Market Report April 12
April 02, 2012 -
POSTED BY Matt
POSTED IN Bloggies
Market Report April 2012:
Overview
There appears to be a number of reports indicating that the long awaited recovery in the USA is finally beginning to happen. Unfortunately in Europe, the governmental debt problem is struggling to be contained and the EU economies seem a long way from joining the USA on the road to recovery, but it does seem that the doom and gloom is beginning to lift and business seems to remain steady.
Stock levels remain at a low level and we have recently seen that interruption in supply has caused price spikes for a few items such as Menthol and Vanillin. We would advise buyers to ensure that they have contracts in place to cover their demand through to August. By June there should be sufficient information to asses the essential oil crops and then decide when further purchasing is required.
The crude oil price remains in excess of USD100/barrel and whilst it remains at this level, we can only see prices of downstream building blocks remaining firm.
Essential Oils
The price correction that took place during the first quarter has certainly encouraged buyers back in to the market and during recent weeks it appears that prices have stabilized, trading in a very narrow range. There are reports coming from China of drought conditions in the Yunnan province and this could create issues for products such as Citronella oil, Eucalyptus oil and Geranium oil. Furthermore, the recent Tsunami scare in the India Ocean is a reminder of the delicate balance that nature holds on the supply of natural products.
Aroma Chemicals
Prices have remained firm due to the Crude oil prices remaining over USD100/barrel for the past few months and no apparent relief of this situation is on the horizon.
Gum Turpentine prices have remained stable and are expected to remain so until there is clearer news from the new crop in May/June. Prices on Phenol based Aroma Chemicals seem to be a little weaker.
Aniseed/Anethol– Chinese
Aniseed Oil – The quality of Aniseed fruits have not been up to sufficient standard to sell in the fruit markets and more material is being made available for oil processing which has helped to reduce prices by around 10%.
Anethol– Prices have also eased by around 10% reflecting the reduction in the Aniseed price.
Cardamom Oil
Guatemala – During the past few weeks we have seen prices increase due to strong demand and limited availability at origin.
India – Prices are increasing due to strong demand and limited supply. Part of the price increase may also be due to speculation by traders on the MCX in India.
Cinnamon Leaf Oil
Prices have slowly continued to decline and we are seeing an increase in demand from customers who feel that the price level is suitably attractive for them.
Citronella oil 85/35% min. Chinese
Growers are no longer willing to sell at what they regard as low prices and recently we have seen a reverse in the price decline.
While demand remains quiet sellers at origin may struggle to maintain their recent price hikes, but availability of good quality oil does seem limited and if demand improves prices could move up very quickly, along with the added worry of a drought in the area. Definitely one to watch.
Cloves and Derivatives
The news from Indonesia and Madagascar is that the total production of Clove Leaf oil of 5000-5500mt is sufficient to meet annual world demand, but demand remains flat and so do prices.
Most buyers are hoping for prices to decline and prefer to wait and see what happens over the next month or so before the 'Wet Season' begins.
Di Ethyl Phthalate (DEP)
The price increase that came in to effect during the early part of the year, due to the increase of phthalicanhydride, has remained and with crude oil prices remaining firm and demand steady it seems that prices will remain at present levels for the next month or so.
Eucalyptus Oil
In spite of the reported drought in the main growing area of Yunnan, supply remains good and able to meet current demand. Prices have remained fairly stable over the past 3-4 months.
Eucalyptus Citriodora
Brazil – Supply continues to be good and meeting demand. Prices have weakened slightly during the past few months but are still considerably higher than the more attractive prices of a few years ago.
China – Prices remain much higher than those from Brazil. Availability remains limited.
Geranium Oil
Egyptian – The bumper crop of 2011 which produced double the average crop still hangs over the market and with only sporadic demand, price remains under pressure. New crop in June is predicted to be good, some reports we are receiving indicate that the crop will again be much larger than the average and unless there is a prolonged and strong demand we do expect prices to soften. We understand that growers and exporters are suffering some big losses and we have heard recently rumours of oil being adulterated.
Chinese – Supply of good quality oil remains limited and prices have remained surprisingly stable, trading some USD50-60/kg higher than Egyptian oil. New crop material should be available during July/August.
Guaiacwood Oil – Paraguay
Price has now stabilized at the higher levels and whilst supply remains limited, prices should remain firm. Demand has been steady.
