2017 Market Analysis of Whether Traditional Chinese Medicine Material Prices Rose or Fell
The Chinese New Year is approaching, and over the past couple of days the markets in the main producing areas of traditional Chinese medicine materials should all be preparing to close for the holiday. Our reporter has learned that at present, apart from the Hehuachi market in Chengdu, the other three of the four major traditional Chinese medicine material markets have all suspended business entirely, and will not resume trading until after the fifteenth day of the first lunar month.
This winter, market prices of traditional Chinese medicine materials rose sharply for several consecutive months, and even as the markets closed they remained at a high level. When the four major markets open after the New Year, will traditional Chinese medicine material prices change at all?In 2017, will traditional Chinese medicine material prices rise or fall?
As the Spring Festival drew near, distributors at the four major traditional Chinese medicine material markets began early to prepare to go home for the New Year. Our reporter learned that after the twentieth day of the twelfth lunar month, the major traditional Chinese medicine material trading markets and small producing-area markets across the country closed one after another, and logistics shipments stopped. Seller Chen Houshang said that the traditional Chinese medicine materials in the market are now mainly supplied in small batches to local pharmacies and clinics, and occasionally members of the public come to buy Chinese medicine to give as Spring Festival gifts.
Chen Houshang: Our schedule here stipulates that the market only closes on the 29th day of the lunar month, but most of those vendors have already gone home now. Basically there is no one left now; basically it is just people who come to buy some Chinese medicine as gifts. They buy a bit more than usual when they come.
Starting in December of last year, traditional Chinese medicine material prices showed a sharp upward trend, with the prices of medicinal materials such as codonopsis (dangshen) rising by more than 100%. Chen Houshang said that at present, the prices of most traditional Chinese medicine material varieties are still at a high level and remain stable.
Chen Houshang: The current medicine prices are still steady at that previous price level, and shipments cannot go out now either, so everything is in a stable phase.
Our reporter learned that at present, the unified-grade price of Shandong-grown Danshen is still 10-11 yuan per kilogram, Gansu-grown codonopsis (dangshen) is 52-53 yuan per kilogram, Shanxi chaihu (bupleurum) unified grade is 50-52 yuan per jin, and Anhui-grown baishao (white peony root) medicinal-grade weishao is 10-11 yuan per kilogram. So will the market prices of traditional Chinese medicine materials change at all after the New Year? Chen Houshang believes that if no abnormal weather occurs, the prices of the major traditional Chinese medicine materials should not fluctuate much.
Chen Houshang: This depends on which variety it is, and also on weather conditions. If the weather is bad, prices will definitely rise further. If the weather is normal, the price level should be about the same.
As for whether the traditional Chinese medicine material market will rise or fall after the holiday, Zhuochuang analyst Zhang Bin also offered his own view. He believes that after the market opens on the fifteenth day of the first lunar month, traditional Chinese medicine material market prices will not rise immediately, but later, as spring stockpiling gets under way, the prices of some types of traditional Chinese medicine materials will still be raised somewhat.
Zhang Bin: This year the medicine market situation is improving overall, the prices of most locally produced medicinal materials have risen to a reasonable level, and supplies are temporarily sufficient. Therefore Zhuochuang believes that the possibility of an immediate price increase after the Spring Festival market opening is not very great, but later, as pharmaceutical factories' spring stockpiling arrives, varieties with reduced output or those that merchants stockpiled earlier as an investment may still have room to rise.
Zhang Bin told our reporter that from 2013 to 2015, the traditional Chinese medicine material market was in a slump the whole time. 2016 can be counted as its year of recovery. Over the next 2-3 years, this recovery period will continue.
Zhang Bin: In recent years, natural disasters such as stable-water flooding and drought have caused reduced output of multiple traditional Chinese medicine material varieties. In addition, with profits low for several consecutive years, farmers in the producing areas changed their planting and investment structure, and cut back planting noticeably. On the other hand, pharmaceutical factories' procurement volume and procurement frequency increased markedly. Starting in August, the market gradually entered the traditional peak buying and selling season, and supported by demand, the market situation improved noticeably. Therefore Zhuochuang believes that although the possibility of a price increase right when the market opens is not great, signs of recovery may gradually become obvious in early spring next year.
Although traditional Chinese medicine materials may enjoy 2-3 good years, analyst Zhang Bin still wants to remind the broad community of growers: by no means blindly expand planting just because you hear news of price increases. The broad community of growers should seize this stretch of good years to increase the varieties they plant and improve product quality.
Zhang Bin: Growers should pay close attention to market trends and dynamics, and should not blindly expand planting or follow the crowd; rational operation should be the main approach. They should also plant multiple varieties according to local conditions and pursue diversified development, to avoid the huge risks brought by a single investment. In addition, they should manage scientifically and in a standardised way, develop standardised planting bases and specialised planting production cooperatives, improve quality, and increase competitive advantage.