Citric Acid: Cost of Raw Material Rising, Will It Rise As Well?

After April 5th, the price of corns in the Shandong Area stops falling and starts to rise strongly. As of Friday, the purchasing price of corns for a citric acid manufacturer in Weifang rose to 2970 yuan per metric ton; compared to the same period last week 2840 yuan/MT, there is a rise of 130 yuan/MT. According to the production cost of citric acid, the cost has risen 221 yuan per ton, so the cost of raw materials has increased significantly. Based on this, will the citric acid rise as well? Foodchem made research on several manufacturers, and the result comes out as below.

From the picture above, we could find that 30% of them believe the citric acid will rise as well, the reason being that, first of all, the raw material of corn has risen to the high level before, under the pressure of costs, the upstream companies support the intention of raising the prices, so the future may still exist a subjective pull-up expectation. Next, with the warming of the weather, the downstream beverage, and the food demand will appear an increase. Since the demand is expected to be better, it will boost the market. As a result, in the support of good demands, the price of citric acid will rise by some certain.

Foodchem predicts that considering that the current price of corns has risen back to high price, the cost side of the upstream companies has strong support for the price; then, to solve the inventory of traders in the selling area, the upstream companies are cautious to change the price, so in the short run, it is still expected to be a high price for citric acid. But from the demand side, the downstream food and beverage demands are increasing slowly, the newly signed orders are limited, under such a poor turnover situation, the pull-up is insufficient. In general, the short-run price of citric acid is expected to stabilize and consolidate.