Citric Acid

Citric Acid Global Market Outlook:

• Consistent demand in the personal care and cleansing sectors could benefit citric acid production, which is expected to go beyond 2.93 MMT in the coming years. Along with China, the US and Brazil are likely to be one of the major producers of citric acid

• Europe produces small quantities of citric acid that majorly comes from Belgium, however, Germany, France, and the UK are the main consumers of citric acid that procure the same from Belgium or Austria

Global CITRIC ACID market (2023–2027)

• Global market size: $3.7 Billion

• CAGR: 5 percent

Price Drivers:

• Feedstock price volatility

• Trade relations among countries and anti-dumping duties

• Increased demand in the cleansing sector

Citric Acid Demand Market Outlook

• Citric acid demand is expected to surge between 4 percent and 7 percent in 2023, owing to the shortage of pharmaceutical grade, amid rallying demand. The market surplus is projected to increase to 0.06 MMT this year, which could lead to bullish price trends.

Citric Acid: Global Supply Analysis

• Citric acid demand is expected to surge between 4 and 7 percent this year, owing to improved pharmaceutical demands. The market surplus is estimated to shrink to 0.06 MMT in 2023 stagnant compared to 2022

• China, which accounts for more than 70 percent of global production, is investing in capacity expansion, in order to increase its export market share

• Around 90 percent of the citric acid is produced through fermentation, 7 percent through extraction from citrus fruits, and the remaining 3 percent produced through chemical extraction. The global citric acid market is expected to increase, owing to the augmenting demand for citric acid in the end-use industries.

• China has approved a list of Brazilian traders for its corn shipments, a step ahead in the Brazil-China corn deal. For Brazil, this would diversify its export destinations and improve sales. According to reports, more traders could be approved in the upcoming weeks. This would eventually improve feedstock supply for corn-based downstream products

• The global citric acid market is estimated to continue witnessing tightness in 2023 with the market surplus at 0.06 MMT. Although the surplus is low, the scenario has improved since 2021, wherein market surplus reached 0.05 MMT. Prices could downtrend in future, owing to abundant feedstock levels

Citric Acid Global Trade Dynamics

• China is the largest exporter of citric acid which accounted of 71 percent of the market share in 2022. Imports of citric acid are fragmented across various destinations majorly European countries

• Chinese export of citric acid is quite fragmented, due to anti-dumping duties. Brazil imports 47 percent of its citric acid from Thailand, followed by Colombia. It is one of the major production destinations for South American countries

• Belgium is the main production destination for citric acid in Europe. However, it imports a significant volume of citric acid from China and other countries to suffice demand. The US uses majority of its production for domestic usage and also imports a significant volume from Thailand

• Transport/logistics issues being seen in China, due to lockdowns at major cities led to a hike in prices in the past months. Transport cost was approximately 20 percent up, also lead times to America and Europe from China had increased

Porter's Analysis on Citric Acid

Supplier Power

• Corn prices are determined, based on domestic supply–demand and global scenario

• Prices are indexed to large trading entities, such as CBOT and Euronext

• Molasses prices move parallel to sugar prices in the EU and prices are determined largely by price movements of sugar #11

Barriers to New Entrants

• Citric acid producers in China get high subsidies and chances of new entrants are high in the country

• With strong dominance of Chinese suppliers, chance of new entrants outside China is low

Intensity of Rivalry

• The number of suppliers of citric acid is considerable, thereby escalating the rivalry

• Citric acid is largely a commoditized market with major Chinese suppliers competing at price front

• In order to gain market share, many Chinese suppliers started selling citric acid at a very low price

Threat of Substitutes

• Acetic acid is the significant replacer of citric acid, since the price of citric acid is two fold of acetic

• There are major substitutes, like lactic, fumaric, malic and acetic acid, still citric acid is the most widely used food acids for its preservative characteristic and commercial availability

Buyer Power

• Large buyers from the food & beverage industry hold a slight edge during negotiations

• There are only few suppliers outside China and these suppliers tend to determine prices

• These suppliers are protected from cheap dumping from China by the respective governments through ADDs

• Imported prices and domestic prices tend to be comparable