Chinese sweetener prices rising at last after spate of plant closures

By RJ Whitehead

- Last updated on GMT

© iStock
© iStock

Related tags: Sucralose

After a year-long race to the bottom by Chinese manufacturers, acesulfame-K sweetener prices have grown steadily since May, with analysts expecting further increases then stabilisation as suppliers, including segment giant Anhui Jinhe, hold back on production.

The ex-works price for ace-K, a calorie-free sugar substitute, hit US$7,163 per tonne in October—up almost 30% in 12 months during a period that saw the commodity’s lowest prices in two years.

The [reduced] supply of ace-K due to production suspension from major ace-K manufacturers in China supported the price rise from April-August​,” said Yang Yimin, editor of Sweeteners China News, which is produced by analyst CCM​.

Ace-K_large
Ace-K prices by year

China’s ace-K market has shown sizeable fluctuations since February 2015, when key manufacturer Suzhou Hope, with a capacity of 10,000 tonnes per annum filed for bankruptcy. Though reorganisation allowed the company to resume production in late 2015, its shipments have been small.

Suzhou Hope was not alone in disrupting the market with raw material suppliers also suspending production. In April, Jiangsu Tiancheng, which manufacturers 20% of China’s diketene (DK), suspended production, while in July, Wanglong, with a DK production capacity of 70,000 tonnes, ended its supply. Both companies are yet to resume manufacturing the ingredient.

According to CCM’s research, the combined DK production capacity of these companies accounts for over 70% of China’s needs, leading to tight DK supply and supporting the rising price of ace-K.

Seeing the suspension of ace-K-related producers, the oligarch ace-K manufacturer, Anhui Jinhe, also raised the quotation in order to make more profits​,” said Yang.

Chinese manufacturers feature heavily in word supply, with Suzhou Hope, Beijing Vitasweet joining leader Anhui Jinhe as significant manufacturers, followed by Germany’s Nutrinova.

At over four times the size of Nutrinova, Anhui Jinhe has a significant say on prices due to its “oligarch​” status. As the world’s biggest manufacturer, Anhui Jinhe delivered over 7,000 tonnes in the first three quarters of 2016, accounting for some 40% of orders.

Yet as its competitor Suzhou Hope has not yet withdrawn from the business, Anhui Jinhe is not expected to raise its prices too fast, CCM says, leading to some stability in the short-run, as recent ace-K prices have shown. 

In April, the leader lifted its ace-K prices by US$298.4 per tonne to capitalise on the rising price trend.

Current global ace-K demand is in the region of 15,000-18,000 tonnes per year, just met by production capacity of around 20,000 tonnes per year.

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