LitseaCubeba– Chinese
During the past 6-8 weeks prices have softened by about 10%, as demand has remained very weak.
Menthol/Peppermint oil – Indian/Chinese
The price for Menthol oil has remained very firm, spurred on by continued speculation on the MCX in India and strong demand from Europe and the USA. With prices increasing so dramatically over a short period a number of producers in India and China have faced serious contractual problems and we do know of a number of defaults, which has added woe on to an already dire supply situation.
Availability of spot material both in India and China remains tight, whilst stocks in Europe and USA are also at very low levels. A number of key producers are predicting that prices during April and first half May will increase again and that we will have to wait until July or August to see prices start to return to lower levels.
Orange oil/Terpenes
The well predicted and expected price reduction has continued and levels are looking very attractive when compared to prices of just a few months ago. Supply is good, but demand has also been strong as buyers look to take advantage of the lower prices. Brazilian new crop is expected to be available slightly later this year, around July/August and we will be reporting about the expected crop as soon as information is available. Prices are driven more by the Floridian market, Brazil are in a situation to reduce prices to compete with Florida
Patchouli oil – Indonesian
Demand remains flat and exporters have been lowering prices in an attempt to attract buyers.
We have no reports of problems with supply and prices remain soft. In addition to the usual Java/Sumatra crude oil we now have a new growing area Sulawesi which have produced large volumes this year.
Petitgrain Oil
Demand/supply remains balanced and prices remain stable at the new higher levels.
Spearmint Oil – Chinese
Prices remain firm and likely to remain unchanged until new crop in July/August.
Tea Tree oil – Australian
Poor weather conditions at origin have seemed not to have had any effect on price and with demand in Europe remaining flat we see no reason why prices will change. Growers confirm that the current prices that they are achieving are just about the workable minimum for them, but on the other side customers are not willing or able to pay higher prices.
Market report Feb 2012
March 02, 2012 -
POSTED BY Matt
POSTED IN Bloggies
Market Report February 2012:
Overview
The overall market for flavor and fragrance material continues to be affected by unusual and bizarre circumstances such as crude oil price increases, material feedstock increases, instability in Europe with the Euro Zone debt crisis, appreciation of the Chinese RMB and the Indian rupee, and weather patterns across the globe. Uncertainty, volatility and price increases are likely to continue to plague the market on many materials. However, not all is bleak as some materials re-establish themselves at a more realistic price level after having reached some record highs in 2011.
Essential oils
Citronella Oil
Pricing seems to have stabilized and we are no longer witnessing any further decline in pricing. Pricing at origin has if anything slightly firmed over the past month even though availability does not seem to be any issue at this time. With continuing drought conditions still prevalent in some of the major growing areas within China, it is difficult to imagine pricing will not be impacted in the coming months. For now however, we are not anticipating any major additional increases in pricing of this oil unless strong purchasing demands enter the market.
Clove and Derivatives
The market continues to be steady for the time being. New crop production figures from Madagascar are not yet available but are anticipated towards the end of March /early April. Demand continues to be somewhat sluggish for the time being.
Coriander Herb Oil
Distillation of new crop material is just starting and will continue through the month of March, however we do not yet have indicative pricing available as of now. Due to the short crop window and limited carry forward stocks, we still have some reservations as to pricing trends on this specific oil. It may be prudent to examine 2012 requirements sometime within the coming weeks.
Cumin Seed Oil
We understand that new crop material should start to become available during the next month or so however, early indications are that this year’s crop is significantly reduced from normal levels. We understand availability is also likely to be affected due to demand from Syria also entering the market since uprising and political situation is impacting their local availability. Long term coverage is being recommended by producers at origin.
Eucalyptus Oil
Prices again have seemingly stabilized after the pricing declines during the fourth quarter of last year and again at the start of this year. The major growing areas in China, namely Yunnan Province, have been and continue to be impacted by drought conditions so we believe that this material should be closely monitored moving forward. We wonder whether now may be a prudent time to examine 2012 requirements especially since the market availability is not showing immediate signs of stress.
Geranium Oil
After the significant decline in pricing from last year’s record highs, pricing seems to have stabilized for Egyptian material. We do continue to see lower pricing on Egyptian origin than the Chinese equivalent. Supply continues to be available and despite the political turmoil in the region, shipments are being affected on time. It is reported that several new farmers have entered the business this year and therefore we could see a higher than average crop in 2012. Traditional farmers are continuing to release their stocks at a steady pace at the current levels but the new players who have entered the marketplace this year are hopeful for a readjustment back up in price to reap higher rewards.
