Vitamin C has had high export prices for more than a year, generating huge profits for producers. However, if the vitamin C supply grows too much, volume increases will cause the price to drop.
Vitamin C sale volume is larger than any other vitamin, and the world receives 80% of its vitamin C products from China. Since the first quarter of this year, however, China's vitamin C surplus caused price drops. As supply continues to increase, this will create new problems for China's production market.
Imbalance between supply and demand
Frbiz analyzes that since the beginning of 2007, the export price of Vitamin C has gradually increased. At end of 2008, the international financial crisis triggered by the global economic downturn, resulting international markets demand weaker and international trade environmental deterioration, brought a greater impact on China's pharmaceutical exports. However, the international financial crisis has not changed developing countries' consumer habits, and vitamin C exports have actually risen. The 2008 exports volume reached 85,000 tons, reaching USD 740 million. Also export prices year-by-year rose 82%, pulling the vitamin C industry into a high season that continued throughout all of 2009.
But by the first quarter of this year, export volume of vitamin C was only 2.92 million tons, year-on-year increased 35.9%, amounting to USD 254 million.
As some local governments and enterprises, receive approvals for building new capacity, the vitamin C industry in China may have a serious excess capacity that will exceed the global demand. Built, under construction and planned production capacity of vitamin C together have the potential for more than 80,000 tons, and more than 200,000 tons by 2012. Undoubtedly, the vitamin C supply and demand balance will be broken.
There are also several other factors affecting the price of Vitamin C, including raw material prices and the summer maintenance shutdowns. Vitamin C is produced mainly corn and starch, and now there is great pressure on the prices of these raw materials. In addition, summer is traditionally a time for routine maintenance shutdowns in the vitamin C industry, resulting in production decreases and price increases.