China's major large-scale capacity expansion projects on citric acid progress
slowly affected by low price of citric acid and bad financial condition of
manufacturers.
In 2015, China mainly has 3 projects for capacity expansion on citric acid.
However, they all progress slowly.
-
Shandong Juxian Hongde Citric Acid Co., Ltd. (Juxian Hongde): 100,000 t/a citric acid project - since H2 2013, the factory was
started to be built and completed in 2014; affected by the low price of citric
acid, now the project progresses very slowly
-
RZBC Group: 100,000 t/a citric acid
project - the company stated to invest EUR99.55 million in building this
project in Hungary on 2 Sept., 2014 but the project is still under construction
now
-
Anhui BBCA Biochemical Co., Ltd.: 60,000
t/a citric acid project - the company started to build the factory in Szolnok
Industrial Park, Hungary on 9 Sept., 2014 but the project is still under
construction now
It is known that the slow progress of these citric acid projects is mainly
attributed to the low market price of citric acid.
According to CCM research, in 2015, the average ex-works price of monohydrate
citric acid is lower than that in the same period of 2014. In Dec., the average
ex-works price is USD744.06/t (RMB4,760/t), down 9.72% year on year. That the
price stays at low level for a long time reduces most of manufacturers'
performance. Some of them even suffer from losses. The poor financial condition
of manufacturers affects the progress of projects. Meantime, the too low
product price also influences manufacturers' enthusiasm to put project into
production.
China's ex-works price of monohydrate
citric acid in Jan. 2013-Dec. 2015
Source: CCM
Different from Juxian Hongde, other two enterprises choose to set up projects
overseas, aiming to reduce the negative impact from anti-dumping.
About 80% of China's citric acid is exported. As the export volume is
increasing, and the export price is low, China's citric acid suffers from
anti-dumping investigation from overseas for many times. In recent years, the
US, Thailand, Ukraine, South Africa and the European Union (EU) have conducted
anti-dumping investigation on China's citric acid. This poses a great influence
on the export of Chinese enterprises. At the same time, the chain reaction of
trade friction increases the risk of China's citric acid export market.
Therefore, building projects abroad is a smart choice.
Notably, that the two enterprises decided to factories in Hungary can
comprehensively solve the tariff problems in the EU market. Hungary is located
in the middle of Europe. Affected by the anti-dumping issues, China's price of
citric acid exported to EU countries is much higher than that to other
countries, which significantly reduces its competitiveness in local markets.
According to CCM, in Jan.-Nov. 2015, China exported 24,455 tonnes of citric
acid to the Germany, the largest export destination in EU, with the price
averaged USD864.47/t. In the same period, the average export price of China's
citric acid to India, the largest export destination was USD698.57/t.
China's export destinations of citric acid in 2014-2015 (Jan.-Nov.)
Source: China Customs
According to CCM's price monitoring, in recent four months, China's ex-works
price of citric acid keeps rising. The price in Dec. is increased by 6.80%
compared to USD696.68/t (the lowest of recent 8 years) in Sept., which is
supported by manufacturers. Pressured by serious loss, citric acid
manufacturers increase the ex-works price to ease the loss.
Currently, the price of corn (raw material of citric acid) is far lower than
that in 2014. Based on CCM's data, in Dec. 2015, the market price of corn was
USD297/t (RMB1,900/t) in China, down 19.07% year on year. The future market of
citric acid will be boosted to some extent under no signs of improvement in
demand, limited space of price rises, declining raw material price and the
coming busy season for export in Jan.
About CCM:
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market intelligence provider for China's agriculture, chemicals, food
& ingredients and life science markets. Founded in 2001, CCM offers a
range of data and content solutions, from price and trade data to
industry newsletters and customized market research reports. Our clients
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