May 2024 Sees Sharp Surge in Global Malic Acid Prices

In May 2024, the global market for Malic Acid experienced a significant surge in prices, impacting both exporting and importing nations. Malic Acid, renowned for its tart taste, acidity, and preservative properties, finds extensive applications across various industries, including food and beverage, pharmaceuticals, cosmetics, personal care, chemical, and agriculture.

The surge in Malic Acid prices was particularly pronounced in the Chinese market, driven by a convergence of factors. A pivotal driver was the appreciation of the Chinese yuan against the US dollar, which facilitated more competitive pricing for Chinese exporters in the global market. This appreciation created an attractive arbitrage window, incentivizing Chinese Malic Acid suppliers to increase exports. Moreover, geopolitical tensions contributed to a scarcity of cargoes, disrupting trade flows and adversely impacting the Chinese market. Increased inquiries of Malic Acid from domestic and international markets further elevated prices, buoyed by robust demand.

As the second quarter progressed, several manufacturing plants, including those producing Malic Acid, scheduled maintenance shutdowns, leading to a supply crunch exacerbated by insufficient inventories. In China's domestic market, the prices of raw material maleic anhydride surged due to increasing costs of its feedstock benzene, driven by strengthening international crude oil prices. This price hike was fueled by rising demand and improvements in terminal market demand. China's official Manufacturing Purchasing Managers' Index (PMI) for May 2024 contracted to 49.5, down from 50.4 in April, signaling a shift from expansion to contraction. This downturn raised concerns about China's ability to achieve its projected economic growth target for 2024, estimated around 5%. The overall supply situation of Malic Acid is anticipated to remain constrained initially, with reports of critical container shortages in northern China. These challenges are exacerbated by a robust market and reduced vessel capacity due to the ongoing Red Sea/Gulf of Aden crisis, leading to significant strain on ships and containers.

Similarly in the United States, the recent surge in Malic Acid prices can be attributed primarily to price increases in major exporting nations like China and global supply chain disruptions. As a significant importer of Malic Acid heavily reliant on Chinese exports, the US market was directly impacted by rising prices. Supply chain bottlenecks, including the drought affecting the Panama Canal and reduced vessel traffic, constrained capacity and increased transportation costs impacted Malic Acid prices. Soaring freight rates, container shortages, and longer lead times further compounded challenges for importers.

The implementation of a General Rate Increase (GRI) by shipping carriers in May further exacerbated the situation, leading to a rise in shipping costs. The surge in Malic Acid prices in May 2024 underscored the complex interplay of factors influencing global markets, from currency fluctuations and geopolitical tensions to supply chain disruptions and transportation challenges.