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.

1. 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.

2. Fourth, the weak cost support. In 2013, the price of corn starch in China remained low and it
has undergone a downtrend since Aug., due to the increasing supply of corn. In detail, the
average ex-works price of corn starch in North China was around USD469/t in 2013, USD8/t
lower than that in 2012.
It is predicted that the price downtrend of domestic xanthan gum will persist in 2014, due to
further capacity expansion. Specifically, the third phase of the xanthan gum capacity expansion
of Deosen Biochemical will be finished in early 2014. Then, the company's xanthan gum
capacity will increase to around 90,000 t/a from present 78,000 t/a, becoming the largest
producer of this product in China. Similarly, Fufeng Group also has a desire to enlarge the
market share of xanthan gum.
Source: Corn Products China News issued by CCM in January.
Table of Contents of Corn Products China News 1401
China returns 2,000 tonnes of GM DDGS to the US
Chinese corn products Imp. & Exp., Nov. 2013
Export volume of China's furfural rebounds, Oct.-Nov. 2013
Price update of corn products, Jan. 2014
Review of the ex-works price of corn germ meal, H2 2013
Ex-works price of xanthan gum decreases sharply in 2013
Guangji Pharmaceutical suspends partial VB2 production line
Shandong Longlive opens online flagship shop at Tmall
Frequent outbreaks of avian influenza challenges poultry industry again
Edible ethanol industry undergoes downturn in 2013
Market price of wheat in China enjoys marked uptrend, June-Nov. 2013
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