Southeast Asian sorbitol producers face increasing cost pressure

23 May 2013 10:53  [Source: ICIS news]

SINGAPORE (ICIS)--Southeast Asian sorbitol producers are grappling with increasing cost pressure because of rising feedstock tapioca starch prices.

Export prices of feedstock tapioca starch listed by the Thai Tapioca Starch Association (TTSA) were at $515/tonne (€402/tonne) FOB (free on board) Bangkok for the week ended 21 May, representing an 8% increase since April.

The listed export price includes the cost of 50kg polypropylene (PP)/polyethylene (PE) packaging bags.

An Indonesian sorbitol producer said the increase in tapioca prices sourced out of Thailand has resulted in squeezed margins, adding that they may have to reduce sales volume if they are unable to pass on the cost increase to customers.

The producer is currently offering cargoes at $670-680/tonne FOB Indonesia.

However, market observers noted that any price hikes would be difficult to materialise given stiff competition from other Asian producers that are not reliant on tapioca.

For instance, Indian suppliers that use maize as feedstock are currently offering sorbitol export cargoes at around $600/tonne FOB India.

Sorbitol is an artificial sweetener with applications in food products and pharmaceuticals.

($1 = €0.78)

By: Lanny Chandra

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