The General
Administration of Quality Supervision, Inspection and Quarantine in China had
announced at the end of January that they decided to cancel the inspection and
quarantine over food grade and feed grade vitamins for export from February
2018 ongoing.
In
China, some vitamins used to need a special Customs Clearance of Exit
Commodities or a Customs Clearance of Entry Commodities by authorities in order
to be exported. The vitamins that were affected by these regulations have been
unmixed vitamin A, unmixed vitamin B1, and unmixed vitamin D, besides others.
With
the cancellation of the inspection and quarantine, a factor that caused a time
delay and cost increase before has been removed for Chinese vitamins exporters.
As a result, reduced export costs are expected in China which will likely
support the vitamin export in 2018.
This
is a remarkable step, looking at the fact that China is currently the world's
largest vitamin producer as well as the biggest exporter. Chinese enterprises
reached this level even the pretty high export costs and complicated customs
procedures have often left a bitter taste for manufacturers and traders, which
were calling for deregulation before. Now with the cancellation of this
obstacle for Chinese vitamin enterprises, the export will experience a lift in
enthusiasm and investment.
The
cancellation of export commodity inspections will reduce the costs of exporting
producers, and the simplified procedure will also benefit traders. This will
stimulate the export of vitamins in China in 2018.
China’s vitamins
exports
According
to the official data by China Customs, the country exported more than 250
thousand tonnes of vitamins in 2017, which represents an uptrend of 13.47%
compared to 2016.
The
export volume of vitamins kept rising in China in December 2017, and it increased
month by month in the fourth quarter. In terms of month, the export volume in
Feb. 2017 was the lowest that year, while from September to December, export
volume increased month by month.
In
2017, the export volume of vitamin C was the largest, reaching almost 150
thousand tonnes, compared to 110 thousand tonnes in 2016. It was followed by
vitamin E export volume. Last year, 68.8 thousand tonnes of VE were exported.
Vitamin B12 was exported the least in 2017 with a volume of 347.7 thousand tonnes.
All
eight vitamins that market intelligence firm CCM has been monitoring oversaw a
positive YoY growth in 2017, and vitamin B1 realised a 51% YoY increase in
export volume, the largest of all vitamins.
From
January 2017 to December 2017, vitamin C saw an uptrend both in export volumes
and export prices. In December, the export volume and the average export price
hit the year's high. China is a major exporter of vitamin C in the world, and
the leading enterprises are currently CSPC Pharmaceutical, Northeast
Pharmaceutical and Shandong Luwei.
In
2017, domestic ex-works prices of vitamin C showed an uptrend. Environmental
policies were strict in China, and therefore some enterprises were ordered to
suspend production, like CSPC Pharmaceutical. Also, Northeast Pharmaceutical
announced in April 2017 its relocation and upgrade plan. Considering that the
output might reduce as a result, VC producers rushed to raise their quotations.
The
increases in domestic prices also stimulated rises in export prices. On January
2018, prices slightly decreased in China as the downstream aquatic feed
industry entered into the slack season, and this is expected to have affected
the export of vitamin C, which is likely to fall a little.
Vitamin
A export price increased sharply in December 2017, following a MoM growth in
November, when the export volume and price both increased.
The
significant annual growth of the export price of vitamin A was mainly due to
BASF's citral factory fire accident in late October 2017. Affected by the fire,
vitamin A price saw an significant growth in Europe. The prices also surged in
China, but the growth was smaller than in Europe. In this context, Chinese
traders became active in exporting it.
In
January 2018, vitamin A supply still tightened globally, given the expectation
of some European premix producers that BASF cannot resume production until the
end of Q2 to the beginning of Q3. Moreover, the world's biggest VA producer,
DSM, reported a pipeline pump explosion in last January, which further
tightened the global supply.
Stronger RMB is hurting
exporter
However,
despite the reason to cheer for Chinese vitamins exporters, there is still an
existing problem in the export business of Chinese enterprises, not only for
vitamins but export in general.
The
Chinese currency Renminbi (RMB) was valued up by the government over the course
of 2017 with an annual growth of 6.3%. As a result, the exchange rate from USD
to RMB has been changed from 6.9 in the beginning of 2017 to 6.3 at the beginning
of 2018.
After
all, the higher value of the Chinese RMB is reducing the overall revenue of
those exporting enterprises, which gain a pretty large amount from their
overseas businesses, despite the fact that China's vitamin export was positive
last year, thanks to increases in prices.
In
2018, RMB continued to get stronger. As of 2 February 2018, the USD/CNY
exchange rate was 6.2885. The continuous increases in value made the export
more difficult. According to the China Customs, since 2015, China has
maintained a growth of vitamin exports for three consecutive years. It is
expected that the uptrend will continue in 2018, given the favourable export
policy.
About the article
The
information for this article comes from CCM, China’s leading market
intelligence provider for the fields of agriculture, chemicals, food and feed.
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