CITIC Construction Investment: Structural repair formula upgrade and feed refinement support long-term demand in the chemical raw materials industry
The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that in September, the average price of VD rose 25.39% in March, maltol prices were repaired, and acesulfame started to recover and be removed from storage; sucralose stocks increased slightly, and the overall vitamin index still declined. Pig farming continues to lose money, and demand for upstream feed additives is under pressure. Looking at the industry as a whole, there are opportunities to restore the structural economy, and the profits of advantageous companies are expected to gradually improve. Sugar reduction trends, flavor upgrades and feed refinement are expected to continue to drive demand and support the medium- to long-term development of the industry.
CITIC Construction Investment's main views are as follows:
The trend of sugar reduction deepens, and application demand expands
In the medium to long term, sugar reduction and healthy consumption are expected to continue to drive industry demand. The continuous expansion of application scenarios for low-sugar and sugar-free foods is expected to drive growth in demand for sweeteners and functional sugar alcohols. Food flavor upgrades help release demand for products such as maltol. Nutritional fortification provides room for vitamins to grow. The refinement of feed and the promotion of low-protein diets are expected to increase the demand for amino acids. Multiple applications work together to support the long-term growth of the industry.
Price increase of maltol in September and removal of acesulfame
The average price of methyl and ethyl maltol rose 4.08% and 2.39% month-on-month; the average price of acesulfame and sucralose remained the same, with year-on-year differentiation. On September 25, acesulfame stocks decreased by 7.36% compared to August 28, and sucralose increased by 1.45%. The flavor additive boom has picked up, and the upward trend in sucralose is still constrained by stocks.
In September, VD3 led the rise and the market was divided
From September 1 to 24, the average price of VD3 and VE increased by 25.39% and 7.46% respectively. The average price of 7 of the 12 key vitamins still declined, and the overall index fell 6.65%. The average price of methionine fell 15.35% month-on-month, and the price recently rose slightly; VE's latest price fell from the end of August. The current recovery is mainly based on the single product market, and the basis for general price increases is still weak.
Aquaculture losses in September constrained upstream demand
The average profit margins of self-raised and outsourced piglets in September were about -199.53 and -99.36 yuan/head, respectively; Makihara and Wen's pig business gross margins in the first half of the year were -4.51% and -9.00% respectively, and sales prices in September both dropped by about 20% year-on-year. Aquaculture losses are restricted and stocked, there is still structural demand for amino acid formula replacement, and upstream profits may continue to differentiate.
Related industries and targets
The food additives and sweeteners industry has opportunities to restore the structural economy, and the profits of advantageous companies are expected to gradually improve. In the medium to long term, sugar reduction formulations, flavor upgrades, and feed refinement are expected to continue to drive demand. The segmentation focuses on vitamins, high sweeteners and functional sugar alcohols, and selects companies with technical, cost and customer advantages. Related companies include Xinhecheng, a leader in nutritional products, Jinhe Industrial, a leader in sucralose, Huakang Co., Ltd., a leading vitamin company, Zhejiang Pharmaceutical and Tianxin Pharmaceutical, a leading vitamin company, and Huakang Co., Ltd., a ternary biological and functional sugar alcohol company with elastic erythritol standards.