October 23, 2007
Major shortages of Chinese-sourced vitamin C — which supplies about 60 per cent of the world market — are forcing prices to their highest levels in many years with no end in sight for the surge.
Increased raw material prices, particularly for corn, and greater costs associated with the imposition of environmental laws, have contributed to the price surge that has seen some forms of vitamin C rising from $3.40 to $11 per kilogram since January.
China has been seen as a source of cheap raw materials for food, nutraceutical and cosmetic applications but as its standards improve, prices may rise accordingly across many letter vitamins, minerals and other nutrients. "It remains to be seen if this domino effect will come into play for other key nutrients and raw materials," said Loren Israelsen, executive director of the United Natural Products Alliance (UNPA)
In the case of vitamin C, the change is sudden, as it wasn't so long ago Chinese vitamin C was selling for $2 per kilo, a situation that forced major manufacturers like DSM and BASF to rationalise their production facilities because of the stiff Chinese competition. They may see these latest developments as an invitation to once again step up their presence in the vitamin C market and wrestle some of China's 60 per cent market share away. DSM has said it is beefing up its manufacturing presence in China.
The Chinese supply situation may be further complicated by a legal case being brought against China's four largest vitamin C suppliers in New York, who are being accused of price collusion.
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