Marjoram Oil
With a life span of only three years, approximately one third of the plantation must be replaced year on year. With the lower market price levels of last year, farmers have been discouraged to plant anew and have been tempted instead to produce alternate crops, such as wheat, with government incentives acting as an additional persuader. Pricing is expected to rise and we may see shortages in this material for the coming three years as a result. Farmers and producers, at origin, are highly recommending that buyers examine their needs with a long term perspective.
Mint oils and Menthol
As we go to print, the Mentha Arvensis (Dementholised Cornmint Oil ) and menthol markets, once again find themselves in disarray with huge volatility in pricing. This market has continued its upward trend, however in recent days has taken off at a full gallop. Pricing is unfortunately increasing at a very rapid rate and it is difficult to predict where this may end. Farmers are indicating that they have low stock levels to satisfy the market until new crop, however we cannot quantify how much of these significant price increases originate from a true shortage of material and how much originates from speculation . This does bring back unhappy memories of the last menthol fiasco back in 1996 when pricing reached record highs. Whatever the underlying cause, we are facing a highly turbulent market for the coming weeks and possibly months and supply is likely to remain very tight and at ever increasing price levels. Dealers and resellers will have some very difficult decisions to make once their current inventory levels are sold out as replacement costs are likely to be at least 50% higher than only one month ago
Nutmeg Oil
ricing remains stable and supply seems to be adequate for the foreseeable future. This market can however be highly sensitive to increased demand so we will continue to monitor pricing as we move forward.
Orange Oil and Orange Terpenes
Florida seems to be on stream with production without any adverse affects from frosts or freezing weather conditions so far this winter. With availability of material not seemingly an issue from both major producing origins, pricing for both oil and terpenes has certainly continued to follow a downward trend. Producers seem to be a little more willing to accept orders at what can still be considered to be high prices, but at long last we seem to be back down to $5 – 6 range from last year’s record highs.
Patchouli Oil
Pricing and availability continue to be stable, with little or no immediate reasons for price increases in the foreseeable future.
Italian Citrus Forecast
Bergamot
Blossoming was good last May however, Spring 2011 has been characterized as having cooler temperatures and more abundant rain than normal. Groves planted with Feminello are now the most used, as it does allow a better resistance to “alternanaza”, a more efficient and quicker process of pruning and picking of the trees.
Today 95% of the crop has been processed and about 115mt of oil has been produced which takes us back to good levels.
Lemon
Same situation with blossoming with Bergamot has been seen with Lemon. High demand for the Italian oil has continued through out the second half of 2011. As a result, processing will continue until late May 2012 in addtion to the processing of summer fruits in July. Although the Italian oil was unusually less expensive during 2011, 2012 should allow for a competitive price position in line with overseas origins while maintaining its traditional sensory advantage. We should see about 750mt of oil processed this winter.
Mandarin and Clementine
In Calabria, where the main part of Green Mandarin groves are, is where the best quality of fruits are produced. A slight price increase is registered on Green Mandarin coming from this area. The second area, in Gioia Tauro, is where we will find the largest part of production with more standard quality fruits with a lower price. 300mt of Mandarins will be processed this season, an 11 percent decrease from last year. Demand is good and despite a slight difference of availability, we see no signs of problem for covering needs.
Orange
Orange fruit production for the 2011/2012 year is estimated at 2.3 million tons in Italy, an 18% increase from previous years. The masses of snow of Mt. Etna during the winter and the wide range of temperature from day to night has had a positive effect on the process of orange maturation, giving to the Tarocco variety’s pulp its typical pigmentation. Demand is still steady, with a very slight weakening in price, although prices remain on the high side.
Aroma Chemicals
Once again we are facing some significant price increases on a wide array of the aroma chemicals. With crude oil pricing in excess of $100 per barrel, all petroleum derived aroma chemicals are likely to be under increased pressure as this filters down into processing costs for all the derivatives. Our major suppliers are reporting an increase in phenol pricing of somewhere between 12 – 15 percent over recent weeks. Additionally we have seen an approximate 20 percent increase over the past month on all Gum Turpentine/CST derived aroma chemicals. We are informed by the producers at origin that there is some significant pressure on existing stocks of Gum Turpentine until we reach the main crop season of May/June. We therefore do not see any relief from these upward trends at least until new crop becomes available.
