July 9, 2004

Increase in Supply of Vitamin C from China Seen to Keep Global Vitamin C Prices at Low Levels in 2nd Half 2004

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China's vitamin C export revenue for the year 2003 has risen by 125.91% from year 2002 to US$327 million, surpassing the US$200 million and US$300 million marks consecutively in a year for the first time. The export revenue accounted for as much as 8.8% of total revenue of China's western pharmaceutical raw materials. 

In 2003, China exported a total of 53,600 tons of vitamin C, registering a significant year-on-year increase of 24.33%. Average export price per unit rose sharply by 81.55% from the previous year to US$6.10/kg.

Attracted by rising profitability, two of China's vitamin C major producers -- Shijiangzhuang Pharmaceutical Group and Northeast General Pharmaceutical Factory -- have begun to expand their production capacity.

Conflict in shareholding rights reportedly prevented Jiangsu Jiangshan Pharmaceutical Co, Ltd from embarking on production expansion, while North China Pharmaceutical Group Corp has so far no plans for further expansion.

Shijiangzhuang Pharmaceutical Group and Northeast General Pharmaceutical Factory accounted for much of the increase in production capacity in China, each with an additional capacity of 7,000 tons this year, pushing up the overall national production capacity to 74,000 tons.

At the global level, DSM 's (previously Roche) plants in the US and Scotland have resumed production in May 2004. As such, the global production capacity of vitamin C is expected to hit 150,000 tons in 2004. With a surplus in supply, vitamin C prices are seen would stay at the low levels globally in the second half of 2004.