may 14, 2018

bluconnection information may 14, 2018

indigo powder/granular and denimblu30 average price development

for customers, retailers and to whom it may concern

history and changing market environment

in the 1980’s, traditional suppliers dominated the market with indigo powder/granular prices ranging between 20 usd/kg and 30 usd/kg (not considering unusual lows or peaks, e.g. in hongkong mid 80’s).
in the 1990’s, chinese suppliers entered the market and prices started to decline.
in the 2000’s, indigo prices were down to below 4.00 usd/kg. all traditional suppliers stopped the production of indigo powder/granular.
between 2010 and september 2017 prices of indigo granular were relatively stable ranging between 5.20 usd/kg and 5.80 usd/kg. there were up to ten competing indigo suppliers in china, representing about 95% of the world-wide indigo production capacity.
in 2017 china government increased pressure to implement environmental standards in the production of indigo, among others shift from coal to gas was requested. in the second half of 2017 new safety regulations were imposed and at the same time raw material prices for the production of indigo increased.
to meet chinese rules and regulations all indigo manufacturers had to discontinue production for several times in 2017 and 2018. some manufacturers closed down for good. this lead to temporary shortages of indigo.
in september 2017 indigo granular prices started to increase on a monthly basis until today.
the shift of the indigo industry to inner mongolia gained momentum. by the end of 2018 all main suppliers will be located there. the total capacity of the three biggest indigo manufacturers will surpass global indigo demand.

bluconnection opinion and outlook 2018

indigo availability and price development is our customers and our concern.
the concentration of indigo production in inner mongolia needs to be monitored closely.
the initial price increases of indigo granular are understandable. the most recent price increases, in the past two months, are not comprehensible. they are relatively higher than known price changes in raw material and environmental related cost.
we do not expect indigo granular prices to decline to previous known lowest levels. until year end prices could further rise. however, product availability should be fine.
considering our indigo production experience and based on present known raw material prices and cost for environment, safety and health, a price level around 6.50 usd/kg for indigo granular should be envisaged by the indigo and denim community.
in order to support environmental friendly production and products and to keep market diversity, denim retailers, agents and others in the denim chain should acknow-ledge indigo price increases and respect denim mills’ and indigo suppliers’ needs.

jan 2016 - dec 2018*- trend

*index, actual prices may vary from country to country

bluconnection is a fair and reliable partner

our responsibility

fair prices. we absorb small deviations in indigo price developments.
for the last nine months indigo prices increased significantly on a monthly basis. we have to adapt denimblu30 pricing on a monthly basis.
we do not take advantage of indigo price increases. for the last nine months we work with a marginal profitability.
we are transparent. indigo granular price levels are known in the market.
to allow our customers a planning horizon of two months we commit quantities for two months and price for one month.
we do not compromise our high environmental, safety & health standards. we work continuously in all areas of our company to improve further and to provide highest quality, cost - efficient and most environmentally friendly products.

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