Sorbitol

Sorbitol Global Market Outlook:

Global Polyol Supply (2022-23F) 4.69 MMT

Global Sorbitol Supply (2022-23F) 2.66 MMT

Key Market Drivers

A drop of 5 percent in the global corn production, owing to a downside in Argentina and EU corn crop

Chewing gum demand (projected CAGR until 2025: 3.42 percent)

• The global supply of polyols is expected to surge by 5.1 percent over a five-year period ending 2023

• A good corn crop (feedstock) in the US and China and the demand from the end-use segments, such as Vitamin C, toothpaste, and chewing gum industries, amidst the post-pandemic recovery, is expected to provide a fillip to the market. However, the Argentina and EU corn crop is projected to be lower in MY 2022-23

• In case of individual polyols, the global sorbitol production is set to rise at a CAGR of 3.2 percent by 2021-2025 while xylitol and mannitol markets could rise at a CAGR of 5.1 percent and 4.1 percent, respectively, during the same period

• Sorbitol is the most used polyol, due to lower production cost, but the health benefits of xylitol and mannitol could ensure that the latter two offer competition to sorbitol in the coming years

Global Sorbitol: Supply Analysis

• An estimated 2.55 MMT of sorbitol was produced globally in 2021-22, with this figure estimated to rise to 2.659 MMT in 2022-23, with a reported global operating capacity of 83.3 percent.

• China is the main growth driver of the global sorbitol production, resulting in a net output of is expected to surpass 2.659 MMT by 2023.

Porter's Analysis on Sorbitol

Supplier Power

• The feedstock is corn. The corn traders and farmers are the major suppliers

• Polyol manufacturers, like Roquette, Cargill, and others, buy corn directly from grain elevators

• The prices are fixed according to futures like, CBOT or current domestic prices

• The suppliers do not have major power, since prices are fixed by the global supply–demand trend

• Supplier power is moderate, as demand for polyols also impacts negotiation

Barriers to New Entrants

• Consolidation of the global suppliers is a major barrier to entry. Acquisitions and mergers are common in the industry

• In addition, the global suppliers are actively setting up bases in regions, like China

• Despite this, independent companies offer competition to the global suppliers

• Barriers to entry are thus moderate

Intensity of Rivalry

• The polyol supplier industry is consolidated by the global suppliers, who account for 64 percent of the market share

• There is, however, competition from regional suppliers in China and other parts of Asia

• The global suppliers consolidate shares by acquisitions or mergers

• The presence of competition makes intensity of rivalry high

Threat of Substitutes

• There is a threat of substitution for polyols, with substitutes such as stevia, aspartame, and others. Sorbitol itself is a substitute for sugar

• Sorbitol can be substituted by Xylitol, still it is not cost-effective to compete with sorbitol, but there exists growth potential, due to health benefits

• The threat of substitutes is thus moderate

Buyer Power

• The supplier market is fairly consolidated, and there are several competing end-use segments

• Demand for polyols from several end-use sectors could offer bargaining leverage to the supplier

• The presence of several regional suppliers could provide negotiation levers to the buyer

• Buyer power is thus moderate