Rosin Market Update, 11-25-13

Posted on November 25, 2013 by Ernest Spinner

Although there is some small rosin production from October through year end, Chinese annual production statistics typically go from October 1 – September 30, and the figures for the 2013 season are now in.  The 2013 crop produced only 500K mts, down from the more typical recent annual production range of ~ 550 – 600K tons. 

The reasons for the decline have been covered here before:  The low price in the spring, based on an expected low demand, was off base.  By the time the farmers & brokers realized this, it was too late in the season to catch up, exacerbated by bad weather in the autumn.  From mid-summer the price spiked more than 50% in five months. 

China realizes that  the shrinking demand is largely self-inflicted by large & sharp price swings vs. the relative price stability of competing chemistries.   But we doubt that the fragmented supply chain structure combined with highly concentrated power groups (brokers & rosin bosses) will change their mentality any time soon. 

As a well known American politician is fond of saying, there is no education from the second kick of a mule.  Since the floor of ~ $1700/mt has apparently been established (by the farmers unwillingness to go into the forests for less than that), we can expect production to rebound in 2014 – at a higher floor.

For the week the price dropped another 6%.

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