Fufeng out of the annual single order to receive single, small customer orders to receive orders significantly slowed down, the company launched the end of the new price policy to encourage order, price can be discussed and wait and see.

Requirements:

At present, the epidemic has not affected the xanthan gum rigid demand, the end of the strong probability of demand.

ECHEMI forecasts:

Since Fufeng and Meihua are both listed companies that need to show annual reports, the annual xanthan gum sales will soon become clear. Corn price may become a key point for xanthan gum to rise and fall. If corn price falls, each factory will probably stabilize the price or slightly reduce the price to compete for orders in the last month, which will impact xanthan gum market and strive for brighter sales data. If the price of corn continues to rise, what price policy will be introduced between the two companies, and whether Zhongxuan will continue to stir in it, you will wait and see.