Entering year 2016, China's export price of furfural starts to decline ascribed
to the falling price of corn (raw material of furfural). In Jan. 2016, the
export price fell to the lowest since Jan. 2014, being USD1,137.5/t
(RMB7,437.54/t), a YoY fall of 22.66% and a MoM fall of 5.99%. Meantime, the
export volume of furfural also reported a YoY fall of 31.54% in Jan. 2016,
presenting 27,44.93 tonnes.
Exports of furfural in China, Jan. 2014-Jan. 2016
Source: China Customs
CCM believes that the simultaneous declines in export price and export volume
of furfural may be caused by following factors:
The continuously falling corn price reduced the production cost and
export price of furfural. According to CCM research, the average market price
of corn was USD309.34/t (RMB2,022.62/t) in Jan. 2016, a YoY fall of 16.8%.
The slumping international crude oil price spurred down the prices of
downstream products. Data from the New York Mercantile Exchange show that the
futures price of Brent crude oil declined to USD34.74/bbl (RMB227.15/bbl) in
Jan. 2016, a YoY drop of 6.81%.
Phenolic resin is the extended product of
petroleum industry, and it is also the major substitute for furan resin
(terminal downstream product of furfural). That the slumping crude oil price
pulled down the price of phenolic resin, making furan resin lose its price
advantage. As a result, the demand for furfural reduced, compressing the export
volume.
The domestic inventory of furfural was abundant, pulling down the market
price of furfural and spurring up the export price. According to analyst CCM,
the average market price of furfural was USD1,141.70/t (RMB7,465/t) in Jan.
2016, down by 20.51 YoY.
Furfural enterprises overstocked their products,
causing mounting inventory and reducing operating rate. From Sept. 2015 to Jan.
2016, the operating rate of China's furfural enterprises has kept falling,
being merely 15% in Jan. 2016, a MoM decline of 15%.
Operating rate of furfural enterprises in China, Aug. 2014-Feb. 2016
Source: CCM
What's more, the negative international situation of some export destinations
also affected the export volume of China's furfural. In Jan. 2016, China mainly
exported furfural to Belgium, a proportion of 51%, according to China Customs.
However, the export volume declined affected by the refugee crisis in Europe
and the terrorist attacks happened in Brussels, the capital of Belgium.
Moreover, the prospect of the global economy in 2016 is still murky, and the
downstream resin sector and foundry sector fails to perform well, leading the
weak demand for furfural in the world. All these are bad for the recovery of
the furfural market. So, CCM holds the view that the exports of furfural will
remain depressed in China in 2016.
Export proportion of furfural by destination in China, Jan. 2016
Source: China Customs
This article comes from Corn Products China News 1603, CCM
About CCM:
CCM is the leading market intelligence provider for China's
agriculture, chemicals, food & ingredients and life science markets.
Founded in 2001, CCM offers a range of data and content solutions, from price
and trade data to industry newsletters and customized market research reports.
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Tag: furfural corn