December 1, 2003

China's Output of Vitamin C Would Reach Over 80,000 MT; Far Exceed Market Demand

An eFeedLink Exclusive Report

The market for vitamin C has always been competitive and some producers have thrived, while others have simply languished. Price movements in the international markets since last year have caused prices of vitamin C to surge in the first half of this year.

Since the second half of this year, Chinese vitamin C producers have either resumed or increased their output in their bid to capitalize on the rising prices. Consequently, prices of vitamin C have begun to slide, the result oversupply in the market.

 According to the latest statistics provided by the Customs authority of Shenyang city, the city exported 535 tons of vitamin C in the first eight months of this year. This was 2.3% lower than the same period last year.

In August 2003, the average export price for vitamin C stood at US$5.07/kg, the lowest for this year. This price level was lower than the average prices of May, June and July 2003 by 50%, 39% and 26% respectively. However, the expansion in vitamin C output by Chinese producers is currently still increasing.

China's Weisheng Pharmaceuticals, a subsidiary of the Shiyao Group, has started its construction of another production line with 15,000 tons annual production capacity. Upon completion, its production capacity will double to 30,000 tons per annum.

Also, it was reported that Dongbei Pharmaceuticals is now expanding its current vitamin C production capacity by 7,000 tons per annum. By the end of the year, the new production line will be put into production, and the production capacity will reach 22,000 tons per annum.

If the abovementioned projects were completed on schedule, China's output of vitamin C will reach 80,000 tons, far exceeding market demand. Consequently, the situation of supply outstripping demand will continue for some time.

Company reorganization is another important factor that will influence future market trends. There was news circulating in the market that four vitamin C major producers in China will bring in foreign investors in their restructuring plans. However, this is still in the embryonic stage.

Given the aforementioned possible changes, to forecast vitamin C market trend for next year is a difficult task. However, market analysts pointed out that, with current demand and supply situation, prices of vitamin C would fluctuate at around US$5.00/kg, at least in the near term.