Market Outlook ANALYSIS OF THE MACRO AND MICRO ENVIRONMENT OF THE FLAVOUR AND FRAGRANCES INDUSTRY

Transcription

1 Market Outlook ANALYSIS OF THE MACRO AND MICRO ENVIRONMENT OF THE FLAVOUR AND FRAGRANCES INDUSTRY Moellhausen SPA ANTHONY MOELLHAUSEN OCTOBER 2015

2 Table of Contents World News... 2 Macro Outlook for Individual Countries and Regions... 3 North America... 3 Europe... 3 Asia... 3 South America... 3 Africa... 4 Industry News... 4 Products News... 5 Citrus Oil... 5 Mints, Menthol and derivatives... 6 Aroma Chemicals... 6 Natural Essential Oils... 6 MOELLHAUSEN SPA 1

3 World News Global growth for 2015 is projected at 3.2 percent, 0.3 percentage point lower than in 2014, and 0.2 percentage point below the forecasts in July 2015 World Economic Outlook (WEO) Update. Prospects across the main countries and regions remain uneven. Relative to last year, the recovery in advanced economies is expected to pick up slightly, while activity in emerging market and developing economies is projected to slow for the fifth year in a row, primarily reflecting weaker prospects for some large emerging market economies and oil-exporting countries. In an environment of declining commodity prices, reduced capital flows to emerging markets and pressure on their currencies, and increasing financial market volatility, downside risks to the outlook have risen, particularly for emerging market and developing economies. For many commodity exporters with flexible exchange rate regimes, weakening commodity prices have triggered sizable currency depreciation. Emerging market currencies more generally have seen sharp depreciations since the spring, particularly in August, while exchange rate movements across major advanced economy currencies have been relatively modest in recent months compared to the August 2014 March 2015 period. These realignments across floating-rate currencies have reflected to an important extent the evolution of underlying fundamentals countries with weakening growth prospects and worsening terms of trade are facing currency depreciation pressures as part of global adjustment. Global activity is projected to gather some pace in In advanced economies, the modest recovery that started in 2014 is projected to strengthen further. In emerging market and developing economies, the outlook is projected to improve: in particular, growth in countries in economic distress in 2015 (including Brazil, Russia, and some countries in Latin America and in the Middle East), while remaining weak or negative, is projected to be higher next year, more than offsetting the expected gradual slowdown in China. MOELLHAUSEN SPA 2

4 Macro Outlook for Individual Countries and Regions North America The recovery is expected to continue in the United States, supported by lower energy prices, reduced fiscal drag, strengthened balance sheets, and an improving housing market. These forces are expected to more than offset the drag on net exports coming from the strengthening of the dollar. As a result, growth is projected to reach 2.6 percent in 2015 and 2.8 percent in Europe The moderate euro area recovery is projected to continue in , sustained by lower oil prices, monetary easing, and the euro depreciation. At the same time, potential growth remains weak a result of crisis legacies, but also of demographics and a slowdown in total factor productivity that predates the crisis. Hence the outlook is for moderate growth and subdued inflation. Growth is expected to increase from 0.9 percent in 2014 to 1.5 percent this year and 1.6 percent in 2016, in line with the forecast of last April. Asia Elsewhere in emerging and developing Asia, India s growth is expected to strengthen from 7.3 percent this year and last year to 7.5 percent next year. Growth will benefit from recent policy reforms, a consequent pickup in investment, and lower commodity prices. Among the ASEAN-5 economies (Indonesia, Malaysia, Philippines, Thailand, Vietnam), Malaysia and to a lesser extent Indonesia are expected to slow this year, affected by weaker terms of trade. Growth is on the other hand projected to pick up in Thailand, as a result of reduced policy uncertainty, to remain broadly stable at around 6 percent in the Philippines, and to strengthen to 6.5 percent in Vietnam, which is benefiting from the oil price windfall. Growth in China is expected to decline to 6.8 percent this year and 6.3 percent in 2016 unchanged projections relative to April. China has also Environment, safety & fire prevention problems. Chinese authorities are fighting environment pollution, fire risk and safety mismanagement. This resulting often in sudden and unexpected shut down of productions units, even of large dimension and slowing down productions or disrupt it completely.chinese port authorities checking proper labeling and fires compliance generating higher lead-time necessary for shipping. South America Economic activity in Latin America and the Caribbean continues to slow sharply, with a small contraction in activity in A modest recovery is projected for 2016, but with growth at 0.8 percent, still well below trend. In Brazil, business and consumer confidence continue to retreat in large part because of deteriorating political conditions, investment is declining rapidly, and the needed tightening in the macroeconomic policy stance is putting downward pressure on domestic demand. Output is now projected to contract by 3 percent in 2015 and by 1 percent in 2016 (for both years, a forecast 2 percentage points lower than in April), with negative spillovers on other parts of the region, especially Brazil's trading partners in Mercosur. The Brazilian politics-economic environment is unstable and on the edge of the dramatic scenario. This has an indirect effect on the strategies that some companies may decide to pursue in order to face an increasing restless economy. MOELLHAUSEN SPA 3

