Global Potato Starch Prices to Rise in June Amidst Strong Demand and Supply Chain Challenges

Potato Starch prices are likely to rise globally in June, continuing the upward trend observed in the previous month. This increase is driven by several factors, including growing Potato Starch demand from downstream industries, higher feedstock prices, and supply chain disruptions. As buyers anticipate even greater demand later in the year, they could boost their purchases in June, further straining available supplies and driving up Potato Starch prices.

As the potato harvest takes place from May to June, buyers are expected to rush to replenish their inventories with fresh stock, leading to increased market demand and a rise in potato prices. Since Potato Starch is derived from raw potatoes, this will elevate overall production costs, consequently driving up prices.

Recent data indicates that manufacturing activity in China experienced a sharper slowdown than expected in May, reaching its lowest level in three months. The official manufacturing Purchasing Managers' Index (PMI), which measures factory owners' sentiment, fell to 49.5 from 50.4 in April, according to the National Bureau of Statistics. This downturn has led to a constrained supply within China's domestic market, potentially driving up Potato Starch prices.

Conversely, the eurozone saw a boost in economic activity in May, characterized by significant increases in business operations and new orders, particularly in the second quarter. This economic upswing has heightened demand for Potato Starch among end-users, which could consequently drive prices upward.

Starting in June, shipping expenses to Europe and the United States are poised to climb due to surcharges imposed by shipping firms to offset the heightened costs of rerouting vessels around the Cape of Good Hope. A prominent German shipping company, Hapag Lloyd, plans to implement a Peak Season Surcharge (PSS) of $1,000 per container for shipments originating from India and West Asia destined for the North American West Coast. Shipments from India bound for the US East Coast and Gulf Coast will face a PSS of $500 per container. These additional charges are expected to increase retail prices for consumers, thereby exacerbating the upward trajectory of Potato Starch costs.

Additionally, the peak shipping season in 2024 is starting earlier than usual due to several factors. Retailers are replenishing stocks following strong sales, preparing for upcoming tariff hikes on Chinese goods in August, and securing sufficient inventories to meet expected high consumer demand during the holiday season. These elements will likely intensify the upward pressure on Potato Starch prices.

According to analysis by ChemAnalyst, the prices of Potato Starch are expected to keep rising due to sustained demand from the food and beverage and pharmaceutical sectors. Market suppliers and distributors, noticing this trend, could take advantage of the situation by quoting higher prices for Potato Starch to maximize their profits.