VB2 price likely to rise in Q1 2016 01-26-2016

VB2 price is likely to rise in Q1 2016, which would be a continuation of the price trend in Q4 2015. This is due to the declining supply, according to CCM.

 

According to CCM’s price monitoring, the market price of domestic vitamin B2 (VB2) witnessed wild fluctuations in 2015. The price changes had three stages:

 

From Jan. to June

The market price of 80% feed grade VB2 kept decreasing. It stood at USD20,423/t in June, down by 22% from Jan. VB2 price fall was ascribed to two reasons:

  • The continual fall in the corn price reduced the production cost of VB2
  • Weak demand from downstream industries caused the sales volume of VB2 to decline

From July to Sept.

The market price of 80% feed grade VB2 maintained stability, averaging USD20,440/t. A recovery in downstream demand stabilized the VB2 price. In particular, agricultural industry demand from overseas markets increased imports of Chinese VB2. Data from China Customs showed that the export volume of VB2 totaled 619.02 tonnes in Q3 from China, 27.13% up from Q3 2014.

 

From Oct. to Dec.

The market price of 80% feed grade VB2 recorded an uptrend. Its price grew by 16% MoM to USD23,620/t in Oct. Subsequently, it was up to USD28,137/t in Dec., hitting a record high in 2015.

 

In Dec., the VB2 price was climbing. At the beginning of this month, the top-3 manufacturers, namely Hubei Guangji Pharmaceutical Co., Ltd. (Guangji Pharmaceutical), Shanghai Hegno Pharmaceuticals Holding Co., Ltd. (Hegno) and Shandong NB Group Co., Ltd. (NB Group), withheld quotations for VB2. By 21 Dec., NB Group had raised its quotations by 10% since 22 Dec.

  • For the domestic market: USD36,905/t (RMB240/kg) for 80% feed grade
  • FOB Qingdao Port price: USD32/kg for granule, USD31/kg for powder

Similarly, Hegno resumed issuing quotations for some products in 21 Dec.

  • 98% feed grade VB2: USD53,820/t (RMB350/kg)
  • 98% food grade VB2: USD55,357/t (RMB360/kg)

However, the company has suspended quotations for 80% feed grade VB2. Hegno quoted USD33,829/t (RMB220/kg) for this product at the end of Oct.

 

To date, Guangji Pharmaceutical is withholding quotations for VB2.

 

Market price of 80% feed grade VB2 in China, Jan. 2014-Dec. 2015

Source: CCM

 

In Q1-Q3, domestic VB2 manufacturers reduced production or suspended production, decreasing the output. 

 

Guangji Pharmaceutical

Its output is about 2,600 tonnes in 2015, down by 4% YoY.

 

Hegno

Its output is less than 300 tonnes in 2015, down by 25% YoY. Previously, its output was estimated to reach approximately 900 tonnes in 2015, posting a sharp fall of 30% YoY. The demand from Europe fell because its FAMI-QS certificate was revoked. This caused Hegno to reduce its output.

 

In Q4, the VB2 price surge can be attributed to the decreasing supply caused by production reductions.

 

The VB2 price uptrend is likely to continue in Q1 2016. This simply reflected:

The quotations of Guangji Pharmaceutical have a huge influence on market prices. The VB2 market is becoming more concentrated, and Guangji Pharmaceuticals has a market share that exceeds 50%. Therefore, it has pricing power. If Guangji Pharmaceuticals raises its prices, the VB2 price will also rise.

 

The market supply of VB2 will continue to drop in Q1 2016. NB Group has shut down half of its VB2 production facilities (current capacity: 1,200 t/a) since 21 Dec., 2015, in order to have the facilities available for carrying out a pilot-scale experiment for new feed additives. It plans to suspend all VB2 production facilities from 22 Jan., 2016 and to focus on producing new products so that these new products can enter the market as soon as possible.

 

The latest two years of statistics indicate that NB Group accounts for 10% of the Chinese VB2 market share. Considering NB Group will shut down all VB2 production facilities in 2016, the domestic VB2 supply will fall as a consequence.

 

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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 emailingecontact@cnchemicals.com or calling +86-20-37616606.

 

Tag: VB2

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