OUTLOOK’12: Asia sorbitol prices to stay stable in Q1 2012

05 January 2012 07:11  [Source: ICIS news]

By Loh Bowei

SINGAPORE (ICIS)--The spot prices of sorbitol in Asia are expected to remain stable in the first quarter of 2012 because of marginally slower demand counterbalanced by rising raw material costs, market sources said.

The spot prices of sorbitol rose slightly to $650-680/tonne FOB (free on board) SE (southeast) Asia on 4 January after falling by $20/tonne at the high end of the range to $650-670/tonne on 23 November, according to data from ICIS.

Prices are likely to remain stable worldwide in the first quarter 2012, said a Thai sorbitol maker.

“In terms of supply and demand, southeast Asia will be stable in [the first quarter of 2012],” an Indonesian supplier said, adding that there will be no new major investments by end-users or producers in sorbitol plants.

Thailand-based producers said there is little chance of new players entering the market as the production of sorbitol requires a certain level of expertise and technological know-how.

Demand for sorbitol is likely to rise because of recent innovations in production processes in the frozen food sector, they added.

Sorbitol is an artificial sweetener with applications in food products and pharmaceuticals.

Meanwhile, Thailand's domestic and export sales of sorbitol in October and November fell by about 20% year on year because of recent floods in the country, said a Thai supplier.

Market players said demand in China is increasing and that there is less excess supply pressure now, alleviating the strain on producers.

The growth in China would be the largest driver for sorbitol demand, industry sources said.

“Hopefully, the demand in China is not artificial,” said a producer.

In Indonesia, feedstock tapioca starch prices were flat at rupiah (Rp) 5,100/kg DEL on 14 December. However, market participants said raw materials are now more costly than in previous years, which have led to narrowing margins.

Uncertainty about the stability of feedstock supply in Thailand is expected to cease with the emergence of technological advancements that will increase the yield throughout the year and prevent sudden surges in the prices of raw materials, Thai players said.

However, feedstock tapioca starch prices in Indonesia and Thailand have been increasing since early November, which is a large push factor in sorbitol price movements, suppliers from southeast Asia said.

Tapioca starch prices increased by 11.2% to baht (Bt) 13.90/kg on 6 December from a 10-month low of baht (Bt) 12.50/kg at the beginning of October, but softened slightly to Bt13.50/kg on 27 December, according to data from the Thai Tapioca Starch Association.

The export prices of sorbitol in India, which had been stable at $630-650/tonne FOB India since 21 June 2011, fell to $550-570/tonne FOB India on 21 December because of the depreciation of the rupee and a slowdown in trading activity towards the end of 2011.

However, the prices of feedstock maize rose by Indian rupees (Rs) 1,500 to Rs12,500-13,000/tonne DEL on 21 December and Indian sorbitol suppliers are hence targeting a $50/tonne increase in sorbitol offers in January.

($1 = Rp9,120.00)
($1 = Bt31.50 )
($1 = Rs53.00)

For more pricing intelligence, visit ICIS pricing

By: Loh Bowei

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