Global Agar-Agar Prices Surge in October 2023 Amidst Rising Downstream Demand

In October 2023, the prices of Agar-Agar experienced an upward trend in the global market. This notable development can be attributed to a confluence of factors, such as an increase in demand from various end sectors, a decline in trade activities, a rise in crude oil prices, and a limited availability of inventories in the market.

The cost of Agar-Agar in China has recently witnessed a gradual rise, attributed to limited availability in the market and a notable surge in consumer demand. Despite the ongoing economic uncertainties, the holiday season in China witnessed a surge in consumer spending, presenting both opportunities and obstacles for foreign enterprises. The Chinese food and beverage industry has experienced a surge in consumption due to the increased domestic travel during the Golden Week vacation, which has resulted in a higher demand for Agar-Agar in October, increasing the price. On the one hand, the rise in crude oil prices caused by the prolongation of OPEC+ nations' oil production cuts and the Israel-Hamas war has considerably increased business expenses and output costs, consequently boosting Agar-Agar pricing.

The United States experienced an upturn in business activity, evident from an increase in new orders and sales, along with indications of easing inflationary pressures, which benefited the Agar-Agar market. This recent surge in business productivity, surpassing all previous records since July, indicates that the US economy is surviving the increase in interest rates brought on by the Federal Reserve's efforts to fight inflation, which contributed to an increase in overall market demand, leading to an increase in Agar-Agar prices. In addition, the forthcoming festivities in the United States, including Halloween and Thanksgiving, have amplified the need for Agar-Agar in the food industry, pushing prices even higher. Aside from that, China reported a lower-than-expected dip in exports in October, while imports increased year on year. Exports to the United States fell by more than 8%, resulting in a scarcity of Agar-Agar on the US market and causing prices to climb.

Agar-Agar is a flavorless vegan replacement for gelatin often used in Asian cuisines. Agar aids in the gelation, stabilization, texturization, and thickening of drinks, baked goods, dairy products, dressings, confectioneries, and sauces. The upcoming Indian festivals, such as Diwali, have increased the demand for Agar-Agar in the food industry, driving up costs. Furthermore, an escalation in the Israel-Hamas conflict poses a major threat to the Indian economy as oil prices and inflation spiral, causing Agar-Agar prices to climb further.

According to ChemAnalyst, Agar-Agar prices may rise in the following month due to increased demand from end-user food and pharmaceutical businesses and restricted supply in the market. Furthermore, the potential rise in Brent crude oil prices is poised to support this favorable trend further. Nevertheless, it is expected that prices will decline towards the end of the year as a result of a decrease in overall market demand, thus maintaining a modest stance in the market.