China is the one of the biggest origin for citric acid in the world. 70-80% of its gross production is for export.
Chinese Citric Acid Production and Supply
It is the most important product in medical chemicals in terms of production and sales volume. At present, China has over 1.5 million metric tons production capacity, which counts 75% of the world’s total capacity; annual production amount is about 1 million metric tons, or 70% of the world’s total volume; export amount is around 0.8 million metric tons and sales value is about 0.7 billion USD.
China’s export is weak recent years because the recession slows down the global economy and demanding. However, export of citric acid is stable with small growth in volume. Chinese citric acid can be found in over 100 countries and regions worldwide, while India is the biggest buyer. Although the export volume is rising recent years, the price is descending. The primary reason is the oversupply due to the radical growth of production capacity.
In the beginning of 21st century, Chinese production capacity was 0.4 million metric tons, 0.6 million tons in 2003, 0.8 million in 2005, 1 million in 2007, 1.2 million in 2012 and around 1.5 million at present, with average growth of 0.1 million metric tons per year. China oversupply rate is 30-40% of the capacity, factory operation rate is only 60%. The world total production capacity is 2 million metric tons, actual production amount 1.5 million metric tons and 1.3 millions metric tons for import and export.
China’s citric acid sales greatly relies on export and the export rate is climbing each year. The prices are often 20% lower than other brands from its global competitors. In recent years, Chinese prices are dropping because of severe competition, while the labor and environmental costs are rising in China.
Export of Chinese citric acid is in a dilemma. Export could expand the global market shares. However, the margin is squeezed therefore some producers have difficulties in cash flow; in a long run, manufacturers have to put more and more investment in environmental compliance.
Chinese Citric Acid and and Dumping
As Chinese export of citric acid counts 60% of the global trading volume, the U.S., Thailand, Ukraine, South Africa and EU claimed that China is dumping to their countries and requested for investigation.
The U.S. used to be the bigger buyer of Chinese citric acid, with average annual import 0.3 million metric tons. China exported to the U.S. about 0.1 million metric tons, which counts 15% of Chinese total export. After the dumping investigation, Chinese trade amount with the U.S. suddenly dropped to 20,000 metric tons per year and only 18,500 tons in 2013. Chinese manufacturers had to shift their orders to EU, Canada, Thailand, Israel and so on. In 2009, India replaced the U.S. and became the biggest Chinese citric acid buyer, with export volume 58,000 metric tons. The volume jumped to 65,000 metric tons in 2013, which counts 8.53% of total China’s citric acid export.
Outlook of Chinese Citric Acid
As the trade barriers and shrinking margin, more and more Chinese manufacturers will put more attention on the domestic market by stimulate the internal demand. The applications of citric acid are expanding, such as in chemical, medical, feed, electrical, textile, plastics industries, besides the traditional food and beverage additive.
China suppliers are also experiencing product structural reform. One sign is that more players are eager to invest in technology renovation and develop high end products. Citric acid anhydrous is a popular grade in global market, where the Chinese suppliers are heading forward. Another leading trend is deep processed citric acid.
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