5 Africa Growth in low-income developing countries is projected to slow to 4.8 percent in 2015, more than 1 percentage point weaker than in 2014, before picking up to 5.8 percent in These projections are shaped by the outlook for sub-saharan economies, in particular Nigeria; the resilient growth in low-income developing countries in Asia, particularly Bangladesh and Vietnam; and for 2015, the domestic-conflictdriven collapse in activity in Yemen. Growth in low-income developing countries is projected to slow to 4.8 percent in 2015, more than 1 percentage point weaker than in 2014, before picking up to 5.8 percent in These projections are shaped by the outlook for sub-saharan economies, in particular Nigeria. Industry News A fire blast in the BASF German facility on March 12, 2014 did not have serious consequences,however the market saw some shortages occurring periodically in synthetic Citral and its derivatives periodically. Symrise has struck a deal to buy Pinova Holdings, for aprox. 427 m USD, from its private equity parent TorQuest Partners, which created the firm in 2010 by acquiring a pine stump chemicals business from Ashland and a pine-based flavor and fragrance business from LyondellBasell Industries. The two deals cost TorQuest $225 million. In 2014, Pinova had sales of $287 million and operating profits of $37.4 million. The Pinova division formerly known as Renaissance is producer of key ingredients for the flavors and fragrances industry. Givaudan 2015 Nine months sales records show sales for CHF 3,296 million, an increase of 2.0% on a likefor-like basis and a decline of 0.5% in Swiss francs compared to the previous year. Emerald Kalama Chemical, a business group of Emerald Performance Materials LLC ( Emerald ) announced that it has reached a definitive agreement to acquire Innospec Widnes Limited ( Widnes ). Innospec, is a leading manufacturer of aroma chemicals at its location in Widnes, United Kingdom. The Innospec Widnes business will become part of the Emerald Kalama Chemical flavor and fragrance business. MOELLHAUSEN SPA 4

6 Products News Citrus Oil USA official crop forecast for season show a sharp decline in the production. The season will be the lowest production year for orange in 50 years! Florida orange production is down 17% less than last season. Production expected at only M boxes versus M last season. 9 years ago, average production was close M boxes. This continue decline of the USA production is related to plagues like citrus greening and other that affect production. Brazil the world largest producer have also announced a dramatic low production for the current crop at M boxes versus an average of M boxes of the previous years Orange Production U.S.A. Brazil We can briefly resume that there will be approximately M boxes less productions between Brazil and USA with the result of lower availability of d-limonene and orange oil for nothing less than almost M/tons. We expect record high prices for all orange derivatives like d-limonene, orange oil, folded orange 5 fold, 10 fold etc. orange oil phase and water phase. Moellhausen S.p.A. is a large dealer and we usually have always stock available however we strongly suggest early booking. Prices are rapidly increasing orange oil is already well over 7USD at origin while some key producers claim to be already sold out. Stay in touch with us, we expect record high price levels. Other Citrus Grapefruit oil and derivatives also following the same pattern of orange, production is extremely limited and price rising. Lemon oil: prices have been softening in Europe in the first semester 2016, however we consider the current levels will see stability and eventually a rising trend in the first semester Crops in Europe in summer have been fair Moellhausen S.p.A. has material of high quality available for prompt delivery at competitive prices Lime oil cp: material is available and price has now reached the level of US$/kg. approx. Destilled lime oil: prices are stable and firm, we have limited availability. Bitter orange oil: prices are high if compared to the past, and short is the availability. Better to reserve materials MOELLHAUSEN SPA 5

