Post Time: 2018-06-11
Monosodium glutamate is a common food ingredient, it was first extracted from kelp by a professor of Tokyo University, who named it "Ajinomoto." Now it’s widely used in cooking and food processing. Modern MSG is mainly manufactured from grain (corn, wheat, rice, etc.), and purified by microbial fermentation.
In the production of monosodium glutamate, corn accounts for the largest part of the cost. A ton of MSG consumes 2.2-2.3 tons of corn. Therefore, when the price of corn goes up, it may cause the MSG price to rise; and if the price of corn continues to slump or decline, the decline rate of MSG is expected to be lower than that of the corn.
The MSG production bases of Meihua Group are located in Tongliao (480,000 tons) and Xinjiang (220,000 tons). The company controls the cost of corn by enriching its supply sources. According to the statistics, the company's corn supply source in 2015 was more diverse than that in 2014, and the cost was also well controlled.
Since MSG's main downstream needs are food-processing and catering, so the needs of these two industries may have a profound impact on the demand for MSG. According to National Bureau of Statistics, in 2016, the main business income of the domestic food manufacturing industry had a 8.8% year-on-year increase and reached 2.36 trillion Yuan, and total profit had a 9.2% year-on-year increase and reached 200 billion Yuan. The catering industry also maintained a good profit growth rate. The steady growth in the food manufacturing and catering industries ensures the market demand for MSG.
In recent years, China's MSG export has become more and more difficult. At the end of 2008, the EU imposed 33.8%-39.7% anti-dumping duties against Chinese MSG; in 2014, the US Department of Commerce announced that it would impose 8.30%-8.32% anti-dumping duties on MSG made in China. However, China's MSG production capacity accounts for about 75% of the world's production capacity, export growth still remains stable. According to the data from China Starch Industry Association, the export of monosodium glutamate from 2008 to 2016 had increased from 200,000 tons to 420,000 tons, with an average annual growth rate of 13.8%, of which the exports to Europe and the United States accounted for 50% of the total export.
MSG production is mainly concentrated in China. The large-scale development of China's MSG industry began in the 1980s. At present, China has become the largest producer and consumer of MSG. In 2014, 75% of the global MSG production capacity was concentrated in China.
Since 2003, the domestic MSG industry has appeared oligopoly after three industry integrations. Before the market integration, there were probably 200 domestic companies. The low concentration and the weak bargaining power may lead to vicious price competition.
There were three rounds of industry integration taking place in 2003-2004, 2007-2009, and 2011-2013, eliminating backward techniques, increasing concentration degree and finally cutting down to about 10 large companies.
production capacities of major companies
Lotus Health Group
Linghua Group Limited
Shandong Shenghua Group
According to the data of the Ministry of Industry and Information Technology, from 2010 to 2013, the backward production capacity of the MSG industry was eliminated by 189,000 tons, 93,800 tons, 143,000 tons and 285,000 tons respectively. The concentration of industry has been further enhanced. The market is monopolized by Fufeng Group, Meihua Group and EPPEN, and the CR3 is about 75%.