Introduction:

 

Since August, the domestic citric acid spot market has experienced a relatively large and continuous decline. The cumulative increase of nearly a year and a half has been withdrawn this month. The main negative factor comes from the increase in the supply side. The industry start-up in September may continue to maintain a high level, the inventory pressure of the citric acid industry will decrease, and the spot price may remain weak.

 

            Status: Spot prices fell off a cliff in August

 

The market price of citric acid began to weaken in mid-July. The rate of decline and the frequency of price reduction in August far exceeded that of July. According to the monitoring data of Zhuochuang Information, as of August 29, the market price of citric acid monohydrate was 6700-9500 yuan. / ton, a month-on-month decrease of 40.8% and a year-on-year increase of 2.1%; the price of anhydrous citric acid refers to 8,000-10,000 yuan / ton, a month-on-month decrease of 36.6% and a year-on-year increase of 5.4%. Under the influence of the bidding and shipping mentality of upstream enterprises, the price of citric acid has dropped rapidly. Judging from the market price trend in the past three years, the current price has broken down the same period last year.

 

figure 1

 

 

Incentives: The industry starts at a high level and the supply is very sufficient

 

Judging from the monthly start-up data of the citric acid industry in the past three years, the overall start-up in 2022 is much higher than the previous two years. The data shows that the monthly operation of the citric acid industry in August was around 92%, an increase of 19.2 percentage points year-on-year and an increase of 36 percentage points from 2020. The high level of industry starts in 2022 is mainly due to a gap in international supply, and more international orders are returned to China. Stimulated by high profits, upstream citric acid enterprises are more motivated to start construction and conduct new production capacity layouts in a timely manner, resulting in a relatively concentrated increase in the industry supply, and the supply is very sufficient. Judging from the existing capacity base of the citric acid industry, if the industry maintains an average start-up of 92%, the monthly output will be around 170,000 tons, an increase of 45,000 tons or 36% over the same period last year. From January to August, the industry output was around 1.203 million tons

 

figure 2

 

            Support: export volume and price rise

 

Continuing the peak export season in the fourth quarter of 2021, the overall export volume and price in 2022 will perform well, which is an important positive support for the export-oriented citric acid industry. Among them, the export volume in January reached 165,000 tons, reaching a new monthly export high in the past five years; the average monthly export price in May was 893.2 US dollars / ton, an increase of nearly 40.2% year-on-year. According to customs data, China exported 829,000 tons of citric acid from January to July, a year-on-year increase of 45.6%. It is estimated that from January to August, a total of 930,000 tons were exported. Taking into account domestic sales, the industry inventory is expected to be 73,000 tons.

 

figure 3

 

Result: Industry profits shrink rapidly and return to rationality

 

With the rapid decline in the price of finished citric acid, the profits of the industry have also continued to retreat, mainly relying on the by-product citric acid residue to hedge. According to the monitoring data of Zhuochuang Information, as of August 29, the average monthly profit margin of the citric acid industry without hedging by-products was 2288.7 yuan/ton, a month-on-month decrease of 4625.3 yuan/ton; after hedging by-products, the average monthly profit of the citric acid industry was The space is 2798.2 yuan/ton, a decrease of 5026 yuan/ton from the previous month.

 

 

Figure 4

 

 

Prediction: The citric acid market will be weak in September

 

Dear parents and friends:

In September, the number of contracts signed in the foreign trade market fell regularly, and at the same time, the bidding process of domestic citric acid enterprises led to a process of rapid price drop, which would lead to a wait-and-see attitude of domestic and foreign customers, and low purchasing enthusiasm. The supporting role of foreign trade has weakened, and the consumption of domestic sales of daily chemicals, washing and disinfection water has increased slightly, but the support is insufficient. At the same time, the prices of various raw materials have weakened, the cost of citric acid has decreased, and the bottom support has weakened.

 

 

To sum up, the spot market of citric acid in September will be dominated by a weakening trend, and high-end prices will gradually fall under pressure, but the decline has gradually narrowed compared with the previous period, and it is still at the seasonal bottom. It is necessary to focus on the progress of the company's construction and the changes in foreign trade orders.

 

 

Source: Zhuochuang Information sci99.com