October 6, 2004

 

 

Global Vitamin C Prices on the Decline; Two-Step Fermentation Production Technology An Edge for Chinese Producers

 

An eFeedLink Exclusive Report
 

I   Global Vitamin C Prices on the Decline
 

The market value of current global vitamin C markets is about US$600 million, with total consumption demand at 60,000 to 80,000 metric tons. 

 

About 50% of the global vitamin C production output is for medicinal and related usage, while food/beverage additives take up 40% and animal/pet feed additives account for the remaining 10%.

  

The growth rate for global vitamin C markets had been at 3%-4% in past several years. This has dropped to 2%-3% in the last two years. Consumption in Asia Pacific has registered significant growth. Global vitamin C prices are currently on the decline, and have reached a new low of US$4.80/kg in late September.

  

About one and a half years ago, the temporary shutdown in production of vitamin C by Roche has caused a shortfall in market supply and consequently prices rose to US$11.00-12.00/kg. Many Chinese vitamin C producers grabbed the opportunity to expand their production rapidly at that time in anticipation of continual profitability. However, Roche resumed its production shortly after. The increased market supply had then driven vitamin C prices significant lower.

   

One of the reasons, which caused global vitamin C prices to hover at low levels, can be attributed to the massive influx of low-priced China produced vitamin C products into the European and US markets.  This market situation is unlikely to change in the short to medium term. 

 

In the past 10 years, vitamin C imports into the US have been growing rapidly.  The US market made up 85% of the global market demand, with its imports registering a sharp increase of more than 7,000 metric tons from 1993 to 15,000 metric tons in 2000.      

 

II   Low Cost Two-Step Fermentation Production Technology an Edge for Chinese Vitamin C Exporters 
 

China's vitamin C production capacity accounts for 68% of the global total production capacity, with its actual production output constituting about 50% of the global production.  

   

Chinese vitamin C producers adopt a two-step fermentation production technology, with production rate as high as 60%, to produce vitamin C products which helps to keep their production cost low at about US$3.0/kg.  This is unlike its European and US counterparts that employ synthesis production technology with relatively low production rate. The two-step fermentation production technology has given China a leading edge in the world. 

 

In view of the intense market competition, some foreign producers are actively developing new production technology. For example, Eastman & Genencor are currently working together to develop a catalytic method of producing vitamin C.  They are trying to produce vitamin C from corn using a multi-stages enzymatic procedure.  Other big international companies are also trying ways to reduce their production cost. 

       

Another big producer BASF is reportedly expanding its vitamin C production actively. It reportedly has consolidated its production technology and started producing crystallized vitamin C in Denmark and Japan.  In recent period, the company was in negotiation with China's Northeast General Pharmaceutical Factocry on setting up a joint-venture production facility. 

 

DSM has recently bought over Roche's vitamin business, anticipating good profitability through large-scale production.  

 

Another major player ADM, who has acquired the vitamin C business in 1990 from Aventis, has originally planned to begin production in 2001.  However, the plan was delayed indefinitely due to the low price levels and poor market outlook.