DSM to Close Citric Acid Plant in China

WUXI, China—DSM will close its Wuxi, China-based citric acid plant after being told by the Chinese government its site is required for urban development. The closure is slated for early 2009 and the Dutch company will be compensated by the Chinese government with a social plan put in place to assist affected employees. DSM said it would not relocate to another Chinese site, citing “structural overcapacity” in the global market. It will now only manufacture citric acid from its Tienen, Belgium facility that has produced citric acid since 1929. The citric acid market has been characterized by reduced margins for western suppliers that have struggled to compete with more price-cutting Chinese input. “The market for citric acid has been under substantial pressure for several years, mainly due to structural overcapacity in China,” DSM said. Other companies, including Archer Daniels Midland (ADM) and Tate & Lyle have closed their facilities, citing margin pressure that has not been eased by price increases as input costs have continued to surge. Read more at NutraIngredients.comSource: NutraIngredients.com: "DSM Shuts Chinese Citric Acid Plant"