Understanding the Dynamics of Rivalry and Equilibrium Across Industry Sections in a Changing Market Ⅱ

Effamall.com 24 May, 2024

Purchase Demand Following Price Increases Weakened

Whether manufacturers held firm on prices or actively cut prices, feed additives such as Vitamin E and 70% L-Lysine Sulfate and bulk raw materials like soybean meal have not sparked expected reactions in the market during the past two weeks, because downstream users have taken the initiative to purchase in the first half of this year. Reviewing the market dynamics before May 11th, except for the price decline in mid-April, which resulted from a batch of sellers from Shandong Province intending to fulfill their orders by the end of April, median traded prices of 70% L-Lysine Sulfate on Mobaobuy.com have still fluctuated between 5300 and 5350 yuan/ton, leading to overall stability. The transaction volume decreased greatly with the effect of manufacturers’ quotations, yet increased by 89.5% after the median traded prices fell this week.

Recently, some vitamin additives have been observed in active market activities, mainly in the distribution sector, with low participation among downstream manufacturers.

The continuously sluggish downstream demand lies at the root of the current market situation.

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Upstream Enterprises Have Intensified Their Willingness to Control the Overall Market Landscape

The strong willingness to further raise prices is both reflected in the abrupt adjustments of pricing policies by certain leading amino acid enterprises in late April and in the promotion of previous orders’ fulfillment via price rises by some vitamin enterprises, who intended to take advantage of recent overseas logistics price influence and factory accidents. In short, upstream enterprises have continuously intensified their willingness to control the overall market landscape, regardless of price rises and falls.

However, the downstream is still in weak demand and normal inventory, without strong feedback to the upstream price-rising actions.

Some upstream enterprises have become more cautious and tend to be relatively conservative in quotations and signing orders this week.

New quotations will come up next week, potentially forming the watershed of market trends by the end of June, but huge distinctions will appear among trends of various product varieties.

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Procurement Will Remain Rational

Given the industry cyclical trough that existed over the last couple of months, downstream feed enterprises will continue to maintain modest inventory levels, sticking to on-demand purchases. In such a case, it’s hard to see big rises and falls in price fluctuations.

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