Arginine Prices Show an Upward Trend in Germany Amidst Supply Chain Disruption

Arginine prices in Germany increased due to consistent end-user demand and increased inquiries for new orders. This upward trend was aided by an insufficient stock level of products in the warehouses of market retailers and merchants. The rise in energy prices in the wake of Russia's complete invasion of Ukraine also contributed to the rise in Arginine prices. Additionally, the price of Arginine increased in the exporting countries, such as China, resulting in an increase in the price in Germany. Furthermore, extreme weather events, such as heatwaves and floods in Germany, disrupted the supply chain of Arginine, preventing suppliers from delivering goods on time, resulting in a rise in the prices of the Arginine.

The German economy is in a state of stagnation as the economy continues to suffer from an economic slowdown amid a decline in industrial and business activity. The decline in German business activity across services and manufacturing was the steepest since May 2020, when the country began to lift the restrictive measures imposed during the pandemic. The contraction in business activity led to an extended period of delivery of goods, increasing arginine prices. Germany is China's main trading partner of China. Recently, Chinese exports have decreased, decreasing market supply, thus supporting the upward trend in Arginine prices.

The German economy has not been able to grow due to the increasing cost of borrowing, high inflation, and the increasing interest rate by the European Central Bank (ECB). German headline inflation peaked at 6.1% year-on-year in August 2023, down from 6.2% in July 2023, the lowest level since March 2022. This indicates that inflation has slightly dropped in Germany, which improved the consumers' confidence from the prior month, contributing to increased demand for Arginine in the domestic market. Moreover, the economic and geopolitical uncertainty, as well as the tightening market conditions, led to a decrease in the supply of Arginine in Germany, thus keeping the prices on the higher side.

Based on the analysis conducted by ChemAnalyst, Arginine prices are projected to rise in the coming months due to a continuous rise in the demand from end sectors. Furthermore, the inflation rate in Germany is expected to decrease gradually in the coming months, which would support keeping the market demand on the higher side. Consequently, suppliers are expected to raise their prices, thus contributing to the rise in Arginine prices. Besides that, the relatively easy trading conditions could further contribute to the growth of the Arginine market.