In Q2 2016, China's citric acid price rose
rapidly. According to CCM's price monitoring, the ex-works price of citric acid
(monohydrate) was USD762.58/t (RMB5,073/t) in June 2016, up 3.2% MoM and 0.9%
YoY. The price finally rose to the normal level from the lowest USD639.98/t
(RMB4,256/t) in April 2016.
Source: Baidu
Ex-works price of citric acid (monohydrate)
in China, Jan. 2014-June 2016
Source: CCM
Main factors boosting the domestic citric
acid price are:
1. Short supply of corn (raw material for
citric acid)
Most of high-quality corn was purchased for
temporary storage, resulting in short market supply. Therefore, enterprises
raised purchase price. In June, the purchase price of corn raised by some
citric acid factories in Weifang City, Shandong Province was USD294.75/t
(RMB1,960/t), up 11% MoM.
2. The improving downstream demand
At present, China's citric acid is mainly
used as additives in beverage and food. As summer comes, the demand for
beverage improves, which boosts the demand for citric acid.
3. Enterprise suspending production reduces
the market supply
COFCO Biochemical (Anhui) Co., Ltd., a
leading citric acid enterprise in China, still suspends citric acid production in
its Bengbu Factory for relocation. So the overall citric acid supply maintains
low in China, pushing up the price.
The domestic citric acid market is still in
overcapacity. According to CCM's research, the production capacity of citric
acid is about 1.67 million t/a in China in 2015. However, the total output was
only 987,000 tonnes.
What's more, after raising purchase price of corn for more
than a month, enterprises' inventories are sufficient, which can satisfy their
needs. As a result, price will stabilize in the short term. Furthermore, in the
near future, corn supply will be sufficient as the state's inventories and
new-harvested corn flow into the market. At that time, corn price will drop and
drag down the citric acid price.
It should be noted that China's citric acid
relies on export heavily. Export volume of citric acid (HS code: 29181400)
accounts for about 72% of the total output. According to China Customs, export
volume was 83,135 tonnes in May 2016, up 13.2% YoY and 23.7% MoM. Meantime,
export price also hit a record low since 2014 – USD703.33/t, down 12.3% YoY and
1.2% MoM.
Exports of citric acid in China, Jan.
2014-May 2016
Note: HS code: 29181400
Export price = export value / export volume
Source: China Customs
The export destinations of citric acid from
China are shifting from developed countries to developing countries. Data from
China Customs show that the top three destinations were India, Mexico and
Turkey in Jan.-May 2016. Affected by anti-dumping investigation, China exports
less citric acid to the European Union and the US. The latter even dropped out
of the top 20. Fortunately, the strengthening demand from developing countries
opens up new export markets for China.
This article comes from Corn Products China News 1607, CCM
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Tag: citric acid corn