The prices of gelatin in the USA are expected to conclude Q1 2025 on a higher note, influenced by several factors. After an initial dip in January, prices are projected to rise in February and March, driven by shifting trade dynamics, increasing demand, and broader economic conditions.

Key Takeaways:

• Strengthening demand from the food, pharmaceutical, and cosmetics industries.
• Anticipation of higher costs due to inflation and trade war concerns.
• Reduced production and exports from China due to the Chinese New Year holiday.
• Potential future tariffs on pharmaceutical imports, causing accelerated procurement.

Gelatin prices experienced a decline in January, primarily due to weaker demand in key downstream industries such as food and pharmaceuticals. A significant contributor to this dip was the weakening of U.S. consumer confidence, which fell for the second consecutive month amid concerns about the labor market and persistent inflationary pressures.

However, gelatin prices are expected to rebound in February and March, driven by strengthening demand across key sectors such as food, pharmaceuticals, and cosmetics. With inflation expectations rising amid trade war concerns, end-user industries may increase their orders in anticipation of higher costs, further fueling demand growth. The food industry, a major consumer of gelatin, is likely to ramp up purchases for products like confectionery, desserts, yogurt, marshmallows, and gummy candies. Similarly, the pharmaceutical sector’s reliance on gelatin for capsule production will continue to support demand as companies secure supplies ahead of potential cost increases.

With the holiday lasting from January 29 to February 12, production in China, a key gelatin supplier, was significantly reduced, leading to restricted exports and delayed shipments. This temporary disruption tightened supply in the U.S. market, contributing to price increases. Additionally, the 10% import tariff imposed by the Trump administration on February 1 further escalated costs for gelatin importers. As a result, higher import expenses were passed on to buyers, adding upward pressure on gelatin prices.

The potential increase in gelatin prices in the U.S. market in March 2025 could be influenced by the growing uncertainty surrounding trade policies, particularly President Donald Trump’s threat to impose a 25% tariff on pharmaceutical imports, with an official announcement expected by April 2. This looming tariff likely prompted pharmaceutical companies to accelerate their procurement of key raw materials, including gelatin, which is widely used in capsule and tablet production.

Overall, gelatin prices are expected to face less upward pressure in the second half of the year due to anticipated adjustments to new trade policies, easing inflation, and a more accommodative monetary policy. The Federal Reserve is likely to resume interest rate cuts in June, which could bolster consumer confidence and provide support to the gelatin market.