SDIC Securities: Cost support+maintenance expectations focus on the elasticity of taurine price increases

The Zhitong Finance App learned that SDIC Securities released a research report saying that according to Baichuan Yingfu, on August 17, the market price of taurine was 24.5 yuan/kg, up 2 yuan/kg from the previous trading day. The bank believes that considering that summer is a peak stocking season in the energy drink sector, compounded by the continued rise in high-end pet consumption and individualized consumption, downstream demand for taurine is expected to continue to be strong at this time. In the future, China's taurine oligopoly pattern may continue to strengthen, and the pricing power of leading companies is expected to continue to stand out. The short logic of the demand-side peak season plus the long logic of upgrading the consumption structure, combined with supply-side maintenance expectations and continued pressure on the cost side, suggests paying attention to the subsequent price elasticity of taurine.

The main views of SDIC Securities are as follows:

Demand for energy drinks is strong during the peak season, and the economic consumption of pets continues to heat up

Taurine (Taurine), also known as beta-aminoethanesulfonic acid, has the appearance of colorless or white oblique crystals, odorless, and has stable chemical properties. It is a non-protein amino acid containing sulfur. It exists in a free state in the body. It is an essential amino acid for animal growth and development. It is beneficial to infant brain development, nerve conduction, etc., and also has a wide range of pharmacological effects. On the demand side, taurine is widely used in functional drinks, pet food, medicine, etc., and is generally divided into industrial grade, food grade and pharmaceutical grade. Industrial grade is mainly used in feed additives, cosmetics, etc.; food grade is used in food additives to enhance nutritional value and functionality; pharmaceutical grade is used in pharmaceutical manufacturing. Among the main downstream areas of taurine, food and beverage and pet food are the most important sectors, accounting for about 75% of total demand in 2025. According to the China Business Industry Research Institute, retail sales of energy drinks in China increased from 131.7 billion yuan in 2021 to 185.6 billion yuan in 2025, with a CAGR of about 9.0%; according to the China Business Industry Research Institute, the size of China's pet food market grew from 128.2 billion yuan in 2021 to about 175.5 billion yuan in 2025, with a CAGR of about 8.2%. The bank believes that considering that summer is a peak stocking season in the energy drink sector, compounded by the continued rise in high-end pet consumption and individualized consumption, downstream demand for taurine is expected to continue to be strong at this time.

The oligopoly pattern of taurine is prominent, with the vast majority coming from domestic supply

In the 80s of the last century, scientists in China successfully synthesized taurine in the laboratory for the first time. Since then, taurine has embarked on a process of localization, and production capacity has continued to expand. Currently, with the exception of Japan, which produces a small amount of taurine in the international market, most of the remaining production capacity is in China, showing a typical oligopoly pattern. The concentration of major manufacturers exceeds 90%, including Yongan Pharmaceutical, Shengyuan Environmental Protection, Yuanda Biotechnology, and Xinhecheng. Among them, Yongan Pharmaceutical has an annual production capacity of 78,000 tons of taurine, making it the world's largest taurine production base; Shengyuan Environmental Protection's annual production of 40,000 tons of taurine, a chemical (food) raw material, has been sealed and has now entered a critical stage of equipment installation and commissioning; Xinhecheng Shangyu base currently has 30,000 tons of taurine production capacity and has reached production; Yuanda Biotech, a subsidiary of Yuanda Pharmaceutical, has 25,000 tons of taurine production capacity. Looking ahead, among the four taurine synthesis processes, the raw materials of the ethylene chloride method and ethylene imide method are all highly toxic. Currently, the commonly used processes in China are the ethanolamine method and the ethylene oxide method. Considering that the yield rate of the ethanolamine method is low and there are many wastes, followed by the continuous tightening of China's environmental protection policy, or eventually converging to the ethylene oxide method, which has a more complicated process but also has better yield and environmental protection, the oligopoly pattern of taurine in China may continue to strengthen in the future, and the pricing power of leading companies is expected to continue to stand out.

Strong cost-side support for taurine, major factory maintenance or phased tightening

On the cost side, according to Huajing Industry Research Institute, the raw material cost accounts for about 60% in the process of preparing taurine using ethylene oxide. Among them, ethylene oxide is the most core raw material, and the unit consumption is about 0.5 tons. According to Baichuan Yingfu, the price of ethylene oxide has risen markedly recently. As of August 18, the average price of ethylene oxide in the ethylene oxide market was 7,550 yuan/ton, +13.53% month-on-month, and has risen 32.92% since this year, putting a lot of pressure on the cost side. At the same time, the taurine production process relies on sulfur-based raw materials such as sodium bisulfite and sulfur dioxide, and the rise in the price of sulfur sources such as sulfur also forms clear cost support. As of August 18, the price of sulfur was 8,900 yuan/ton, which has risen 122.5% since this year, jointly raising the cost center with ethylene oxide. Meanwhile, according to Hangzhou Weigao, mainstream taurine manufacturers have recently cut production and stopped production and maintenance as planned, and delivery and supply for some brands have been limited, or a phased tightening of supply and demand. The bank believes that the short logic of a short peak season on the demand side plus the long logic of upgrading the consumption structure, combined with supply-side maintenance expectations, and continued pressure on the cost side, suggests paying attention to the subsequent price elasticity of taurine.

Recommended attention: Yongan Pharmaceutical, Shengyuan Environmental Protection, Xinhecheng, etc.

Risk warning: macroeconomic downturn, raw material prices fluctuate sharply, downstream demand falls short of expectations, and large expansion of production capacity.