Lactic Acid Prices Soar Across the Globe Amidst Rising Demand and Higher Feedstock Costs

The worldwide Lactic Acid market, a crucial amino acid extensively used in the food, pharmaceutical, and industrial sectors, is experiencing a significant price increase. This surge is driven by a combination of factors, including a growing demand for Lactic Acid, sharp rises in raw materials costs, and supply chain challenges. These developments underscore the need for businesses to devise strategic plans.

Dow Chemical recently issued an official statement stating that they plan to introduce a price revision for all surfactant grades and packaging options in the North American market, starting from September 1st 2023. This price adjustment will lead to a maximum increase of $0.1 per pound, including Lactic Acid costs. It's worth noting that since August 1st, many chemical products, including Lactic Acid, have witnessed price increases. The prevailing sentiment in the market remains positive, mainly due to the combination of limited supply and strong demand.

Another crucial factor contributing to the rise in Lactic Acid prices is the escalating cost of corn, a primary raw material used in Lactic Acid production. Recent years have seen a series of events that have driven corn starch prices to new highs. Climate-related disruptions, such as extreme weather events and droughts, have negatively affected corn harvests in major producing regions. This reduced corn supply has tightened the market and led to price hikes for Lactic Acid. Additionally, the increased diversion of corn toward ethanol production, driven by environmental and regulatory factors, has further reduced the availability of corn starch for industrial purposes.

In August, the Chinese corn market experienced a price surge due to a combination of factors, including typhoon weather, elevated temperatures, increased rainfall, reduced corn yield expectations, and a reluctance among trade entities to sell their stockpiles. This resulted in price increases at ports as they sought to replenish their inventories. Furthermore, prices of various downstream products derived from corn's deep processing continued to rise, leading to improved profit margins in the corn deep processing sector. As we entered September, domestic corn market prices managed to maintain their elevated levels, indicating overall stability in raw material costs. This stability allowed profit margins in the corn deep processing industry to remain steady, with consistent demand for starch and other downstream products.

The actions of major exporting countries significantly influenced the trajectory of Lactic Acid prices globally in September. China, the largest global producer and exporter of Lactic Acid, faced its own set of challenges. Environmental regulations and the government's commitment to reducing pollution led to production limitations and supply disruptions in some regions, causing uncertainty in the market. China's domestic demand for Lactic Acid also continued to rise, leaving fewer quantities available for export. Consequently, international buyers had to rely on their own stockpiles or explore alternative sources, further adding to the price pressure.

Furthermore, fluctuations in currency values and exchange rates played a significant role in the increase in Lactic Acid prices, as international trade is inherently sensitive to shifts in the relative values of currencies. In summary, the global Lactic Acid market is currently facing unprecedented challenges, with increasing demand, rising corn starch costs, and supply disruptions in major exporting countries contributing to the soaring prices.