Upstream Push for Price Increases Meets Downstream Procurement Rationality amid Steadily Rising Market Demand

Last week, the number of inquiries and actual transaction volumes on Mobaobuy.com continued to remain at a high level?for the year,?although?they did experience?a decline of 38.6%?and 64.3%?respectively?compared to the previous week.

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The total actual transaction volume achieved on Mobaobuy.com during?the first three weeks of August has exceeded the monthly average from?January to July by 22.3%, approaching the peak?monthly figure of the year. This stands in contrast?to previous years’ patterns. The early emergence of this procurement trend is influenced by?various?factors:?earlier-year?low inventory levels, the?accelerating recovery of?farming industry, sustained?high price of bulk raw materials, a growing willingness among feed manufacturers to procure raw materials, and the unstable delivery of goods from suppliers. The trend began with?70% L-Lysine Sulfate, followed by DL-Methionine?and Calcium Hydrogen Phosphate,?with?even the consistently weakening L-Tryptophan and L-Valine not lagging behind.

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Last week saw a decrease in inquiries and transaction volumes on the platform, accompanied by a slip in conversion rate. This shift can be?attributed to an?increasing rationality in downstream?procurement decision-making. This adjustment is in response?to the upstream’s?persistent strategy of higher?pricing,?rather than reflecting the faltering demand.

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Over the past week, 70% L-Lysine Sulfate continued to experience?a 6%?to 7%?increase in market price and a 6.7%?increase in average transaction price on Mobaobuy.com?compared to the previous week. Likewise, DL-Methionine?witnessed a 2.7%?rise in market quotations and a 14.1%?surge in average transaction price on Mobaobuy.com week-on-week. Besides, a number of?manufacturers have either suspended making offers or raised the prices for Calcium Hydrogen Phosphate, leading to a 14.8%?increase in the average transaction price on Mobaobuy.com?compared to the preceding week.

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Apart from delivery issues on the supply side, rising demand was another driving force for this round of price hike. Although downstream players have improved their profitability?to some extent, there is still a significant?way to go before?achieving?substantial profit growth. Therefore, they are inclined?to build up inventories for September and October?within?a more acceptable price range.

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Currently, the market trend for?this October and beyond?is shrouded in uncertainty. Nevertheless, many downstream feed manufacturers are still hopeful?that the?supply situation will change after September,?even though?October and November are traditionally?peak seasons of demand and sales. With?this year’s market trend occurring?earlier than in previous years, it is expected that the subsequent movements?may deviate accordingly. Given the current supply and demand situation, however, this upward trend is highly likely to?persist through?November and December, spanning?both the amino acids and phosphates markets. The main reasons for this?scenario?include?the rise in bulk raw material?prices and the approach of two major double?holidays?in China (National Day/Mid-Autumn Festival, and New Year's Day/Spring Festival).

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In the past?two years, analyzing and forecasting?market price trends has presented difficulties,?primarily due to the counter-market marketing strategies?employed by certain manufacturers,?which artificially impacted?market demand and supply?dynamics. Such?counter-market?approaches?might continue to prevail?in the next two months,?making?the market even?more unpredictable. To illustrate, the market situation of L-Threonine between?April and?June this year stands out.?While the probability of?encountering a similarly?complex situation in the upcoming fourth quarter?isn’t significant, the?potential?still remains.

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It's precisely due to?these considerations that buyers have intentionally held back?inquiries,?despite a?consistent?rise?in?demand, causing?the declined number of inquiries on the platform last week.?They?are holding off, awaiting new offers from manufacturers for the upcoming?week or even the subsequent week, all in anticipation of potential?“gray rhino”?or “black swan” events.

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Last week, 70% L-Lysine Sulfate maintained its position as?the best-selling?product on Mobaobuy.com. Backed by a growth in conversion rate, it continued to?lead in both the number of inquiries and transaction volumes on the platform,?in spite of a slight decline?in inquiries.

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Last week, 70% L-Lysine Sulfate, DL-Methionine, Monocalcium Phosphate, Sodium Bicarbonate, whey powder, Sodium Chloride, Calcium Hydrogen Phosphate,?among?others,?achieved a high conversion rate, while products with a modest conversion rate include?L-Threonine and 98.5% L-Lysine HCL. In contrast, there were almost no inquiries for L-Valine and L-Tryptophan last week after a surge in their?prices.