Glucosamine is a by-product of shrimp meat, produced from chitin, which occurs naturally in shrimp shells. China produces 90 per cent of the world's glucosamine but its chitin supply has dropped sharply in the last two years, as an EU ban on Chinese seafood imports depressed the country's shrimp-meat sales and subsequently production.
The EU last month lifted the ban on Chinese seafood imports. This will now reduce glucosamine prices, but the effect will be delayed, predicts Shandong Luye Pharmaceutical, which produces some 5 per cent of global glucosamine.
"The EU has just lifted its ban on seafood imports, but seafood collection time is during May and August," Sammy Jiang, international business manager from Shandong Luye Pharmaceutical, told NutraIngredients.com.
"However, next year prices will come down," she forecasts.
The seafood ban had led to falling shrimp farming, forcing glucosamine producers in China to rely on collection of shrimps in the wild and chitin imports from the Americas.
Glucosamine prices have climbed steadily from around $6 per kg in February this year to around $16 per kg by May.
As recently as February, "there was lots of raw material. We didn't need to collect as farmers would send it direct to the factory," added Jiang.
New sources such as sea crab available in August have since eased raw material supply for some producers.
Luye Pharmaceutical has also imported shrimp shell from Canada, despite the high import tariffs and VAT, to help ease pressure on materials.
"This month half of our total raw material is imported from Canada. The price is high, at about $4, but is almost the same as in China this year," said Jiang.
WellAble, one of the biggest glucosamine suppliers in China with a claimed market share of a quarter of the US market and a third of the European market, also highlights the impact of raw material prices.
Mr Yau, international business manager for the company, says raw material prices are up by around 30 per cent, but also notes that these prices are anyway seasonal.
"At the end of this year all material will run out. But I don't think glucosamine will go higher than $17 a kg,"he told NutraIngredients.com.
However, WellAble says the price rises have not been driven by the chitin shortage alone. Rising energy prices in China have impacted both fishing and production costs, which are around 30 per cent higher this year, said Yau.
Producers now hope that the beginning of the fishing season will relieve the price pressures as soon as the end of spring 2005. But the harvest can vary, and is not predictable. However, as Chinese shrimp farming output picks up once more, driven by renewed European demand for shrimp meat, chitin supplies will start to recover to former levels.