Prices of Chinese origin xanthan have dipped down to €3 per kilo and even lower in some cases, says Dennis Seisun, founder of hydrocolloid market research and consulting firm IMR International and publisher of the Quarterly Review of Food Hydrocolloids. Whilst this provides extremely favourable conditions for buyers, western producers are having a hard time competing on price and are having to trade on reliability and quality instead.
EU enjoys lowest pricing
Even in the US, where an anti-dumping action is in effect, Seisun says prices continue to be competitive. “The anti-dumping duty imposes huge levies of up to 150% on xanthan imported from China into the US, but Chinese suppliers are nevertheless managing to keep their market in the US. Europe, on the other hand, is the lowest priced market for xanthan because there is no anti-dumping duty,” he told FoodNavigator.
Chinese production capacity has grown exponentially in recent years, with new producers continually coming on stream. Seisun estimates that in excess of 200,000 tonnes of xanthan are produced in China alone, compared with under 100,000 tonnes five to ten years ago.
Another draw for EU buyers is that Chinese suppliers are able to certify their xanthan as GMO-free; any xanthan produced from GM-modified US corn is virtually unsaleable in Europe.
The dichotomy of cassia and guar
Cassia tora gum prices have escalated owing to a poor crop in India – the main producing region – following a late monsoon. Seisun puts prices at €2.8-3.5 for pet food grade cassia, €8-10 per kilo for food grade cassia and €18-20 for chemically modified cassia.
Paradoxically, the price of guar gum, which grows in similar areas in India and is also dependent on the monsoon season, is steady at around $3 per kilo.
“I can’t explain why the cassia crop has declined significantly, resulting in higher prices, but the same can’t be said for guar, even though they grow in similar areas and under similar conditions. One possible explanation is that guar is such a large volume market that stocks are much larger and it is able to absorb fluctuations in raw material supply much better,” said Seisun.
US boosts processing capacity
Seisun notes that the US is adding new split processing capacity, but says this will do little to alter the dynamics of the market, as most guar is grown and processed in India (85%) and Pakistan (12-13%), with the rest of world only contributing 2% maximum.
“Even if the US doubles its capacity it will still only account for 1.5-2% of global supply,” he said.
Looking forwards, Seisun predicts that guar prices will stay stable for the rest of this season and into the next given the crop and the level of carryover stocks.
“I hope we don’t head for either of the two extremes we’ve experienced with guar – when it could hardly be given away at $1 per kilo or the crazy situation when it was $25-30 per kilo. The present $3 dollar range is sustainable and represents good value for farmers.”