Global Agar-Agar Prices Surge in April Amidst Soaring Demand and Supply Constraints

In April, Agar-Agar prices witnessed a significant rise globally, mirroring the trend seen in the previous month. This surge was fuelled by heightened demand from various sectors including food, dairy, and pharmaceuticals, coupled with constrained supply in the market. Consequently, market participants responded by quoting elevated prices, thereby maintaining a bullish sentiment across the market.

The official data reveals that China's manufacturing sector sustained its expansion for the second consecutive month in April, driven chiefly by an increase in overseas demand. However, the pace of this growth moderated due to escalating production costs. The manufacturing Purchasing Managers' Index (PMI) for April slid to 50.4 from March's 50.8, though it remained above the expansionary threshold, indicating the resilience of industrial recovery well into the Q2, as per the National Bureau of Statistics (NBS). This continued expansion in manufacturing signals a consistent demand for various products, including Agar-Agar. The heightened demand, coupled with escalating domestic production expenses, led to tightened supply conditions within China, prompting manufacturers to hike Agar-Agar prices to uphold profitability. Given China's pivotal role as a primary exporter of Agar-Agar, a parallel pricing trend unfolded in other markets like Japan and Western countries.

Japan's economic outlook for the latter half of 2024 appears promising, buoyed by factors such as wage hikes, robust consumer spending, and a depreciation of the yen. While a weaker yen enhances profitability for Japanese exporters, it also raises the cost of imports, thus explaining the notable uptick in Agar-Agar prices. Furthermore, with Golden Week on the horizon, Japanese firms are proactively stocking up on Agar-Agar in April, anticipating potential production slowdowns or closures. This surge in demand has momentarily surpassed available supply, consequently driving prices upwards. Compounding the situation, disruptions in transportation and logistics, stemming from business closures during this period, have caused delays in Agar-Agar deliveries. This has further constricted supply, exacerbating the upward pressure on prices.

Additionally, the geopolitical tensions between Iran and Israel have introduced another layer of complexity to the situation. These tensions have sent ripples throughout the global trade landscape, impacting logistics and maritime operations. As geopolitical maneuvers unfold between these nations, the stability of trade routes, shipping costs, and the flow of goods have all become vulnerable to disruption. This has further fueled the upward trajectory of Agar-Agar prices, as uncertainty surrounding trade routes and increased shipping costs add momentum to the already rising prices.

According to ChemAnalyst's analysis, the trajectory of Agar-Agar prices is poised for a steady ascent in the months ahead, driven by sustained demand from downstream industries and the persistent challenge of limited supply conditions. Furthermore, the global trade landscape could encounter obstacles due to ongoing geopolitical tensions, which could amplify the potential for heightened Agar-Agar prices.