[Domestic News] Mysteel Semi-Annual Report: Outlook for the National Sesame Market in the Second Half of 2023

Reviewing the sesame market in the first half of 2023, it remained stable with a slight upward trend. In the first quarter, the market experienced limited domestic supply, resulting in resilient prices. The primary circulating sources in the market were imported sesame. In the second quarter, the market was suppressed by factors like import costs, which led to prices ending on a high note. Overall, the sesame market in the first half of the year exhibited a generally stable and somewhat strong trend.

Ⅰ、Analysis of Domestic Price Trends in the First Half of 2023

1、Analysis of Domestic Price Trends

The domestic sesame market in the first half of the year remained strong, with limited market transactions and relatively weak trade quotations. There was a scarcity of market supply, and most transactions were conducted in small quantities locally.

In the first quarter, the sesame prices in China remained at high levels. This was primarily due to the limited domestic sesame supply, resulting in tight availability. Although there were fewer transactions after the Lunar New Year, the increase in imported sesame prices post the Lunar New Year led to a rise in domestic sesame prices. According to Mysteel agricultural statistics, the average market price in the first quarter of 2023 was 15,000 yuan per ton, which was 800 yuan per ton higher compared to the average market price of 14,200 yuan per ton in the same quarter of the previous year, representing a 5.63% increase. In January and February, the domestic sesame supply was scarce, and the market entered a pre-harvest restocking phase, resulting in stable and slightly strong sesame prices. In March, the domestic sesame market experienced an imbalance between supply and demand, with limited supply in production areas. Trade quotations from traders were relatively weak, and in some regions, there were no mainstream transaction prices, as farmers were waiting for the new planting season.

In the second quarter, there was limited remaining domestic sesame stock, and the main production areas had few available circulating supplies. Trade quotations from traders were weak, and in some regions, there were no loading prices available, leading to a slightly chaotic market situation. Overall, market prices were determined through individual negotiations. Domestic sesame continued to face a weak market, with few transactions taking place. Most production areas had entered the growing season, and there were reports of a slight increase in planting areas in Hunan and Hubei provinces.

2、Analysis of Imported Sesame Price Trends

Imported sesame prices experienced significant fluctuations in the first half of the year. After the Lunar New Year, international market quotations were generally higher, leading domestic traders to increase prices. The prices of imported sesame rose by 800-1000 yuan per ton. In March, imported sesame stocks continued to increase as the market entered the off-season, with fewer outbound shipments from ports and more inbound shipments. The prices of imported sesame fluctuated, mainly due to the preference for recently arrived shipments and their impact on prices. However, overall, while prices have increased, the market has seen limited overall shipments, and inventory levels have gradually increased.

In the second quarter, imported sesame prices were influenced by international market and futures trends, resulting in significant price increases. The prices of imported sesame remained stable with a slight upward trend. In May, domestic imported sesame prices were supported by international market trends, leading import traders to hold firm on prices. Prices of imported sesame generally rose, and the market saw flexible trading with some high asking prices but lower actual transactions. In June, imported sesame prices remained strong as inventory continued to decline. Traders showed a reluctance to sell, and downstream manufacturers mostly purchased on-demand, resulting in a market that operated at a stable high level. Towards the end of the month, with the arrival of new season sesame from abroad, some imported sesame prices experienced a slight correction, but overall prices remained relatively stable.

Please note that the above translation provides a summary of the analysis, and the actual analysis may contain more specific details and factors influencing the price fluctuations of imported sesame.

Ⅱ、Analysis of Fundamentals in the First Half of 2023

1.Analysis of Imports and Exports

Based on customs data from January to May 2023, the import volume of sesame in the first half of the year was 406,397.45 tons, a decrease of 209,220.78 tons or 33.99% compared to 615,618.23 tons in the previous year. The main importing countries were primarily African countries such as Niger, Sudan, Togo, and Ethiopia. Among them, 140,860.225 tons were imported from Niger, accounting for 34.66% of the total; 93,090.711 tons were imported from Sudan, accounting for 22.91%; 78,390.031 tons were imported from Togo, accounting for 19.29%; and 24,199.058 tons were imported from Ethiopia, accounting for 5.95%. In the first half of the year, imports were influenced by domestic demand, exchange rates, and international market conditions, which increased import costs and reduced traders' willingness to stock up actively. In terms of average import prices, the average price of imported sesame in the first half of this year was $1,584.76 per ton, an increase of $91.61 per ton or 6.14% compared to $1,493.16 per ton in the previous year. After the Lunar New Year, international market quotations rose by 800-1,000 yuan per ton, resulting in increased import costs and therefore an increase in the average import price of sesame.

Over the years, the export quantity of sesame has remained relatively low, mainly exported to countries such as South Korea and Japan, with little variation in annual export volume. Due to the higher domestic sesame prices and limited domestic production, the country does not have a competitive advantage in the international market. Additionally, downstream manufacturers generally do not choose to export large quantities.

Please note that the translation provides a summary of the information provided, and some specific details may have been omitted.

2.Inventory analysis

Currently, the inventory at Huangdao Port is maintained at around 145,000 tons, lower than the inventory of approximately 200,000 tons in the same period last year.  In the first half of the year, influenced by international market quotations and exchange rate fluctuations, some industry participants were not receptive to high-priced goods, leading to cautious stocking.  In the downstream market, the high cost of imported sesame affected the willingness to stockpile, and most buyers maintained just-in-time purchasing.

From the storage and inventory situation in the first half of the year, the average outbound volume in January was around 2,400 tons, with inbound volume around 2,200 tons. Most traders had limited willingness to stockpile in January and mostly made purchases based on immediate demand. In February, the average outbound volume was around 2,800 tons, with inbound volume around 3,200 tons. Although market transactions increased compared to the previous period, outbound volume remained relatively stable. Continuous arrivals of imported sesame at higher costs and slower acceptance by downstream enterprises resulted in a slowdown in market demand, but port shipments were still feasible. In March, the average outbound volume was around 1,600 tons, with inbound volume around 2,300 tons. March continued the influence of the traditional off-season, leading to a decline in inbound and outbound volumes. Terminal demand did not show significant improvement, and the sesame market continued to weaken.

In April, the average outbound volume was around 2,800 tons, with inbound volume around 3,200 tons. Downstream market demand was likely driven by temporary restocking before the May Day holiday, and after the restocking phase, the market would return to a subdued situation. Short-term holiday sentiment drove up prices of imported sesame but did not represent substantial changes in demand, making it difficult to sustain the price increase. In May, the average daily outbound volume was around 2,700 tons, with inbound volume around 1,200 tons. In June, the average daily outbound volume was around 1,700 tons, with inbound volume around 1,000 tons. The main reason was the impact of international market trends on the imported sesame market, where prices repeatedly reached new highs. Under the influence of the international market, traders adjusted their quotations, resulting in higher and more chaotic prices. Some traders suspended quotations and maintained a wait-and-see attitude. The downstream market remained cautious, with a focus on observation, and most purchases were made based on immediate needs and at lower prices.

III、Forecast for the second half of 2023

Overall, the current domestic market situation is relatively stable with a slightly weak tone. Traders are following the market and pricing based on quality. Considering the impact of international market quotations and exchange rate fluctuations, it is unlikely that there will be a significant decrease in prices in the domestic market. The price trend for the second half of the year is expected to remain at a high level and continue to rise, depending on the driving force of demand.

Source ：Mysteel