7 Mints, Menthol and derivatives The demand for natural menthols and mint products continues to be stable, the production of synthetic menthols have cooled down provoking an unexpected rises in price. We currently forecast a stable market with prices for the natural source quite competitive. Moellhausen S.p.A. always has stock of peppermint, DMO; mint arvensis, menthol, menthon etc. Aroma Chemicals In general the current low prices of oil and the strong USD currency have given stability to prices (in US$). Most of the key aroma chemicals are available without any problem of supply and by average cost of production and logistic have declined resulting in good momentum for buying. Alpha pinene and beta pinene & derivatives: no problems in supply, prices are competitive. Carvacrol and laevo carvone: products with the time will be tending to increase due to d-limonene shortage; however this may be an effect taking place only by mid We always have available stock. Coumarin, dihydrocoumarin: price remain stable, however some important plant have been shut down in China due to pollution; it is better to keep longer stock. Dihydromircenol: prices have now reached minimum level, it is an excellent moment to buy thanks to the low prices. Musk ketone (0,01 MX): products is short and productions units in China constantly shutdown for pollution issues, better secure material in advance, price reflect alternate short and long availability without any logic. Synthetic Citral derivatives: geraniol, geranyil acetate, citronellol, citronellal, linallyl acetate, linalool, etc.: despite some spot periodical shortage in supply, we usually carry a good stock available for prompt delivery any time. Terpineol, terpenyl acetate and pine derivatives: all at very competitive level available at our stock. Vanillin, ethyl vanillin: prices are stable with tendency to become more competitive in the next semester. Natural Essential Oils Cinnamon leaf and bark: prices tend to increase, strong demand from China pharmaceutical industry, and adverse climatic condition especially in Sri Lanka have brought the production to minimum output with consequences on the prices that are obviously rising sharply. Moellhausen S.p.A. usually carries stock Eucalyptus oils and eucalyptol: products are available and prices quite stable. Garlic oil: from China prices are reaching top level We have only few hundreds kg available... price over US$/kg. MOELLHAUSEN SPA 6

8 Geranium oil: price from China remains quite high, while Egyptian oil is at minimum levels we have stock. Guaiacwood oil: production is limited by the CITES authorities, we always have stock available in Europe for prompt delivery. Indonesian products: nutmeg, eugenol, clove and its derivatives, patchouli all available for prompt delivery without problem at competitive prices. Lavandin grosso oil: product is short, crop has been limited, prices rising sharply, we have stock at present but it is rapidly reducing. Litsea cubeba and natural citrals: crop in China has been good, however slow demand and limited prices have not encouraged growers to plant more acreage. Consequently, price have slipped a little. Availability is fair at the moment, eventually in the second half 2016 we could experience some shortage and higher price level than current Moellhausen S.p.A. always has stock available at competitive prices Petitgrain oil: is short, but new crop should be abundant and price return to lower level shortly. Roman Chamomile oil: Product is short! Moellhausen S.p.A. has some available stock; contact us ASAP in order to secure material. Next crop will be in July 2016 only Pls. feel free to contact our customer service or ask for further information to our sales executives worldwide. Moellhausen S.p.A. always carries a stock for prompt delivery of the items you need with a product stock counting more than 2,000 raw materials, aroma chemicals, essential oils, specialties, concentrated spices and ingredients are always available for prompt delivery! Best regards Anthony Moellhausen Moellhausen S.p.A. MOELLHAUSEN SPA 7