FMC raises gum prices on spiralling energy costs

By staff reporter

- Last updated on GMT

Related tags: Cost, Carrageenan, Petroleum

Major food grade carrageenan supplier FMC BioPolymer passes
spiralling energy prices onto the market, announcing a price hike
for its pharmaceutical and food brand products by 5 to 10 per cent.

The firm, that supplies microcrystalline cellulose, carrageenan and alginates to food makers, said the price rises are effective from 15 October.

"Sustained cost increases in energy, raw materials, and freight are the factors driving this action.

Energy-related costs have increased significantly over the past three years, impacting plant operations and shipping,"​ the firm said in a statement this week.

This is just the latest price hike affecting FMC's products; in November last year the Philadelphia-based firm pushed up prices for its food grade carrageenan by up to 8 per cent.

Industries from steel to food continue to be hit by soaring energy costs. In the US natural gas prices reached record highs last week; firms have faced a sevenfold increase in US gas prices over the past four years.

Prices for crude oil, both a key raw material and energy supplier for the food industry, recently topped a record $70 a barrel.

Further, prices were exacerbated by Hurricane Katrina that last month ripped through the Gulf of Mexico, an important area for the extraction of oil, propelling fears of shortages.

Although since then they have fallen: this week prices for US benchmark November-dated contracts were about $64 the barrel.

The Center for Global Energy Studies expects oil prices to remain above $50 a barrel throughout 2006.

But FMC is not only feeling the pinch from energy costs.

Carrageenan, a gum used for texture and viscosity in food products, is extracted from seaweed, largely sourced from the Philippines and Indonesia.

But in recent months a strong pull in global carrageenan stocks, impacted by an increase in demand from China's booming processed food industry, has led to price spikes.

"Costs of critical raw materials, including seaweed and pulp, have also risen dramatically during the same period,"​ said FMC BioPolymer this week.

In the EU the food market has grown to use both refined - known as E407 on food labels- and semi-refined (E407a) carrageenans. In the US, there is no distinction for the food labels - the hydrocolloid is simply known as carrageenen.

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