Anticipated Global Citric Acid Price Surge in Q1 2024: Confluence of Factors at Play

As February unfolds, the global Citric Acid market braces itself for a significant surge in prices, propelled by a myriad of factors poised to impact the industry in the remaining two months of the first quarter of 2024. Across the Asia-Pacific (APAC), North American, and European regions, a convergence of events, ranging from plant shutdowns to geopolitical tensions, are expected to drive Citric Acid prices upwards, exerting pressure on supply chains and market dynamics.

In the APAC region, the escalation of Citric Acid prices is primarily attributed to the shutdowns of mojo plants in prominent exporting provinces. These Citric Acid plant shutdowns have rendered manufacturing units nonoperational as they undergo maintenance, resulting in a reduction in supply. Furthermore, festivities such as the Chinese Lunar New Year in mid-February have exacerbated the situation, leading to additional plant closures and disruptions in production activities of Citric Acid. The resulting supply constraints have contributed to the upward trajectory of prices in the region.

As per ChemAnalyst experts there have been certain records of plant shutdown in the recent weeks mentioned below:

Moreover, ongoing geopolitical tensions in the Red Sea have exacerbated port congestion, container shortages, and delayed shipments, thereby prolonging transit times and impeding the smooth flow of goods, including Citric Acid. The resultant supply chain disruptions have exerted further upward pressure on Citric Acid prices, accentuating the challenges faced by market participants.

Adding to the price surge is the escalation in raw material costs, particularly corn starch, a key component in Citric Acid production. In late January, a resurgence in downstream demand for starch, coupled with low inventory levels among corn starch enterprises, led to a departure from the typical price trend, with manufacturers incrementally raising factory prices to offset escalating input costs. This tightening of market supply has bolstered the stability and resilience of domestic corn starch prices, further exacerbating the cost pressures faced by Citric Acid producers.

Similarly, in the North American and European regions, Citric Acid prices have witnessed a substantial uptick, driven by a combination of factors. In Europe, currency fluctuations, characterized by the depreciation of the Euro against the USD by 2.12% in January 2024, followed by a continued decline of 0.95% through February, have amplified export prices. Additionally, the surge in raw material costs, particularly corn, has provided further impetus to the upward price trajectory, underscoring the multifaceted nature of the challenges confronting the industry.

Globally, disruptions in the Red Sea and the Suez Canal due to geopolitical disturbances have reverberated across various industries, including the Citric Acid market. Heightened freight prices and extended transit times around Africa have resulted in delays in product deliveries, highlighting the interconnectedness of global supply chains and the susceptibility of commodity markets to geopolitical events.

The anticipated surge in Citric Acid prices in the remaining months of Q1 2024 underscores the complex interplay of factors shaping the global market landscape. From plant shutdowns and supply chain disruptions to escalating raw material costs and geopolitical tensions, Citric Acid market participants are navigating an environment fraught with challenges. As stakeholders brace for the impact of these dynamics, proactive measures and strategic initiatives will be imperative to mitigate risks and ensure resilience in the face of evolving market conditions.