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CCM-Slump in VB9 price in H2 2015 in China

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Publish time: 17th December, 2015      Source: CCM
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   Since July 2015, VB9 price has been tumbling in China, mainly because of increasing supply led by newly constructed projects been put into production successively. CCM believes that the price change is unclear in the long term.

  

   

  

  According to CCM's price monitoring, the market price of 98% feed grade vitamin B9 (VB9, folic acid) was USD327,070/t (RMB2,000/kg) in July 2015, slumping by 64% to USD118,760/t (RMB750/kg) in Nov. Entering into Dec., mainstream manufacturers quoted USD85,974/t-USD93,790/t (RMB550/kg-RMB600/kg).

  
Slump in VB9 price in H2 2015 can be attributed to newly constructed projects been put into production successively and original manufacturers resuming production in H2. In H1, domestic VB9 supply was in short, but now VB9 is oversupply. Accidentally, new entrants adopted low-priced strategy, leading to VB9 price decline.

  
Newly constructed projects

  
Jiangxi Tianxin Pharmaceutical Co., Ltd. put the first phase (250 t/a) of folic acid project (total capacity: 500 t/a) into production in Aug.
Shangdong Hongzhi Biotechnology Co., Ltd. launched a 300 t/a VB9 project in July.

  
Original manufacturers resuming production

  
It's revealed that domestic main VB9 manufacturers have resumed production.
Changzhou Niutang Chemical Plant Co., Ltd. resumed production.
Changzhou Xinhong Pharmaceutical & Chemical Industrial Technologies Inc restarted production line, but with small supply.

   

  

  Market price of 98% feed grade VB9 in China, Jan. 2014-Nov. 2015

  

  

  Source: CCM

   

  

  

  In H1, VB9 price soared. This pushed up the cost of feed grade vitamins to USD55/t (RMB350/t), the peak in recent ten years. More than half of feed manufacturers are unfavorably affected by VB9 price soaring, then they reduced application amount of VB9 in feed in order to lower production cost. About 19% of the manufacturers reduced the application amount by 20%+. This indicated that VB9 price was too high which was far exceeding expectations of users and VB9 sales was slack.

  
In H1, high price generated high profit for manufacturers, but reduced sales volume. In H2, a continual fall in VB9 price increased the sales but dragged down its profit. Generally, wild fluctuation in VB9 price this year is unlikely to affect original manufacturers, but this is likely to make new entrants loss.

   

  

  There are two different views on VB9 price change.

   

  

  Price is likely to go down.

  

  For one thing, several newly constructed VB9 projects will go into production at the end of this year or next year.

      
  •     
          Jiangxi Zhangle Fine Chemicals Co., Ltd. has constructed a 500 t/a VB9 project, whose products will hit the market in Dec. 2015.     
      
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  •     
          Zhejiang Shengda Pharmaceutical Co., Ltd. will put a 600 t/a VB9 project into production at the end of 2016.     
      

  Therefore, the supply will be increased and the price will be dragged down.  

  

  For another, manufacturers and downstream clients hope to reach a balanced price of VB9. A balanced price can guarantee profits for manufacturers, and has no impact on raw material cost for downstream clients. Industry insider maintained that the current USD85,974/t-USD93,790/t (RMB550/kg-RMB600/kg) is far higher the balanced price. So it's estimated that VB9 price will continue to fall.

   

  

  Price is likely to fluctuate slightly and trend to stabilize, but unlikely to slump.

  

  According to industry sources CCM has spoken to, there are lots of uncertain factors for VB9 price, environmental protection policy in particular. The increasingly stringent environmental policy makes the production cost of VB9 unable to decrease, VB9 price is unable too. However, other factors (such as increasing supply) made VB9 price fluctuating in a short term, the price trends to stabilize in a long term.

   

  If you would like to know more about the VB9 industry, why not have a look at our product: Amino Acids China News.

   

  About CCM:

  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. CCM is a brand of Kcomber Inc.

   

  For more information about CCM, please visit www.cnchemicals.com or get in touch with us directly by emailing econtact@cnchemicals.com or calling +86-20-37616606.

   

  Tag: VB9