M-cresol an important
fine chemical, used in the production of vitamin E, fenitrothion, permethrin
and many other chemicals that are then further utilized in other industries
such as medicine, pesticide, antioxygen, dye, perfume and fungicide. This
chemical is widely utilized by the vitamin industry in China and is considered
an important intermediate in the manufacturing process of vitamin E
specifically. Earlier this year, the Ministry of Commerce of China announced
the anti-dumping investigation on imports of m-cresol from the USA, EU, and
Japan. Furthermore, another disruption in the supply of m-cresol was reported
on November 18, 2019, when Lanxess, a specialty chemical company and one of the
world’s largest m-cresol producer announced force majeure due to “unforeseeable
technical problems”.
According to
Lanxess, the regular production levels of m-cresol are expected to resume
during the first half of 2020. However, until than the supply of m-cresol in
China is expected to be restricted and this might cause an increase in the
production cost of vitamin E. Although, there are many local m-cresol
manufacturers operating in the country but there supply often doesn’t meet the
demands of the market and therefore, the chemical has to be imported.
One of the leading
manufacturers of synthetic vitamin E, BASF announced that the current scenario
of m-cresol will not impact the production of vitamin E, as their company does
not use m-cresol as intermediate. However, there are many local Chinese vitamin
E manufacturers whose main raw material is m-cresol and with the current
scenario of anti-dumping investigation and force majeure declaration from one
of the largest suppliers, the production process of vitamin E will be
disrupted. All these developments are occurring at a time when one of the major
vitamin E production operation jointly operated by DSM and Nenter is currently
offline for up-gradation and refurbishment of facilities. All these disruptions
will restrict the supply of vitamin E in the Chinese as well as the global
market and will push the price up.
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