DSM Nutritional Products has announced a 15 per cent price increase for all its citric acid products, reflecting industry-wide concern about increasing energy, raw material and freight costs.
In addition, European suppliers are currently facing intense price competition from Asia. Chinese occupies about 30 to 40 per cent of the citric acid market, with ADM, DSM Nutritional Products, Tate & Lyle, Jungbunzlauer and Cargill dominating the rest.
The company said that the increase is effective immediately for all newly contracted business.
Citric acid dominates the category of organic acids, with production estimated at 1.4 million tons in 2004. On the back of numerous applications for the ingredient, consumption is expected to grow strongly until 2009, with the market value exceeding $2 billion (€1.53bn).
However despite bright growth prospects for citric acid due to its numerous applications in food and beverages, suppliers are facing tough competition from abroad. Chinese companies are pushing ever more competitive prices onto the market place, leading some European producers to complain of price dumping.
Effects are now being felt. ADM for example recently announced the closure of its Irish citric acid plant in Ringaskiddy, with the loss of some 150 jobs.
Citric acid is the most widely used food acid in today's food and beverage industries, providing a sharp, yet clean and refreshing, tart taste. In fact, 70 per cent of citric acid production is targeted at the food and carbonated beverage sectors.
Though it occurs naturally in fruits, most citric acid is produced in refineries. This is accomplished by fermenting cane sugar, molasses, and dextrose by use of the fungus Aspergillus niger.