In Q1 2016, the market price of vitamin C (VC) in China remained low and
stable. In Feb., the domestic market price of 99% feed grade VC powder was
USD3,662 /t (RMB24,000 t/a), similar to that in Jan., according to CCM's price
monitoring. In early March, the quotation for VC from major domestic producers,
such as CSPC Pharmaceutical Group Co., Ltd. (CSPC Pharmaceutical), Northeast
Pharmaceutical Co., Ltd. (Northeast Pharmaceutical), and Shandong Tianli
Pharmaceutical Co., Ltd. (Tianli Pharmaceutical), was between USD3,360/t
(RMB22,000/t)-USD3,520/t (RMB23,000/t).
Market price of 99% feed grade vitamin C powder in China, Jan. 2014-Feb. 2016
Source: CCM
Currently the price of VC has stopped decreasing, because the stricter
environmental protection policy has influenced the operating rate. However, the
price is unlikely to increase, because of the excess capacity.
Domestic production:
Because of the depressed market price of VC, North China Pharmaceutical Co.,
Ltd. (North China Pharmaceutical), a major VC manufacturer in China, suspended
the production of VC. Besides, the company is relocating its VC factory,
because of the constraint from local environmental protection policy.
It may
not resume production within this year. Even so, the excess capacity of VC in
China can't be reduced effectively. It is noted that Shandong Luwei
Pharmaceutical Co., Ltd. (Luwei Pharmaceutical) and Tianli Pharmaceutical are
rapidly expanding the production of VC.
In 2015, the total domestic capacity of VC was estimated to be above 180,000
t/a and the output slightly increased to around 153,000 tonnes, of which only
30,000 tonnes were consumed in China. Actually, CSPC Pharmaceutical, Luwei
Pharmaceutical, and Tianli Pharmaceutical accounted for more than 60% of the
domestic VC market share.
Export:
In 2015, China's export volume of VC decreased by 1.42% YoY to 123,710.522
tonnes, with its export value fell by 5.88% YoY to USD434,220,913. Obviously,
the export price has witnessed a decline, which increased the pressure on
domestic VC producers who are already on the brink of loss.
In Jan., 2016, China's export volume and export value of VC both fell MoM,
resulting from the weak demand from overseas market.
China's exports of vitamin C, Jan. 2014-Jan. 2016
Source: China Customs
Raw material:
In 2015, the rising price of raw materials has further squeezed the
profitability of VC. In China, VC is mainly produced by two-step fermentation
method, which with sorbitol as starting material.
Last year, the average domestic market price of 70% sorbitol was USD589/t
(RMB3,759/t), a YoY increase of 5.6%, according to CCM's price
monitoring.
However, since H2 2015, domestic VC producers have reversed the poor situation
of poor profitability, because of the continuous decline in prices of corn and
sorbitol.
Ex-works price of 70% syrup sorbitol in China, Jan. 2014-Feb. 2016
Source: CCM
Forecast:
In the short term, given the overcapacity and production expansion in domestic
VC industry, it is unlikely for the price of VC to increase substantially.
In the long run, as the competition between producers become more intense, it
may cause a decline in the price of VC. This may force some producers, who are
on the brink of loss, to stop the production of VC.
Besides, under the pressure of stricter environmental protection policy, some
VC enterprises may greatly reduce their production or even withdraw from the VC
market. By then, the domestic VC industry will get rid of overcapacity and
embrace a significant rise in the price of VC products.
This article comes from Corn Products China News 1603, CCM
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Tag: vitamin VC