DOC Investigates Possible Dumping of Citric Acid

17 January 2000 00:00  [Source: ICB Americas]

By Feliza Mirasol

The US Department of Commerce has launched a preliminary investigation into the possible dumping of citric acid and sodium citrate into the US market by Chinese producers. The action follows a petition filed by US citric acid manufacturers Archer Daniels Midland Company, Cargill Inc., and Tate & Lyle Citric Acid Inc., a division of A.E. Staley Manufacturing Company.

The petition, filed with DOC and the International Trade Commission on December 15, 1999, is seeking antidumping duties of more than 350 percent on those imports. ADM, Cargill and Tate & Lyle charge that China's exports of citric acid and sodium citrate to the US have tripled since 1996, during which time Chinese prices in the US have declined substantially. As a result, the Chinese share of the US market has grown significantly--more than doubling in the last year alone, according to the companies.

ITC will meet on January 28 to make a preliminary determination of whether there is "a reasonable indication of harm to the domestic industry" from the Chinese material. If ITC rules in favor of the domestic producers, DOC will then calculate dumping margins and set preliminary antidumping duties. After that, the case will return to ITC for a final injury determination.

"The case is still very early in the process," notes Bill Gruber, vice-president and worldwide acidulants sales manager with Cargill. "We're just waiting to get a favorable ruling with the ITC on January 28."

"Chinese producers have targeted the US as a critical market, and this strategy is reflected in extremely aggressive pricing tactics at major US accounts," says Warren Connelly, an international trade attorney with the law firm of Akin, Gump, Strauss, Hauer & Feld LLP. Mr. Connelly is the counsel to the three petitioning companies.

Domestic prices for citric acid average around $1.40 to $1.50 per kilogram (63 cents to 66 cents per pound) compared to European prices of $1.10 to $1.20 per kilogram, estimates Leo Hepner of the UK-based consultancy L. Hepner and Associates. However, prices for Chinese material are estimated at a significantly lower range.

"Chinese producers are selling directly to [customer] companies at prices in the low-50's," says a distributor who estimates Chinese material at around 53 cents per pound. "That triggered the complaints of US producers and distributors. Chinese citric acid prices have never been [as] low [as] the low 50's. The average price should be around the low-60's, [although] some large-volume contract buyers may be paying in the upper-50's at 58 cents or 59 cents per pound."

Demand for citric acid is healthy and the market is balanced, producers say. They estimate a growth rate of 4 to 5 percent per year on a global basis. The consumption of anhydrous citric acid in 1999 is rated at roughly 250,000 metric tons, which is met mainly by domestic producers ADM, Cargill and Tate & Lyle, according to Mr. Hepner.

"The US is an attractive market for overseas producers, due to the higher price levels," he notes.

Jungbunzlauer Inc., the Basel, Switzerland-based producer of citric acid, is expanding its reach into the US market by building a new facility in Port Colborne, Ontario. Last July, the company signed a long-term supply agreement with Canadian-based Casco Inc. under which Jungbunzlauer will make citric acid by processing fermentation feedstock supplied by Casco.

The new plant will be adjacent to Casco's corn wet milling facility. It is scheduled to come on by the end of 2001 or the beginning of 2002.

"We are expanding our capacity as an international supplier," says Stefan Radi, vice-president of marketing at Jungbunzlauer. "For the US market, especially, you have to have a North American plant if you want to be a substantial supplier to multi-national companies in that area. When this plant is completed, we will have two citric acid plants. Our other plant in Pernhofen, Austria, is the largest single plant in the world for citric acid, with a capacity above 300 million pounds per year. The plant we're building in Canada is probably going to increase our worldwide capacity by roughly 30 percent."

Cargill is also bringing on a new citric acid plant that should be up and running by May. The $50 million plant is adjacent to the company's corn wet milling facility in Uberlandia, Brazil (CMR, 11/2/98, pg.7).

ACETYL SALICYLIC ACID--Supreme Resources Inc., Alpharetta, Ga., now offers acetyl salicylic acid USP in powder, crystalline and granular forms for shipment from the company's warehouses across the US. Supreme also offers a complete range of technical and USP grades of salicylic acid in purities from 98.5 percent to 99.5 percent in both crystalline and powder forms. The company has manufacturing plants in North America and Europe.

ASTAXANTHIN--Ashni Naturaceuticals Inc., Salt Lake City, Utah, has signed an exclusive agreement with AstaCarotene AB of Gustavsberg, Sweden, to act as the sole US distributor for AstaCaRx (astaxanthin), a natural human nutritional supplement. AstaCaRx, an antioxidant made from a red micro-algae, could potentially capture a significant share of the North American antioxidant market, which is worth more than $800 million per year, according to the companies.

CITALOPRAM--Forest Laboratories and Warner Lambert Company's Parke-Davis division have received Food and Drug Administration approval for marketing an oral solution of Celexa (citalopram), a selective serotonin reuptake inhibitor for the treatment of depression. The oral solution will be commercially available in the first half of this year.

DOXYCYCLINE--Atrix Laboratories Inc. has received approval in 11 European Union nations to market Atridox (doxycycline) 8.8 percent for use in the Atrigel delivery system, the company's innovative antibiotic therapy for periodontal disease. The company expects to launch the product in many European Union countries starting next June, once individual national marketing authorizations are issued. Approval in the three remaining EU countries is expected by the end of the year.

FLUOXETINE--UK-based Bioglan Pharma PLC has introduced fluoxetine capsules 20 mg, the first generic version of Eli Lilly & Co.'s Prozac to be made available, according to Bioglan. In several European countries, Lilly's patent on Prozac expired on January 8. The company's two key US patents for the drug will expire in 2001 and 2003.

TOLTERODINE--Pharmacia & Upjohn and Monsanto Company's Searle division have signed an agreement under which Searle will co-promote Detrol (tolterodine tartrate tablets) in the US. Detrol is for the treatment of overactive bladders. Under the agreement, Searle will deploy roughly 475 sales representatives to promote the drug in the US, starting on March 1. A combined sales force of nearly 1,800 representatives will promote Detrol to urology, primary care and other physician audiences.

THPS--Albright & Wilson has received approval from the Environmental Protection Agency for the use of Tolcide PS200 and Tolcide PS352C (tetrakishydroxymethyl phosphonium sulfate) biocides in food-contact paper applications.

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