Impact on China's F&B Sector due to Low Benzoic Acid Values Backed by Weaker Toluene Market

The massive Food and Beverage (F&B) sector is a major contributor to China's economy. China's largest consumer market for F&B items since 2011, surpassing the United States. China's food and beverage market are predicted to expand in the future owing to several variables, including the country's bourgeois population and household incomes rising quickly, distribution of food and beverages having better infrastructure and e-commerce sales rising. 

Due to the revival of COVID-19 in the major industrial hubs, which resulted in an irrational zero-tolerance policy and severe lockdowns, the Chinese markets struggled with continuous on and off lockdowns. Everyone can relate anecdotes of supply chain problems that influenced the world economy, from the epidemic's beginning to the turmoil brought on by the war in Ukraine. As the world's largest producer of food additives, China's food and beverage industry have been particularly heavily struck by the COVID-19 pandemic. Almost all restaurants nationwide saw a significant decline in revenue since the outbreak. The Chinese economy hasn't recovered yet, but the better-than-expected numbers indicate that efforts to relax the restrictions support companies in restarting output and giving the slowdown a floor.

In food and beverages, particularly carbonated ones, Benzoic Acid (BA) is a frequently used antimicrobial preservative since it has the strongest antibacterial action. The growth of yeasts and bacteria, which is a key contributor to food spoiling, is inhibited by Benzoic Acid. The US Food and Drug Administration maintains a restriction of BA inclusion in common categories of food at 1000 mg kg1. In contrast, Chinese regulation limits the addition of BA to carbonated beverages to 200 mg kg1. Because of its many benefits, BA is frequently used in food and beverages as an antibacterial and antifungal preservative. 

Since China is one of the top producers of Benzoic Acid, followed by the Netherlands, the cost of Benzoic Acid in the Chinese market has been steadily declining along with the cost of feeding Toluene. According to market experts, the supply of Toluene is anticipated to become even more constrained going forward due to fluctuating Crude prices. Another element supporting this price trajectory is the low demand from domestic merchants, who have enough inventory on hand to meet downstream demand as a whole. ChemAnalyst forecasts that prices will drop in the domestic market through the end of August but that there will be sufficient stock on their shelves to meet the demand for benzoic acid as an additive in industries.