Guosheng Securities: Folic acid inventory has been fully cleared and turning point has emerged. Industry structure continues to be concentrated.

Guosheng Securities released a research report stating that folic acid is accelerating in price, and a turning point has appeared. On November 15, 2024, the average price of folic acid in the market was 210 yuan/kg, with a weekly increase of 19.32% and prices rapidly moving up. According to Baichuan Yingfu, on November 15, mainstream manufacturers were still not accepting new orders and delivery was tight, with the mainstream market price rising to 205-215 yuan/kg (the previous mainstream market price was 172-176 yuan/kg), and some high-end prices adjusted to 220-230 yuan/kg. Overall, the circulation inventory of folic acid is low, and the upward price trend is expected to continue, indicating that folic acid may have reached a turning point. The main points of Guosheng Securities' analysis are as follows: Folic acid is an essential vitamin for the human body, with rigid demand. Folic acid (also known as vitamin B9) is an important carrier in one-carbon metabolism and is an indispensable nutrient for the human body. Folic acid is involved in the daily metabolism of amino acids, as well as the synthesis of pyrimidines, purines, and the major methylating agent S-adenosylmethionine (SAM). A lack of folic acid can lead to a series of problems such as anemia, neural tube defects, decreased immune function, and cardiovascular diseases. Folic acid also has significant effects on the healthy development of fetuses, promoting the maturation of bone marrow cells, promoting brain development through DNA synthesis, and enhancing the development of nerve cells and brain cells in infants and young children, ultimately improving intelligence. Benefitting from the growth in high value-added demand for human use, global demand for folic acid reached 2,100 tons in 2023, with China's demand increasing from 310 tons in 2019 to 600 tons, with a compound growth rate of up to 17.95%. Folic acid has shown significant price elasticity in history, with the last super boom leading to an 18.4-fold increase. In 2015, some industry manufacturers reduced production significantly due to environmental factors, coupled with rising raw material prices, resulting in an extreme price increase in folic acid: the price rose from 160 yuan/kg in January 2014 to a peak of 3100 yuan/kg in May 2015, with a cumulative increase of 18.4 times. After nearly a decade of stagnation, inventory has been fully cleared, and the industry landscape continues to consolidate. Commercialization of folic acid has a history of about 30 years. Initially, folic acid was mainly produced in Japan and Europe, but due to increasing environmental requirements, folic acid production gradually shifted to China. The super boom in 2015 attracted new players to enter the market, and from the second half...