Spring 2017 Market Trends Update, Chinese IngredientsSpring 2017 Market Trends Update, Chinese Ingredients
The supply and price of ingredients from China—such as turmeric, inositol, pea protein, glucosamine and stevia—is dependent on a variety of factors, particularly farming conditions and the environmental impact of production facilities.
April 7, 2017
A little market intelligence can go a long way. For instance, a formulation can be impacted on every level based on raw materials—their availability, quality, price and more. Based on longstanding relationships with Chinese factories, we are able to take the "guesswork" out of many of the popular ingredients coming out of China. Here’s a look at where things stand after Q1.
Ascorbic Acid Series
Due to the price increase of corn and coal, facility maintenance and environmental control for reducing pollution that started in the middle of 2016, vitamin C prices continued to increase until the end of 2016. The market price is currently stable at historically high levels from the past five years. Most vitamin C manufacturers believe prices will be stable at current levels. There is still a huge production capacity in China and we remain cautious about the vitamin C market of 2017. In the next few months, the price of vitamin C derivatives (sodium ascorbate, calcium ascorbate and AA DC97 granular) may still continue to increase due to price increases of raw ascorbic acid powder from the past six months.
As a mainly feather duck/hair hydrolyzed amino acid, the L-Leucine Regular (animal source) price has increased since the middle of 2016 due to the government’s environmental control restrictions. For now, prices have stopped increasing and are stable. Due to very high production costs, we believe the price of L-Leucine Regular may be stable at current level. Now, the price of L-Leucine (fermentation, corn source) is almost the same as animal source L-Leucine. L-Valine and L-Isoleucine prices are very stable, so Instant BCAA prices are also very stable.
More brands in the U.S. market have started to put this ingredient into their product line. The price is adjusted based on harvest and season. In the winter, it will hit the high end, and in summer, it will turn back to normal. Overall, the price is stable. This ingredient has been used as traditional Chinese medicine (TCM) for centuries, and new studies are carried out for new benefits continuously. The U.S. demand will continue to increase in the coming years.
Black Rice Extract 25% Anthocyanin
The demand has increased by 30 to 40 percent annually. The price was stable from 2014 to 2016, but due to the large demand in 2017 and the limited harvest in 2016, the price is predicted to increase by 20 to 30 percent.
In the first half of 2016, the price was stable but started to increase in the second half. This trend is still going on and the cost increase is a result of increased energy costs. Also, the chemical starting material increased by 30 to 50 percent per one of the major factories. With more investment to reduce the pollution, the price will stay firm or increase in 2017.
The slaughter scale this spring is far less than last winter, which leads to a shortage of starting material for chondroitin. One of the major factories has been shut down by the government and required to improve its pollution treatment. The quote from the major output area is rising and we believe this trend will remain for the first half of 2017.
On one side, the starting material cost has increased. On the other side, a new production facility has come into the market and is trying to gain market share with low prices. So, there is some difference in price from different manufacturers, but generally, prices are stable.
Cost of yam diosgenin (the mainly raw material of DHEA) is increasing and the price of DHEA (yam origin) has also started to increase moderately. Another mature production technology of DHEA is by wood or soy sterol; the price of this type of DHEA remains stable.
In the past few months, supply was short due to pollution control requirements from the government. However, a major Chinese manufacturer has improved its facility and now meets the government’s environmental control requirements, so the supply will continue to improve.
The cost of the raw material will increase, so prices of gamma oryzanol will also increase moderately.
The price of glucosamine has been stable in recent years with some of the factories shut down due to pollution control; however, some of the large-scale factories are doing well. The starting material can be obtained domestically and abroad, and the supply is stable. As a very mature product for joint health, the supply and production are balanced and most factories believe the trend will be stable in 2017.
The price is at historically low levels thanks to usage cost reduction and increase in market demand. Due to abundant supply, prices may be hard to increase through Q2, 2017.
Dietary fiber foods are very popular in the United States and worldwide, and inulin is a hot dietary fiber and prebiotics ingredient. One of the most reputable manufacturers says market demand of inulin keeps increasing in recent years and demand is expected to keep increasing in 2017. Prices will remain stable as factories have great supply capability.
L-Arginine and L-Arginine Alpha Keto Glutarate
Since the major factories are shut down in China, the supply and price have increased since the middle of 2016. The current supply has slightly improved due to some Daseng-origin arginine that has entered the Chinese market. This has helped, and keeps the arginine derivatives market from going crazy. Hydrolyzed arginine production is still on hold without definitive plans to resume schedule.
Market demands of L-Carnitine series products are still increasing steadily; attributed to the increase in demand for weight loss products and infant formula milk powder. New factories have stepped into production in the past two to three years, increasing supply. Prices have continued to fall, with current prices reaching the lowest point in recent years. However, facing the increasing pressures of the cost of raw materials, and labor and pollution control, L-Carnitine prices may rebound in the first half of 2017.
Currently, the supply ability is still less than past years due to the unstable production status of two major manufacturers. However, supply and demand are at a balanced status. These two manufacturers may recover in the next few months, so the L-Citrulline market may go back to weak, and price may start to drop.
