CCM: China's market price of VB2 hits record high in May 2016 09-02-2016

China's market price of vitamin B2 (VB2, =riboflavin) has kept rising. According to CCM's price monitoring, in May 2016, the figure of 80% feed grade VB2 reached USD43,351/t (RMB285,635/t), up 124% YoY, hitting the highest record since 2008.


This was mainly thanks to the price rising of domestic producers. In April, Shanghai Hegno Pharmaceutical Development Co., Ltd. (Hegno) was said to raise its quotation for VB2 to USD42.5/kg (RMB280/kg) for May's orders. Shandong NB Group Co., Ltd.'s spot price also reaches USD42.5/kg (RMB280/kg) at present. Hubei Guangji Pharmaceutical Co., Ltd. (Guangji Pharmaceutical), the largest Chinese VB2 producer, has suspended offering quotations since April.


So far, the VB2 production has been concentrated. The three producers above are the leading ones, 80% of the domestic sales. Early in 2007, domestic VB2 market price suffered from falls after skyrocketing. From 2008 to 2014, the overall market was in a downturn, putting the producers under great business pressure but improving the production concentration of this industry. Ever since 2015, leading producers seem to have a tacit understanding and have continued raising their sales prices. Thus, the overall market price has kept going up, despite the fluctuations.


                                 Monthly market price of 80% feed grade vitamin B2 in China, Jan. 2015-May 2016

                                       
                                                                                                 Source: CCM




Leading vitamin B2 producers in China, as of June 2016

Producer

Production capacity, t/a

Remark

Hubei Guangji Pharmaceutical Co., Ltd.

4,500

Guangji Pharmaceutical & its subsidiary Guangji Pharmaceutical (Mengzhou) Co., Ltd. both produce VB2

Shanghai Hegno Pharmaceutical Development Co., Ltd.

2,000

/

Shandong NB Group Co., Ltd.

600

The company reduced its capacity by 50% from 1,200 t/a to 600 t/a from 21 Dec., 2015

Source: CCM


Domestic producers are likely to largely improve their overall performances, given the soaring VB2 market price and falling raw material price at present.


As VB2 is produced by fermentation, raw material and energy take up a large part in production costs, especially corn starch (raw material for VB2). The production of one tonne of VB2 needs 18-20 tonnes of corn starch. Since H2 2015, China's market price of corn kept sliding, affected by the increasing output and huge inventory in recent years. This has pulled down the market price of corn starch, which showed record lows from Jan. to May 2016.


Thanks to this, producers have lowered the production costs and thus largely improved gross profit. For instance, Guangji Pharmaceutical announced a large YoY rise of 56.25% in its Q1 2016 revenue and its net profit reached USD3.50 million – RMB23.06 million, vs. loss in Q1 2015.


                                 Monthly market prices of corn & corn starch (northern) in China, Jan. 2014-May 2016

                                             

                                                                                          Source: CCM


China's exports of VB2 (HS code: 29362300) also showed an upward trend. According to China Customs, from Jan. to April 2016,

  • Volume: 805.62 tonnes, up 20.89% YoY
  • Value: USD25.33 million, up 26.43% YoY
  • Price: USD31.4/kg, up 4.6% YoY


The soaring domestic market price of VB2 slightly boosted the export price. China mainly exports 80% VB2, 70% of the national export volume. Hegno and Guangji Pharmaceutical are the top two exporters, 90% of national figure.


                                                            China's exports of vitamin B2, Jan. 2015-April 2016


                                     
                                                                                  Source: China Customs

 

This article comes from Corn Products China News 1606, CCM




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.

 

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Tag: corn  vitamin

 

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