Ex-works price of xanthan gum decreases sharply in 2013
Summary: The ex-works price of xanthan gum witnessed a sharp downtrend in 2013, especially in H2 2013. The decrease in the price could be attributable to the increasing supply, the slow growth in demand from overseas markets, the weak competitive advantage and the weak cost support. Tag: DDGS,sorbitol,furfural,corn germ meal,xanthan gum,VB2,poultry industry,edible ethanol industry,wheat The ex-works price of xanthan gum witnessed an obvious downtrend in 2013, especially during H2 2013. For example, the ex-works price of xanthan gum of Fufeng Group Co., Ltd. (Fufeng Group), a leading xanthan gum manufacturer with a capacity of around 50,000t/a, fluctuated at a relatively low level during H1 2013, according to data from CCM. The average ex-works price decreased from USD5,190/t during H2 2012 to USD5,149/t during H1 2013. Since then, Fufeng Group continued to decrease the price of xanthan gum to USD4,275/t in Dec. 2013, down a significant 17% compared with that in June 2013, due to the downturn in the market for xanthan gum. The following factors forced producers to decrease the price of xanthan gum in 2013: First of all, the increasing supply of xanthan gum. Tight supply caused higher prices in 2012, but expanding capacity led to oversupply in 2013. Deosen Biochemical Ltd. (Deosen Biochemical), Fufeng Group, Inner Mongolia Jianlong Biochemical Co., Ltd. and Meihua Holdings Group Co., Ltd. all put xanthan gum production lines into operation this year. Each of these production lines has a capacity of around 10,000 t/a. And it is estimated that the new capacities of xanthan gum in 2013 totalled around 60,000 tonnes. The expansion intensified the competition in the xanthan gum market, so manufacturers had to decrease their prices to take up more market share. Second, the slow growth in demand from overseas markets. Generally, China's xanthan gum is an export-oriented product. While, the demand growth of xanthan gum from overseas was not satisfied. The export volume of xanthan gum was around 102,000 tonnes during Jan.-Nov. 2013, just at the same level as that in 2012. Moreover, in May 2013, the US Department of Commerce imposed dumping margins on Chinese xanthan gum, ranging from 15.09% to 154.07%. The high anti-dumping margins negatively impacted the xanthan gum export. Third, the less competitive advantage. In 2013, the price of guar gum, a substitute of xanthan gum, declined in the overseas market, especially since July. According to data from China Customs, the average import price of guar gum from India (China's major import origin of this product) was around USD4,993/t during Jan.-Nov. 2013, down from around USD6,533/t in 2012. The low price of imported guar gum attracted more downstream enterprises to use this product. China imported around 4,472 tonnes of guar gum from India in the first eleven months of this year, 1,074 tonnes more than that in 2012.