L-Lysine Mono HCL Granular
Price of feed grade L-Lysine has dropped, so L-Lysine Mono HCL Granular Food Grade has also dropped, and the supply is abundant.
The L-Methionine and DL-Methionine markets are stable. As more factories began producing L-Methionine by fermentation, the cost reduced substantially. We believe DL-Methionine demand will shrink and L-methionine will become the preferred form. The cost of L-Methionine is also much better compared to the last two years.
Luo Han Guo Extract
Price was stable from 2014 to 2016, but generally is still on a downward trend. The market demand is increasing but the production capacity has increased even more. The price is expected to remain stable but may come down with the application of more advanced extraction technology.
The market demand is growing steadily but the price is coming down through the years due to sufficient starting material harvest. Some new extract facilities and planting areas are still under way and we believe the price will come down a little in the coming months.
Melatonin production causes heavy pollution, therefore supply is influenced by the Chinese government’s environmental control policy and actions. For now, manufacturers still have many orders on hand and the lead-time is long. We predict price will continue increasing in 2017.
The price of raw material (DMSO) continues to increase, as does the market demand of joint health products. Prices of MSM will be on a steady rise.
As a newer plant-source protein, the demand for pea protein remains hot. The price has increased slightly due to one of the major suppliers having issues exporting before the Chinese New Year, but now there is no sign the price will come down. With the increasing demand and popularity over the market, factories are planning to expand production and we believe the price will remain firm in 2017.
Purple Sweet Potato Pigment
This is a newer natural colorant and the demand was stable from 2014 to 2016. The factory advises prices will increase slightly due to increased costs, but it will try to keep the production efficient so costs remain competitive and stable.
These ingredients are developed for use in dietary supplements, infant foods, solid drinks, ice cream, instant food, diary products, etc. The demand is increasing, yet prices are currently stable for these fruit powders.
Riboflavin 5 Sodium Phosphate
The price of riboflavin is stable for now, so we anticipate riboflavin 5 sodium phosphate may remain at current levels in next few months.
Soy Protein Isolate 90%
The market for soy protein isolate is very mature and stable. The influence factors for market change are from the supply side and the price may continue increasing for the following reasons:
• The current price of soy in China has increased by 10 percent compared to October 2016, and the supply is still tight.
• Production costs continue to increase due to pollution control required by the government.
• Some manufacturers are not running well, some have stopped production due to financial problems and some are changing their marketing strategy, aiming at a high-end market with little success.
The cost to grow spirulina keeps increasing. The package and transport costs have also increased by 20 percent, which the factories are trying to absorb on their own. The supply is still sufficient to meet the demand.
Stevia is being increasingly applied to the traditional food chain as well as dietary supplements. As an herbal extract, the price is highly related to the leaves harvested. From 2014 to 2015, the supply was tight and the price was firm. In 2016, the harvest was normal and we believe the price will be stable in the first half of 2017 and stay firm or increase slightly for the remainder of the year.
Currently, sucralose pricing is still on the high end with a stable supply. With the shortage taking place during the latter half of 2016, the price went up too quickly. We believe the market will gradually return to a reasonable level.
Sweet Tea Extract
The price was on the rise from 2014 to 2015 due to starting material cost increases, but started to decrease in Q3 of 2016. The price is highly related to the harvest that is currently unstable.
Current taurine prices have reached their highest point in the past five years due to reduced supply. Some factories have shut down in the past two to three years and actual output from all manufacturers is well controlled to match market demand. Production costs continue to increase (raw material, labor, pollution control) but one main taurine manufacturer predicted the price for 2017 should remain stable.
The price of caffeine (the major starting material of theobromine) tends to be stable, so the price of theobromine is also stable. We predict this will continue at least in the first half of 2017. One of the major Chinese caffeine manufacturers is establishing a new facility, so supply capacity will increase in the future.
Turmeric Extract (Curcumin 95%)
The supply of raw materials will be short in 2017. The harvest is poor in the major planting area in India and Burma. India suffered from severe drought in 2016, so output of turmeric is much less than before. Burma is still under civil war which influences the export quantity of turmeric. There is a great possibility for price increase of turmeric extract series products in 2017.
A new environmental control policy has led to a short supply of D-Xylose (the direct raw material of xylitol), so the supply of xylitol is also short and the price has steadily increased since Q3, 2016. This trend may continue until the middle of 2017, so prices will continue to increase in the coming months.
Thiamine, niacin, niacinamide, D-calcium pantothenate and pyridoxine HCl are currently stable at a high level and on the same trend with previous reports.
Editor’s Note: ingredientsonline.com is exhibiting at Ingredient Marketplace in Orlando, Florida, April 18-20. Click the following link to see the company’s 2017 ingredient forecast—along with informative articles from other companies—on the Exhibitor Insights blog. Topics range from improving nutrient absorption and formulating with plant proteins to the latest in retail packaging, digestive health and sports nutrition.
Tony Xue, general manager of the ingredientsonline.com China office, has 10 years of experience in the dietary supplement industry. Prior to his current role, he served positions in sales, purchasing, inventory control and marketing in both the United States and China. Xue has a bachelor’s degree from Shanghai International Studies University.
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