October 16, 2003
Export Prices for China's Vitamin C Continue to Plummet
An eFeedLink Exclusive Report
Latest figures released by China's Shenyang Customs showed that Shenyang exported a total of 8,535 tons of vitamin C between January and August this year, registering a fall of 2.3% from the same period last year. Exports for the month of August fell to its lowest this year, with prices averaging US$5.07/kg, which was a decrease of 50%, 39% and 26% respectively for the three months August, July and June.
In continuance with the rising trend late last year, vitamin C export prices have risen in the beginning of this year. Average monthly prices have increased by as high as 49%, from US$6.74/kg in January to US$10.06/kg in May. From June onwards however, average prices of vitamin C exports have begun to slide. July average prices have fallen to the same level as January's. Meanwhile, August's prices have hit this year's all time low.
Industry experts attributed the falling vitamin C prices chiefly to the global supply-demand disequilibrium, with supply exceeding demand. In the first half of 2002, export prices of vitamin C in global market fell below costs, at close to US$3.00/kg, prompting both domestic small-scale and global large-scale producers to either suspend or cut back on production.
This has subsequently created a shortfall in the global market, causing prices to rise sharply from US$2.98/kg to US$12.00/kg. Some domestic producers, including the four major producers, and foreign producers soon resumed or increased production. Consequently, they created an excess supply in the global market, causing prices to plummet again. Accordingly, some market analysts forecast that prices will continue falling to the levels from where it has start rising.
Industry experts believed that the plummeting prices of vitamin C would give rise to a host of problems for Chinese producers, such as those of foreign exchange earnings and export tax reimbursement. The plummeting prices have cost distributors to suffer great losses. In the hope of keeping their customers, some producers resorted to giving concessions. They offered their regular customers price adjustments, or even issued offer prices only when products arrived.
This has in turn created a wide discrepancy between actual selling prices and the export declaration prices, directly affecting the industry's foreign earnings and export tax reimbursements.
