THE CONFERENCE PROCEEDINGS - IFEAT

RECENT TRENDS AND FUTURE CHALLENGESIn reviewing some of the recent trends and future challenges of our industry, I am going to discussfour topics: rising costs since 2008; global warming and changing weather conditions; speculativetrading and the impact of synthetic menthol.Rising CostsSince the end of 2008, the world over faces the impact of quantitative easing (QE) introduced by theUSA, and inflation becomes inevitable, especially affecting the prices of raw materials andagricultural products, such as iron ore, and petroleum. The Federal Reserve in the USA, and othercentral bankers in Eurozone and Asia are battling inflationary trends.Climatic ChangesWith climatic changes, including frequent droughts and floods, output is affected and just-in-time(JIT) delivery becomes not so workable. Larger users need to maintain higher stock level instead ofjust depending on the JIT system. For example, Hurricane Sandy that hit the States in October 2012caused much woe and disruption to the people.Speculative TradingSpeculative trading at India’s Multi-Commodity Exchange (MCX) causes volatile, unexpected pricefluctuations and uncertainties and magnifies price fluctuation. As I mentioned earlier, we faceimperfect information in real world transactions. Individuals who know a lot more information wouldhave the competitive advantage, while the rest might just follow the herd instinct. So it’s normal aperson ended up buying high and selling low at a loss.Impact of Synthetic MentholSynthetic menthol will have an increasing impact on the market with the entry of the giant BASF intothe market in 2012 and the expansion of existing producers Symrise and Takasago. Menthol has ademand of more than 22,000 tons a year and is worth about US$ 660 million at a price of US$ 30/kg.If mint derivatives are included the market is worth more than US$ 800 million. Menthol has enjoyeddouble-digit growth rate for years, with growth coming mainly from China, India and Southeast Asia.Before 2012, there were two main players insynthetic menthol, namely Symrise (Germany)with 3,000 to 3,600 tonnes per annum, andTakasago with 2,000 tonnes. Together, theysupplied about 20~25% of menthol globally.Pre-2012 Synthetic Menthol – Production Capacity! Symrise