Potential impact of antidumping on citric acid

Ronny Hacham, of Gadot Biochemical Industries, which is based in Israel and produces citric acid and citrate salts, said that an antidumping order was likely to have a limited effect on Chinese global market share because they have a technological advantage. As a result there may be more shifting of products between territories, rather than reduction in Chinese production, as they would sell less in the protected areas but more in all other regions. And food and beverage companies will end up paying higher prices for the ingredients. Hacham, VP of business development and marketing, told FoodNavigator-USA.com that although imports from China to the US would probably be reduced, they were likely to be replaced in part by imports from other regions or countries such as Brazil. He said: “Anti-dumping orders may provide a protection but it is of a temporary nature. “Longer term we should compare relative strength of Western producers vs Chinese. “Comparing the production technologies of these two possible sources one can identify a significant advantage to the Chinese fermentation step. “It is believed that Chinese fermentation is superior and enables production of cost effective product. This advantage will enable Chinese to further grow their global market share.” Citric acid is a fermentation product, which means it can be made from a number of carbohydrate products including corn and sugar. But external pressures, such as growing competition for crops from the biofuel industry have resulted in raw material shortages and higher prices. Citric acid producers in the US and Europe have experienced declining profitability in the market for their ingredients as the threat of cheaper Chinese production and continuing high raw material costs has grown. Hacham said that Chinese fermentation requires raw materials (carbohydrates) from an early stage in the supply chain so they are using the plant itself, (such as corn, sweet potato or cassava). However, Western fermentation requires purer raw material such as sugar, starch, dextrose or molasses, which are more expensive per carbohydrate unit. GBI's sales are split mainly between the US and EU and Hacham said they would continue at a “comfortable price level” regardless of antidumping orders. US investigation The US Department of Commerce’s International Trade Administration (ITA) said on November 13 that preliminary investigations revealed Chinese producers/exporters had sold citric acid and citrate salts in the US at 119.41 to 156.87 percent below regular market value. And Canadian producers/exporters had sold discounted material at 20.88 percent below market prices. The investigation followed a complaint lodged by Archer Daniels Midland, Cargill and Tate & Lyle Americas. The DoC is due to make its final determinations in April, which may include anti-dumping measures. Companies cited in the investigation include Jungbunzlauer Technology in Canada and Yixing Union Biochemical and Shandong TTCS Biochemistry in China.

Potential impact of antidumping on citric acid

The prospect of antidumping measures for citric acid looms in the US after an investigation found Chinese companies selling products below market value. But one industry player says the duties would have a limited impact.

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