Citric acid

06 March 2000 00:00 [Source: ICB]

Five major Western players and China dominate the industry, which is in oversupply, although in Europe the situation is much tighter

Supply/demand

The global capacity of citric acid for 1999 is estimated by SRI Consulting at 879 000 tonne/year. According to industry sources, global citric acid consumption is estimated to be 80% of worldwide capacity. Based on 1998 figures, citric acid consumption in western Europe is around 247 000 tonne/year, with production at 256 000 tonne/year. In the US, consumption and production were 232 000 tonne/year and 209 000 tonne/year respectively. SRI Consulting estimates that China's capacity is 190 000 tonne/year, resulting in a 20% market share worldwide.

Consolidation of the industry has left the citric acid market in the hands of five large producers: Jungbunzlauer, Archer Daniels Midland (ADM), Cargill, Tate & Lyle and Hoffmann-La Roche. SRI Consulting estimates that these five producers together with China have 85% of the global market share of citric acid. Tate & Lyle has increased its worldwide citric acid market share to 17% as a result of the acquisition of the citric acid unit Haarmann & Reimer, a Bayer subsidiary, in 1998. Included in the deal were three citric acid plants in Latin America and the Dayton, Ohio, US, plant which has a capacity of 60 000 tonne/year.

EUROPEAN PRICES FOR CITRIC ACID, 1995-99

Year	Average price/kg
1995	$1.68-1.82
1996	$1.13-1.53
1997	$1.04-1.39
1998	$1.02-1.42
1999	$1.06-1.17

Source: SRI Consulting - Zurich

Uses

Citric acid (§-hydroxy-tricarboxylic acid) is odourless, has an acid taste and is efflorescent in dry air. It comes in a variety of commercial forms including 100% anhydrous and mono-hydrate citric acid.

Due to the versatile molecular structure, applications range from sequestering agent, to buffer, organic intermediate, plasticiser and detergent builder. Citric acid acts as an acidulant, flavourant and preservative in foods and beverages and in pharmaceutical and cosmetic applications. In detergents, citric acid in the form of sodium citrate is used as a builder which increases the cleaning function. Pharmaceutical applications for citric acid include use as a flavouring agent, and in astringent lotions where a mild acid is required. In Europe last year, 65% of citric acid consumption was in food and beverages and 20% in household detergents.

Technology

Deep fermentation is the main commercial route to manufacture citric acid. The fermentation medium which consists of dextrose or sucrose is aerated continuously by bubbling air through it. Citric acid can also be produced from corn sugar using submerged culture fermentation. Other processes include liquid surface fermentation where a mixture based on beet or cane molasses is fermented in shallow aluminium pans. Solid state fermentation uses moist wheat bran to produce citric acid.

Health & safety

Citric acid is considered harmless and non-toxic and recognised as safe for multi-purpose food uses. However, dust needs to be controlled as it can cause respiratory irritation.

Prices

Citric acid prices in Europe have fallen over the past few years. In 1995, prices for citric acid ranged from $1.68-1.82/kg with the low end of the range referring to monohydrate grade and the higher end the anhydrous grade. European prices for citric acid in 1999 range from $1.06-1.17/kg.

US domestic prices vary from $1.40/kg for citric acid anhydrous and $1.50/kg for trihydrate citric acid.

Industry sources say that both US and European prices for citric acid will continue to be squeezed by cheap Chinese exports flooding both these markets.

MAJOR GLOBAL CITRIC ACID PRODUCERS, '000 TONNE/YEAR

Plant capacity (100% anhydrous)

Company	Location	Capacity
Jungbunzlauer	Perhofen,	136
	Austria
Archer Daniels	Southport,	98
Midland	NC, US
	Ringaskiddy,	45
	Co Cork, Ireland
Hoffmann-La Roche	Tienen,	90
	Belgium
Cargill	Eddyville, Iowa, US	72.6
Tate & Lyle	Dayton,	60
	Ohio, US

Worldwide capacity (100% anhydrous)

Producer	Capacity	Mkt share, %
People's Republic	190	20
of China
Tate & Lyle	165	17
Archer Daniels	143	15
Midland
Jungbunzlauer	136	14
Cargill	98	10
Hoffmann-La Roche	90	9
(Citrique Belge plant)

Source: SRI Consulting - Zurich

Outlook

Industry sources estimate a 4-6%/year growth rate for citric acid but Leo Hepner of Leo Hepner & Associates believes that this figure is overly optimistic and gives a 4-5%/year growth rate for citric acid worldwide. For Europe, the growth rate is estimated at 2.5%/year with the US slightly more dynamic at 3%/year. Citric acid prices for Western producers will continue to come under pressure from imports of cheaper Chinese material and from the current overcapacity in the citric acid market.

Jungbunzlauer, the Switzerland-based citric acid producer, is expanding its reach into the north American market by building a new facility in Port Colborne, Ontario, Canada. Last July, the company signed a long-term supply agreement with Canadian-based Casco under which Jungbunzlauer will make citric acid by processing fermentation feedstock supplied by Casco. It is scheduled to come onstream by the end of 2001 or the beginning of 2002. Cargill is also bringing on a new $50m citric acid plant in Brazil that should go onstream by May 2000.

Roche Zhongya (Wuxi), a joint venture between Swiss chemical company Roche and China's Wuxi Zhongya Chemical, expects to bring its 40 000 tonne/year citric acid plant in Wuxi, southeastern China, onstream by the end of 2000. Industry sources say the bulk of the new $29.5m facility's output will be exported worldwide.

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