Is the sucralose shortage over?

Is the sucralose shortage over?

Price and supply should be stable ... unless the EU bans aspartame in May.

Phytochem International Inc., an international distributor of standardized botanical extracts in the supplement industry , announced today that the sucralose shortage is over

Manufacturer capacity
Last May, Phytochem announced that sucralose was in shortage. Today the shortage is over. The demand for sucralose worldwide continues to rise. Sucralose is seen as a safer alternative to aspartame which will be re-evaluated by EEU in May 2013.

It has taken time to upgrade facilities and relocate factories, and this industry-wide infrastructure upgrade appears to be over. Many Manufacturers are prepared for a 30 percent increase in sucralose demand this year. This infrastructure upgrade has the industry in compliance with Chinese Government Ecological regulations, so this is not expected to be a problem this year.

Pricing outlook
Tate & Lyle, the number-one sucralose producer that is priced 30 to 40 percent higher than the generic Chinese manufacturers announced "modest progress" for the full-year and that while sucralose volume growth had now returned to normal.”

Phytochem predicts that industry growth will be through Chinese manufacturers who are significantly undercutting Tate & Lyle. Currently, Chinese manufacturers are selling at a slim margin and there isn’t much room for downward movement. It appears that in the near term prices are stable. Enough capacity remains to fill the usual summertime demand spike.

Sucralose is manufactured from sugar and the International Sugar Organization expects supplies to exceed demand by 6.2 million metric tons in the season ending Sept. 30 so there isn’t upward pressure based on raw material. On the other hand, inflationary pressures, a trending rise of the yuan versus dollar currency exchange and rising labor costs could weigh in a little on the other end.

The outlook for sucralose demand is a rising and manufacturers now have the capacity to deal with this. Price and supply should be fairly stable at least in the near term. There is one wild card. If the EEU decides to ban aspartame in May, then this could destabilize the market.


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