Surging Production Costs Push Chinese Tomato Paste Prices Up by 118%

Rising production costs have pushed Chinese tomato paste export prices to USD 980/ton so far this month, a significant increase of 118% compared to last year. Tomato paste prices have been on the rise in China in recent years as the country grapples with the effects of COVID-19.

The main factors behind this price surge are elevated fresh tomato prices and the increasing cost of tomato processing. The price of fresh tomatoes has gone up considerably in China as farmers react to the rising cost of tomato seeds and fertilizer. According to Tridge wholesale price data, in Shandong and Wuzhong provinces, tomato prices have risen by 41% and 50%, respectively. Wholesale prices in Guangxi province witnessed the most significant growth, rising from USD 0.21/kg to USD 0.60/kg, a 191% YoY increase. With such elevated tomato prices coupled with high energy and labor costs, tomato processing in China has become significantly more expensive.

Tomato prices in china have traditionally been lower compared to prices in other producer countries (Italy, the US, Spain, Portugal, and Chile). The competitiveness of Chinese prices has pushed the US and Italy out of key markets such as the Middle East and Africa. However, China’s price advantage on the back of the recent rising cost of fresh tomatoes and processing cost is waning. In April 2021, Chinese tomato paste was USD 819/ton while the Spanish product was USD 1191/ton, that price differential has shrunk by 52% over the past year. During the same period, the price gap between Italian tomato paste and Chinese tomato paste has contracted to 14%, while the difference between the Chinese and Portuguese products has gone down by 53%. This trend clearly shows that China is losing its competitive advantage, and a continued surge in prices could result in a loss of some of its market share.

Chinese tomato paste exports have also been impacted by the recent price trend, falling from 68,392 mt in January to 55,474 mt in February, a MoM decline of about 19%. Compared to the previous marketing year, exports for MY 2021-22 are down by 17%.

Tridge’s view is that Chinese tomato paste prices could reach USD 1050/ton by the end of May. If prices should reach that level they would be the highest in over three years. This scenario looks likely as production costs look to remain elevated throughout the year. Also, due to the Russia-Ukraine conflict, energy costs are set to remain high while the effects of COVID-19 continue to impact prices and tomato production in the country.