June 3, 2010
China may restrict investment in vitamin C sector
China is revising its Catalogue for the Guidance of Industrial Restructuring and this may set access limits regarding investment in the vitamin C industry, which will curb repeated constructions and blind development.
The vitamin C industry is one of the few industries in China that have not been affected in the global financial crisis. Since vitamin C prices remained very high and material prices were relatively low in 2009, a great deal of the production capacity was expanded in pursuit of lucrative investments in that year.
According to a survey jointly conducted by the National Development and Reform Commission (NDRC) and the Ministry of Industry and Information Technology (MIIT), the total annual production capacity of the existing vitamin C facilities in China has exceeded 80,000 tonnes. The figure may reach 180,000 tonnes by the end of 2010, and further rise to 200,000 tonnes by 2012.
As the vitamin C's supply-demand balance has been broken, its export price has been declining sharply.
Statistics show that China exported 29,200 tonnes of Vitamin C valued at US$254 million in the first quarter of 2010, up 35.95% and 15.06% respectively on-year. However, the unit export price of Vitamin C during this period dropped 15.37 % on-year to US$8.72 per kg.
Analysts believe that the government move can further raise the industrial concentration and vitamin C prices.
At present, the global consumption of vitamin C totals around 120,000 tonnes. Beside DSM, the world vitamin C production capacity is highly concentrated in five Chinese pharmaceutical groups, including the Northeast General Pharmaceutical Factory (NEGPF). The high industrial concentration can further enhance Chinese enterprises' pricing power.
