CEH Report
Table of Contents
Abstract
Citric acid is a commodity chemical produced and consumed throughout the world. It is used mainly in the food and beverage industry, primarily as an acidulant. It is estimated that about 75% of the citric acid produced is consumed for food and beverages. The majority of production capacity and consumption in 2009 was in China, Western Europe and the United States. Western Europe, the United States, China, Other Asia, and Central and Eastern Europe combined are estimated to account for nearly 80% of global citric acid consumption. The citric acid industry continues to be influenced by an increased supply from China and an abundant global capacity. In recent years, prices have been driven down by these factors. Tariffs have been enacted worldwide to keep citric acid markets competitive and prices from declining further.
The following pie chart shows world consumption of citric acid:
In the United States, the citric acid market will continue to grow as a result of growth in the beverage and detergent markets. Although consumption decreased slightly in 2009 from 2008 levels because of the economic downturn, a rebound in the beverage market and strong growth in the detergent market will increase citric acid use. New product introductions and continued use in diet colas, fruit-flavored waters, iced teas and sports drinks will lead to higher growth. Liquid detergent growth and environmentally friendly citric acid products in this market will also contribute to growing citric acid demand. New growth will also be seen in industrial applications such as plasticizers and green cement, as demand for renewable resources continues to grow. In Canada, citric acid use may rebound in oil recovery applications if oil prices head further upwards.
In Europe, the citric acid market has been under pressure since 2002 and continues to spiral downward, with prices falling as low-cost suppliers flood the market. The closures have represented an industry trend and have tightened the supply in Europe. Companies are trying to restructure in order to enhance the competitiveness of their citric acid production activities. New markets are not expected to develop.
The citric acid market is impacted by price, which has been driven down by a combination of strong competition from Chinese products and an abundance of global capacity. European producers are contending with imports from Chinese producers. While the average prices were declining, Chinese imports of citric acid to Western Europe grew significantly from 2004 to 2007. The significant increase in imports during these years led to high European Commission antidumping duties in 2008, which helped to increase prices (up about 35% on average in dollar terms) in 2008 compared with 2007. However, the antidumping measures have not been as effective on import volumes as was expected. After antidumping measures were applied for all Chinese producers during 2008, several Chinese producers were exempted from the antidumping duty in 2009, as long as they met the minimum import price (MIP) as defined by the EU and reviewed quarterly. As a result, list prices started to drop later in 2009 compared with 2008 levels.
Chinese competition is mainly in citric acid monohydrate (solid form) and sodium citrate, the most-used form of citric acid salts. In the future, the European manufacturers of citric acid and citrates might concentrate on the production of citric acid solutions (using solid form produced in-house or imported) and/or higher-value citrates. The general trend is that producers are trying to get the anhydrous material closer to the cost of monohydrate, because of the better storage characteristics (longer shelf life, more stability) of the anhydrous material (the monohydrate tends to harden in storage). The main growth driver is believed to be in mineral fortifiers (e.g., calcium citrate, calcium phosphate, magnesium citrate and zinc citrate) produced from citric acid. The role of fortifiers for the health food industry is expected to increase in the coming years.
In Other Asia, consumption is highest in India, Indonesia, Thailand and the Republic of Korea. Growth in this region is expected to be 6–7% per year over the next few years, driven mainly by beverages, which account for 85–90% of demand.