Asian buying helps spur upturn in key gum Arabic market

By: Ahmed Alhaj (Site Admin)

KHARTOUM, (sudanow.info.sd) - Sudanese gum Arabic prices have edged up in recent weeks due to indications that demand is starting to pick from the key markets of Japan and China.

A sales manager at the London office of FAAS Trade & Investment told The Public Ledger that the major Japanese buyers/trading houses had only purchased a total around 20% of their typical gum Arabic annual intake in 2011. FAAS Trade & Investment represents global sales for one of Sudan's largest exporters of gum Arabic.

The FAAS sales manager explained that stocks in Japan were now depleted to levels well below typical years and Japanese interest had become active in the last few weeks in requesting prices and giving shippers general annual forecasts.

"After an absence last year, the Japanese are coming back and making noises that the Sudanese shippers want to hear," he remarked.

Japan buys around 5,000 tonnes of Sudanese Kordofan cleaned HPS grades each year and its demand and overall buying pattern has an almost immediate impact on the local market and prices. This effect can be particularly fast if many the Japanese buyers rush in to purchase at the same time, the FAAS sales manager said.

However, he viewed it as unlikely that the latter would happen as the Japanese importers usually take coverage steadily and often quite discreetly in order to prevent disturbing the market and causing prices to surge upwards.

One key development noted by the market was that one of the major end user companies in Japan had been making enquiries to buy, further encouraging the idea that demand would pick up this year.

This had helped to send prices for Kordofan cleaned gum Arabic to $3,000 a tonne fob from levels of around $2,800 a tonne fob before Christmas.

In addition, the FAAS sales manager noted that with rapid advances in food technology, China was now using larger volumes of gum Arabic in its food and beverage applications as both these key sectors became more developed.

He explained that Sudanese origin gum Arabic was preferred by the Chinese buyers due to the existing presence of several large Chinese oil conglomerates in Sudan and the very friendly China-Sudan relations (spurred on by the increase in oil exports). China's gum Arabic intake was expected to increase substantially during 2012/13. "There are a couple of thousand extra tonnes going to China each year now," the FAAS source added.

Moreover, contacts in China had indicated that trading remained largely unaffected by the global economic downturn, he noted.

Sudanese gum Arabic prices have also been supported by the fact that this year's crop was seen as only reaching an average size.


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