Will Up-Going VA Price Continue in China?
Guangzhou, China, May 18, 2016 (Newswire.com) - With Zhejiang NHU, Chinese vitamin giant, raising its sales price of VA again, China’s VA market continues to boost. Due to the concentrated production and stabilized market supply, VA market price is expected to keep high in China, according to analyst CCM.
Zhejiang NHU Co., Ltd. (Zhejiang NHU) raised its sales price of 500,000 IU/g feed grade vitamin A (VA) to USD55,760/t on 9 May, 2016. In fact, earlier in March, Zhejiang NHU had already up-regulated the sale price to USD45, 690/t, according to CCM’s price monitoring.
“The reason why Zhejiang NHU raised its VA quotation is that the supply of VA in China is likely to get tight in the coming period,” analyzed Shi Xuejian, chief editor of Vitamins China News, CCM.
So far, the transaction price of VA has reached around USD46,460-48,010/t in the China’s market, which is higher than the company's previous quotation.
“Zhejiang NHU, a leading Chinese VA producer with strong voice in pricing VA, holds an optimistic attitude towards the development of VA market. It is believed that this price up-regulation may continue boosting market price of VA,” stated Shi.
In fact, thanks to the rise in sales price of VA since 2016, Zhejiang NHU announced its Q1 2016 net profit to surge by 75%-95% to USD21.80 million-24.29 million, according to CCM.
Faking the short supply?
Since early 2016, Zhejiang NHU has raised its quotation for VA several times. Other mainstream VA producers, like Zhejiang Medicine Co., Ltd. (Zhejiang Medicine) and Xiamen Kingdomway Group Co., Ltd. (Kingdomway), and leading dealers responded and raised their sales prices.
The VA market price in April was averaged at USD49,560/t, up 100% over Jan., according to CCM's price monitoring.
“The up-regulation of VA price makes the purchasers believe in the short supply of VA. It may be a virtuous circle, to help boost the market price of VA,” said Shi.
However, some sales persons in producing enterprises and dealers continue taking a “wait-and-see” attitude towards the trend of VA market, according to CCM's research.
“At present, the top 3 VA producers in China are all in normal production. Yet, the supply is getting tighter,”
“Or, the producers are cutting down their trading volume,” Shi predicted.
In the first half of May, the actual transaction prices were in chaos. Some were set high in new orders while some remained low at around USD44,920-46,460/t.
Affected by the expected price rise of VA, dealers and distributors purchased large amount of VA from producers in advanced at a relatively low price. Thus, they can quote lower prices than producers currently.
However, as their inventory is running down, they have to accept the high quotation from the producers in new orders.
“In fact, large-scale feed makers, who have small inventory of VA, often prefer to purchase from VA producers at preferential prices, which makes it easier for leading VA producers to control the price regulations,” said Shi.
Multinational producers have little effect on China’s VA market
Although BASF's vitamin plant in Shenyang City, Liaoning Province keeps normal production of VA, its supply to clients is tightened.
Moreover, BASF's citral plant in Malaysia failed to be put into production on time by the end of 2015. This will intensify the short supply of citral, raw material for VA, in the global market.
“Chinese VA producers who rely on imported citral may confront the risk of short supply,” said Shi.
"Yet, supply of raw materials has small influence on that of domestic VA," Shi commented.
DSM has provided little of its VA to China and thus has limited influence in domestic market. And Bluestar Adisseo Company has already withdrawn from China's VA market.
Given all these, Zhejiang NHU, Zhejiang Medicine and Kingdomway are the real leaders in domestic VA market in China.
In the short run, there will be few new VA producers to enter the VA market due to the complicated production technology; thus, the tightening supply won’t be relieved.
Yet, in 2016, the oversupply will certainly be largely eased and the market price of VA is expected to keep high, Shi predicted.
CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta.
For more information about CCM, please visit www.cnchemicals.com or get in touch with us directly by emailing firstname.lastname@example.org or calling +86-20-37616606.