From Boom to Bust: Agar-Agar Industry Braces for Price Plummet

The prices of Agar-Agar likely to see a decline globally during Aug 2024, driven by range of factors. The primary reasons for this trend include a reduced demand from the food and pharmaceutical industries, coupled with a plentiful supply in the market. Consequently, manufacturers and suppliers are quoting lower prices to boost sales, reinforcing the downward trend of Agar-Agar prices.

Additionally, the harvesting season for seaweed, the primary source of Agar-Agar, extends from late spring to early autumn, with peak harvesting from May to August. This period often results in a plentiful harvest, which significantly boosts the supply of raw materials. The increased availability of seaweed can subsequently lower Agar-Agar prices by amplifying market supply.

In China, recent data indicates that the country's manufacturing sector is facing a particularly tough summer, highlighting significant challenges for factory owners grappling with weak demand and posing risks for economic growth in the latter half of 2024. The manufacturing sector's business climate has deteriorated slightly due to several adverse factors, including the traditional off-season, insufficient market demand, and extreme weather conditions. To cope with heightened competition, some manufacturers have reduced their selling prices to stimulate sales, thereby contributing to the decline in Agar-Agar prices. As China is a major exporter of Agar-Agar, the downturn in its domestic market and subsequent price reductions have had a cascading effect on Western markets, leading to lower prices globally.

In the US, the economy is experiencing moderate deceleration, with consumer spending growth softening due to increased price sensitivity and the impact of higher interest rates. Although inflation is trending downward towards the target range, the Federal Reserve has maintained benchmark interest rates between 5.25% and 5.50%, reflecting a cautious stance. This decision is likely to continue affecting consumer sentiment, further dampening demand and contributing to the downward trend in Agar-Agar prices.

The economic downturn in France and Germany, the largest economies in the euro zone, has also impacted Agar-Agar prices. Data shows a sharp decline in business sentiment, with companies in these countries increasingly pessimistic about an economic recovery. This lack of confidence is due to weaker global economic conditions, policy uncertainties in France and Germany, and potential geopolitical impacts from the upcoming US presidential elections. As businesses in these key European economies face stagnant growth and an unpredictable economic environment, they are cutting back on investments and lowering inventory levels, which has further contributed to the drop in Agar-Agar prices.

ChemAnalyst's analysis indicates that Agar-Agar prices are expected to persist in their downward trajectory in the coming months, primarily due to sustained weak consumer demand. Furthermore, uncertainties related to the Red Sea conflict pose potential risks to international supply chains, which could exacerbate disruptions in global trade. These factors are likely to impact global demand negatively and contribute to continued lower prices for Agar-Agar.