China’s citric acid
price has witnessed a significant drop in October, due to slack demand and
sufficient inventories. However, the price is likely to rise again in December,
facing new environmental pressure and the largest festival in China.
The
prices of both, anhydrous citric acid and monohydrate citric acid, have seen a
stable growth in the first half of 2017. After remaining more or less stable
from June to September, the prices then fall significantly in October, even
lower than they have been in the beginning of the year. In November, the price
is nearly unchanged from the previous month.
According
to market intelligence firm CCM, the high operation rate for citric acid in
China is leading to a sufficient market supply for the demand, which adds pressure
on the price and hence many manufacturers have lowered their prices
significantly. Even the high environmental pressure from governmental
institutions is not changing the situation currently. High inventories of
citric acids are furthermore able to balance out fluctuations in the
production.
What’s
more, the autumn period is normally the beginning season for slack demand for
citric acid, as most of the citric acid is used in beverages like soft drinks
and that consumption significantly decreases in the cold months of autumn and
winter.
Thirdly,
falling corn prices resulted in low production cost. It is known that corn is
the major raw material for citric acid. Along with the launch of new corn on
the market, quality corn supply tends to be sufficient gradually, so corn
prices continue to fall.
Rebound in December and
January 2018
However,
buyers of Chinese citric acid may speed up their purchasing at this time, as
the price is likely to go up again in December and January, according to CCM.
On
the one hand, Chinese authorities have announced, that the next round of
environmental inspections for China’s manufacturers is coming soon, which will
again put pressure on producers and interfere with the production, reducing
supply and hence push up the price.
On
the other hand, the biggest festival and event in China is approaching in
January, the Chinese New Year. On this festival, the sales of beverages are
about to skyrocket, which demands a sufficient supply of citric acids. The
increasing demand will likely support a further price growth in the months
ahead.
About Citric Acid
Citric
acid is naturally found in citrus fruits around the world. However, it can also
be synthesized artificially by using aerobic organisms.
Citric
acid is a very important food ingredient worldwide, as it represents the most
used food acidulant.
The
scope of downstream industries for citric acid is wide. The chemical can be
found not only in food and beverage products but also in detergents, cleaning
substances, personal care products, pharmaceuticals and medications, as well as
plenty other smaller applications.
Chinese
manufacturers are playing an important role in the global citric acid
production, as half of the top international players are Chinese firms. Other
significant nations of citric acid production are the USA, Switzerland, and
Israel.
About CCM
CCM
is the leading market intelligence provider for China’s agriculture, chemicals,
and life science markets.
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