Shrimp trading dispute sends glucosamine prices skyward

Glucosamine prices are currently soaring as major producer countries are hit by a shortage of raw materials that looks set to continue well into next year, reports Dominique Patton.

Glucosamine, a rapidly growing supplement for its benefits to joint health, is largely derived from the shells of shrimps. However earlier this year the US shrimp industry filed a request with the US International Trade Commission and the Department of Commerce to investigate dumping by major shrimp exporters, including China, India, Vietnam, Brazil, Ecuador and Thailand.

Since initial findings of significant injury to US shrimpers, fears of tariffs that could be brought in retroactively from March onwards have had a major impact on the shrimp fishing business elsewhere.

Sundeep Aurora, president of India-based Pharmed Medicare, which is the major supplier of glucosamine to Europe, says shrimp producers were faced with anti-dumping duties that would halve shrimp meat prices. At around the same time, diesel prices rose by around 40 per cent, with the result that fishing in many regions has ground to a halt.

"I've heard that some fishermen are even selling their boats," Aurora told NutraIngredients.com.

Overall production is down by more than 40 per cent in India and by around half in China, with a direct effect on prices. Glucosamine is currently selling in the US for $17.50 per kg, up from $13 last week, and up from around $5 about a month ago, according to US-based Blue California, which manufactures the ingredient at its China plant.

But prices are expected to climb even higher as raw material stocks fail to improve.

"Our stocks are down about 30 per cent," said Aurora. "We are slightly better positioned than some because we have planned ahead and are playing a very careful game, allocating products to key customers."

"We also have partnerships in Europe that have been giving us good prices so as a thank you for this, we have tried to control our prices. But our costs have gone up by 300-400 per cent," he continued, "as we have to travel further afield to source the material. We have had to increase prices substantially and place no new forward orders."

The Indian company is the main supplier to Europe, after tests for chloramphenicol forced Chinese glucosamine and low quality products off the market. Many of these products end up in the US.

Pharmed also claims to control 95 per cent of the glucosamine trade out of India and sells more than 70 per cent of its material as a finished form, making it highly vulnerable to the raw material shortage.

But consumers could also feel the impact of the price rises, especially in markets like the UK where glucosamine is sold as a food supplement. In other countries that require pharmaceutical grade glucosamine higher prices are already the norm.

Aurora expects the situation "to worsen twice as much again", possibly even affecting the strong growth in the ingredient, currently estimated at around 10-15 per cent each year thanks to the wealth of science supporting its benefits.

The situation depends, it seems, entirely on politics. Department of Commerce preliminary determinations on the anti-dumping case are to be released on 6 July for China and Vietnam, and 29 July for India, Thailand, Ecuador and Brazil.

The US industry wants margins of up to 130 per cent on Indian shrimps but Elizabeth Levinson, a lawyer with Garvey Schubert Barer in Washington, who is representing three Indian shrimp exporters, said they will likely be much lower.

"We're fairly optimistic. There will be dumping margins but they will be low," she said. "All countries will end up having to pay duty but it is a case of which country comes out best."

Customs officers can start collecting cash deposits or bonds immediately after preliminary determinations although these could be refunded or altered depending on the final determinations expected in September/October. The case could then proceed to the World Trade Organisation, making the future for glucosamine highly uncertain.