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

About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.

For more information about CCM, please visit www.cnchemicals.com or get in touch with us directly by emailing econtact@cnchemicals.com or calling +86-20-37616606.

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