Global Market Outlook on Vitamins

China remains the best cost sourcing region, the prices of Vitamin B1 remain historic high levels  driven by tight supplies. The sellers however seem to have higher profits with increase in prices.Category Takeaway: Prices of Vitamin B1 to either stabilize at current levels or fall by 2-3 percent in 2018/2019  driven by demand rationing by buyers as the prices have touched historic highs.

Price Outlook 2018/2019 :
Supply constraints in China still holds good ; this along with increasing demand from feed may keep the prices stable from the last year levels as the price of product has already reached its peak.

Vitamin B1 Market Dynamics

With changing market dynamics due to the removal of inspection process, more dealers and traders are expected to enter the market increasing the opportunity for better negotiation.

Category Takeaway: Prices are expected to reduce marginally owing to change in Chinese regulations on product supply and inspection.

Supply Market

  • India’s alkyl amines increased capacity of acetonitrile to 10,000 Mt/yr and the same is expected to reach 30,000 Mt/yr by the end of 2019, thereby making surplus feedstock supplies in future
  • China is the predominant country supplying 85 percent of the global requirements
  • Owing to the recent change in the environment policy in China, many companies have either shut down or limited their production, leading to a 30 percent fall in supplies

Demand Market  

  • The recent USDA approval of thiamine hydrochloride injectable injection manufactured by Sagent Pharmaceuticals shall boost the demand for thiamine additionally in the pharma sector thereby keeping it competitive for nutraceuticals
  • In 2018, demand for feed grade vitamins will increase in China given the fact that feed output have kept increasing, live pig raising activities have been standardized and antibiotics free-feed are advised for production.

Price Trends 

  • Blaming strong demands and surging raw material prices, the major Chinese producers raised the prices for Vitamin B1in early January 2018 as well
  • However, with change in policies on inspection and pricing for domestic and foreign market, the prices are expected to drop in the near future.

Value Chain & Cost Drivers

  • Despite higher environmental cost increased the prices of acetonitrile in 2017, prices are likely to witness a fall owing to increase in production from India.
  • Fixed cost remains the second driver of cost. A medium size plant requires at least $20 million worth of fixed cost for its operation

Supplier Landscape

  • In February 2018, Chinese CIQ claimed that inspection on vitamin production is not necessary anymore and hence producer’s lack the control of the goods as they do not need to acknowledge the destination of the goods as per the existing policy
  • The change in policy shall lead to entry of many distributor who can export to foreign market

Raw Materials and Cost Drivers 

Direct supply partnership with large producers can save cost and assure long term consistent supply

Category Takeaway: Overall price surge in 2017 through 2018 was largely due to china’s regulations and BASF’s citral plant force majeure. Feedstocks supply trend, supplier power and increasing demand from feed industry are other major cost drivers. Price speculations by small producers are common.