Gum Turpentine derived aroma chemicals, which will be impacted by the recent feedstock increases, include such products as Iso Bornyl Acetate, Camphor Powder, Terpineol, Terpinyl Acetate and associated Terpinyl derivatives, Alpha Pinene , Beta Pinene, Dihydro myrcenol, Dimyrcetol and related products.
Phenol derived aroma chemicals, which could be affected by the recent phenol increases, would include such materials as Di Phenyl Oxide, Methyl Salicylate, Amyl Salicylate, Benzyl Salicylate, Coumarin, OTBCHA, PTBCHA, Thymol, Ethyl Vanillin, etc.
Market Report Jan 2012
February 02, 2012 -
POSTED BY Matt
POSTED IN Bloggies
Market Report January 2012:
We wish all of our customers a very happy, healthy and prosperous New Year and look forward to continuing our relationships and business during 2012.
Overview:
There was a definite slow down during the 4th quarter of 2011 and finally we started to see the long awaited correction of prices, especially on naturals. In recent weeks, however, we have seen noticeable resistance from sellers at origin to these lower levels and in certain instances prices have actually started to move back up slightly.
In both USA and Europe there is a worrying lack of free stock of certain raw materials, as many stockholders have been reluctant to purchase when all indices were pointing towards price reductions and the differential between prices at origin and spot has widened.
The on going concern of the viability of the Euro has seen a definite shift of focus to the US Dollar strengthening against other currencies, including the Renminbi and Rupee, which may give exporters at origin a little more room to reduce their US Dollar prices, but this may take a while to come through.
With the largest Chinese festival of the year soon to start, Spring Festival , there will be serious disruption to exports during the period of January 19th to January 30th, so unless goods have already been shipped, the next expected shipment date will be early to mid February with arrival in to store around mid- late March. As the supply chain was already tight, this pause in exports from China may lead to temporary shortages of product, which may not be corrected until end of March/April.
Essential oils
Demand during the last quarter was less than in previous quarters, but was still at a reasonable level, especially when considering the economic gloom reported everyday by the media.
It has been noticeable during the first half of January that buyers have been attracted by the more favourable prices and orders have been placed for requirements for the next 3-6 months and their requirement can be reviewed in time for the next main crop period of June/July.
Aroma Chemicals
Demand was slow during the last quarter, but prices have remained generally firm, with some products actually increasing in price. Gum Turpentine prices remain low and the down stream products do look particularly attractively priced at present.
Recently there has been an increase in activity and a number of large orders have been placed.
Aniseed/Anethol – Chinese
Aniseed oil - Recently prices at origin have increased due to strong demand. Also, farmers are not willing to sell the Aniseed spice at low prices, which is restricting the amount of supply available for the production of oil.
Anethol – Prices remain steady, closely linked to the price of Aniseed.
Cardamom oil
Guatemala- Availability of good quality oil is still limited, but after a price decline during November and December, prices have started to increase (slightly) as buyers once again look to cover their requirements.
India– Supply is good and prices look very attractive against those from Guatemala.
Cinnamon Leaf Oil
Prices have declined, which is good news for buyers and recently good size orders have come in to the market. We would recommend customers to look at their requirements, as prices do look interesting.
Citronella oil 85/35% min. Chinese
After a price decline of about 15%, there is a definite reluctance of sellers at origin to reduce prices further. Demand is slow and supply is good and we believe the price will not increase in the near future.
Cloves and Derivatives
Total availability of crude clove oil is predicted to be less than the worldwide demand, but prices remain under pressure as the market remains quiet. If demand picks up, we could see prices increase very quickly.
Madagascar– Distillation of Clove Leaf oil stopped in November 2011 and farmrs/exporters have now switched their attention to the Clove Bud crop, where demand is very strong and prices are firm.
Clove Leaf oil production may only start again in April/May, but we are monitoring the situation and will advise you if there is any change.
Di Ethyl Phthalate(DEP)
The price of Phthalic Anhydride has unexpectedly increased by around 30% during the past 4-6 weeks, which has caused a significant jump in the price of DEP from India.
