Domestic vitamin C re-enters a new round of low-price whirlpool - Victoria C

At the end of July, the domestic export prices of major export enterprises of vitamin C (VC) had fallen below US$5/kg, and the price cuts exceeded 50%. Although some international buyers at the beginning of the year considered that China's VC export prices may be reduced due to new production capacity, such a big decline is still beyond the expectations of foreign buyers.

Maintaining high boom in 2009

VC's main consumer market is in developed countries in Europe and America, and market demand has steadily increased year by year. With the support of technological improvements, China's VC export has given China a "global production and export power".

At present, the global VC market has an annual demand of approximately 120,000 tons, and there are six major suppliers. Except for DSM (20,000 tons), the remaining five companies are all located in China, namely the Northeast Pharmaceutical Factory (22,000). Ton); Shijiazhuang Group Weisheng Pharmaceutical (Shijiazhuang) Co., Ltd. (27,000 tons); Huabei Pharmaceutical Group Wellcome Pharmaceutical Co., Ltd. (25,000 tons); Jiangsu Jiangshan Pharmaceutical Co., Ltd. (22,000 tons); Shandong Luwei Pharmaceutical Co., Ltd. (formerly 5,000 tons of annual production capacity has now expanded to 25,000 tons).

The number of China's VC exports has increased year by year. In 2006, China exported 69,790 tons, and the export amount was 233 million US dollars; in 2007, it was 72,505 tons, and the export amount was 342 million US dollars; in 2008 it increased to 89,130 ​​tons, and the export amount was 777 million US dollars. The average export price was US$8.72/kg; in 2009 it was reduced to 82,120 tons, the export amount was US$838 million, and the average export price was US$10.20/kg.

The huge production capacity of China's VC has allowed China's VC exports to still have a strong say in the economic crisis, and has also allowed China's VC exports to continue its booming period for the entire fiscal year.

Export quotation fell by half in 2010

From the above data, we can see that since 2006, the international market for Chinese VC demand has been increasing year by year. The "speech right" of Chinese VC and the rising demand in the international market have caused VC's vitamin export prices to decline as a whole in 2009. Under the circumstances, it remained the best and did not fall. In 2010, there was an excellent situation in which pharmaceutical products rose in volume and price in the first quarter, but VC exports were very different. After the first quarter of 2010, prices fell sharply and fell by more than 50% in just a few months. .

From the perspective of export volume, from January to May 2010, the export volume was 48,018 tons. In the same period of 2009, the export volume was 35,843 tons, an increase of 34.5% year-on-year. As can be seen from the monthly average export prices of VCs in Figure 1, from January to May 2009, China’s average monthly export prices of VCs are on a monthly basis; however, from January to May 2010, VC export prices However, it showed the opposite trend of monthly decline: the average export price in January was US$8.93 per kg, which decreased to US$8.59 per kg in February, and then slowly decreased to US$8.50 per kg in May.

70% of VC business basically consists of long-term orders, so the market export price lags behind 2 to 3 months before giving feedback. The export market quotation of VC can be seen from Figure 2. In the first quarter of 2010, the market export quotation was about 10-11 dollars per kilogram, which was higher than the average export monthly price of 8.5-9 dollars per kilogram; but starting from March The export quotation all the way down. In April, the market export quotation was 8.5 US dollars/kg, in June it was 8 US dollars/kg, and in July it dropped to 5 US$/kg. Until the deadline for writing, VC export quotation has fallen below US$5/kg.

In just six months, the decline has exceeded 50%. The "voice power" of VCs that has always been proud of the Chinese people has been lost. VC is once again trapped in a low-price competition circle that sacrifices profits and resources.

Given the year-on-year growth of China's VC demand in the international market, what are the reasons for China's VC to once again fall into the vicious circle of low-price competition?

Unexpected new capacity

The supply and demand balance is the main reason that VC can still maintain a high degree of prosperity in 2009. At the beginning of 2009, the actual production capacity of VC was approximately 118,000 tons, which consisted of DSM (20,000 tons), the four major VC manufacturers in China and the actual production capacity of 5000 tons before Shandong Luwei's expansion. As a whole, the actual domestic production capacity is 98,000 tons, which is basically in line with the global annual demand of 120,000 tons.

The high business climate and high export prices of the VC industry took a year and a half to run, bringing huge profits to the company. This has also attracted many eyes in the industry, and the desire for investment and expansion has gradually increased. As a result, the news that VC was expanded and put into production at the end of 2009 was frequently reported.

First, Shandong Luwei Pharmaceutical Co., Ltd. expanded its annual production capacity of 5,000 tons to 15,000 tons, and then expanded to 25,000 tons. In 2009, new production capacity began to be released. In 2008, Shandong Luwei's export volume was 7,760 tons, accounting for 6.11% of China's VC export volume; in 2009 Shandong Luwei's total export volume was 14,081 tons, accounting for 11.92% of China's exports, becoming the second largest export volume. The third largest VC exporter in China, Shijiao Weisheng and Northeast Pharmaceuticals. From January to May 2010, the export volume of Shandong Luwei was 11,351 tons, accounting for 23.54% of China's total export volume. The export volume ranks first among China's VC companies. The release of Shandong Luvi's new capacity has undoubtedly exerted tremendous pressure on other Chinese VC export companies.

Followed by the expansion of Zhengzhou Tuoyang Industrial Co., Ltd. and the export of VC products at the beginning of this year, the external quotation of products of Shandong Runxin Fine Chemical Co., Ltd. and Mudanjiang Hi-Tech Biochemical Co., Ltd., and other VC projects under construction were frequently reported.

These tumultuous news are tantamount to aggravate, the price that pulls VC finally drives down all the way again, fall into the strange cycle of low price competition again.