Carnitine Market Faces Steady Prices as Demand Softens and Supply Surges

By the end of August 2024, Carnitine prices are forecasted to stabilize at the lower end of the spectrum globally, reflecting the trend seen in the previous month. This decline is primarily due to persistently weak demand from downstream industries combined with a plentiful supply of Carnitine. As a result, sellers have started to reduce their inventory at lower prices, amplifying the negative sentiment across the sector.

Recently, China experienced a significant drop in Carnitine prices due to a series of interconnected factors. Firstly, the manufacturing sector across Asia faced a period of reduced activity, driven by weak demand both domestically and internationally. This slackened demand led to a slowdown in production, resulting in an oversupply of Carnitine and putting downward pressure on prices. Additionally, the imposition of substantial import duties by major trading partners, including the European Union and the United States, on Chinese exports exacerbated the situation. These duties led to a marked decline in foreign demand for Carnitine, further accelerating the price drop. A similar trend is anticipated for Carnitine prices in the US and European markets.

In Europe, a significant factor contributing to the drop in Carnitine prices was the weakening of market sentiment, particularly in Germany. After four months of improving consumer confidence, July saw a reversal as households, facing higher prices and a slowly recovering economy, opted to reduce their spending. This cautious consumer behaviour is expected to reduce demand for various goods, including Carnitine, thereby pushing prices lower.

In the USA, the anticipated decline in Carnitine prices in August is attributed to several factors linked to ocean freight rates and logistical conditions. Although ocean rates out of Asia remained stable at mid-July highs, the overall shipping landscape is shifting. Increased ease in securing allocations and spot bookings, combined with projections indicating a drop in US imports starting in September, signal a forthcoming reduction in freight rates. This has already begun to manifest, as rates from Asia to North America's West Coast have decreased by 15% from their recent peak. Despite some carriers planning rate hikes in mid-August, the easing demand and greater capacity for this shipping lane cast doubt on the sustainability of these increases. Additionally, the recovery of water levels at Gatun Lake in Panama and the softening of weight restrictions by local authorities contribute to a more favourable shipping environment. These factors collectively point towards a decrease in transportation costs, which could subsequently lead to a decline in Carnitine prices in USA.

According to ChemAnalyst's analysis, Carnitine prices are expected to continue their decline due to ongoing weak demand from end-users. Additionally, factors such as uncertainties surrounding the Red Sea, persistently high interest rates in Western markets, and increased tariffs on Chinese products imposed by the USA and Europe could also impact the pricing trajectory of Carnitine.