Supply is good and demand steady, but the new prices are causing problems for many customers, especially those that failed to place contracts and instead are purchasing from the spot market.
Eucalyptus Citriodora
Brazil– During the past few months supply has improved and we have seen more attractive prices coming from all of the major exporters. The recent strengthening of the USD against the Real has also helped the reduction of price.
China– The quantity available from China is limited, but we have seen prices reduce to remain close (but still not as competitive) to those from Brazil.
Eucalyptus oil
Weaker demand during November and December pushed Chinese suppliers to offer more attractive prices and over the past few months we have seen prices decline about 20% from their peak. Recently there has been much more buying activity and prices have now stabilized at these lower levels.
Supply is good and unless the market is influenced by speculators in China, we expect prices to remain around the current level.
Geranium oi Egyptian-
With prices falling so dramatically from their peak of USD500 to around USD125-130/kg at the end of December, it was no surprise to see a flurry of orders come in to the market and recently prices seem to have stabilized. With the quantity produced from the 2011 crop reaching around 160mt (double the average crop), we believe that prices will remain under pressure until a majority of the stock held by Egyptian farmers/exporters is sold.
Chinese– Supply remains limited due to the crop in 2011 being considerably less than an average year, but prices have declined by around 10% mainly in response to the lower prices from Egypt, even though the products from the two origins are not directly interchangeable.
Guaiacwood Oil – Paraguay
Product is sourced from areas where accessibility is very difficult and supply has been interrupted due to the drought in Paraguay, which has caused the river levels to drop making it very difficult for ships to navigate the river and deliver cargo from the forest area to the port.
Stocks in Europe are limited, but sufficient to keep up with current demand. If demand suddenly increases, this may cause a problem with supply. Good planning is essential to avoid delivery issues.
Prices remain high and stable and we see little reason to see any change to pricing in the near future.
Litsea Cubeba – Chinese
Prices have declined by around 20% from their peak of 2011, but even at the more attractive prices demand remains weak. New crop is due July/August and we do not expect to see any dramatic change to the price. Availability is good, but we have seen a number of lots where the quality is not up to the usual standard and buyers should be careful when purchasing from unknown supply sources.
Menthol/Peppermint oil – Indian/Chinese
During November and December prices eased back, as speculators cashed in and realized their profits before the year end. At the beginning of January prices on the MCX in India were still reported lower, but since January 10th the speculators seem to have re-entered the market and purchasing once again, pushing up prices.
This coincides with the Chinese New Year and when China re-opens at the end of January it looks like they will be faced with having to pay much higher prices for the Mentha Powder from India.
With prices constantly fluctuating, many importers/stockists have reduced their purchasing and available stock in Europe is limited.
Orange oil/terpenes
With the Florida crop now coming on stream, this has improved the supply side and with demand being rather slow, prices have shown a weaker tendency. Some customers took the decision in 2011 to ‘wait and see’ and it seems that their decision was the right thing to do. Whilst current prices are down considerably from the peak of 2011 they are still significantly higher from the levels of 2009 and it could be that the current price levels will become the new standard.
We are still awaiting confirmation of the crop size from Florida, but understand that the crop is looking good, with no expected problems. We are hoping that freeze conditions does not affect Florida in the next month or two.
Patchouli oil – Indonesian
Demand has been sluggish over the past few months and prices have declined by about 5-10%.
Supply is good. Exporters do not report any adverse weather problems.
Petitgrain Oil
In recent years supply of oil has been interrupted because of drought reducing the water level in rivers, making it increasingly difficult (if not impossible) for boats to navigate along the river and deliver their cargo to the main exporting ports and 2011/2012 seems to be one of the worse.
The lead time from placing of an order with origin to delivery of goods in our store is now taking around 3 months and we do recommend that customers plan their requirements well in advance.
Spearmint Oil – Chinese
The reduced crop of 2011 has kept supply limited and prices firm and we see no chance of any change to this situation until the new crop in June/July.
Tea Tree oil – Australian
Demand remains weak, yet prices from Australian exporters remain unchanged.
The continued strengthening of the Aussie dollar is impacting on prices in Europe, giving the illusion that the price in Europe is increasing. Unless there is a sudden increase in demand we expect prices at origin to remain stable. Stocks in Europe and USA have decreased as many importers have chosen not to replenish stock whilst demand remains slow.
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