Food additives price trend

Why the price of most products increased

Since the end of August, The price of most products appear in different degrees of rise. The Price of increase and magnitude are very fast. The reasons are as follows:

①Policy implications: In the fourth quarter of the beginning of the Chinese government, the strict control of the environment has severely restricted the start-up and production of factories in many areas, especially in Shandong, Hebei, Henan, etc. It also spread to all provinces, autonomous regions.

②Market demand impact: With the gradual recovery of the world economy, the demand of various industries is also on the rise. The demand for raw materials is also gradually being restored.

③The factory operating rate is not enough: The third quarter is the major quarters for parking and overhaul of all major upstream raw material plants, for example: soda ash, caustic soda, sulfur, yellow phosphorus, etc. Therefore, the price rise of major upstream raw materials caused by insufficient utilization rate is also one of the main reason for the price increase of various downstream products.

④Exchange rate problem: Since the U.S. dollar interest rate increase in the second quarter, until the international markets and the Fed confirmed that the fourth quarter last meeting of the Federal Reserve to raise interest rates to confirm, in the case of the market a long time, relatively stable exchange rate, product prices are also reasonable things.

For the last month of the fourth quarter to the first quarter of next year outlook, with the arrival of winter in China and the improvement of air quality, the recovery rate of factories at all levels will gradually rise, affected by the policy and overhaul issues all over, the market supply gradually increased, full access to the northern hemisphere also cut the demand for food additives and various raw materials, the upper reaches of the main raw materials have been running for 3-5 months or more, the market has accumulated a lot of worries factors, coupled with the promulgation and implementation of policies to stimulate the exchange rate of the U.S. dollar, such as the tax reduction and interest rate hikes by the Federal Reserve. Prices at all levels are expected to have a greater price change, Christmas and New Year’s Day may be a market price trend’s watershed.

Against to several factors affect the market price of the product:

①RMB exchange rate trend: Although the dollar exchange rate is expected to have a greater change, but the strong RMB exchange rate can’t be ignored. Recall before many times the trend of the RMB exchange rate is beyond the expectation of most people, for how much the dollar’s impact on the RMB will have, currently unable to predict accurately. Thereby resulting in the product price will have greater volatility there is a certain uncertainty.

②Continuation of the policy: Chinese government controls the environment, it will be long-term sustainable behavior. Strength and time will be one of the other major reasons that determine the price trend of market products.

The following are the price history of several major raw materials: