Edited by China Merchants: "large fluctuations in vitamin prices may become the norm in the future"

Vitamin A has risen by 50% in the past month, and vitamin B has tripled in less than two months. why do vitamin prices fluctuate so much?

1. Industry profile: the main downstream of vitamins is the feed industry, the demand is relatively rigid and the price transmission is smooth.

Among the vitamin series products, vitamin A, vitamin E and vitamin C account for 64% of the vitamin market, and vitamin B accounts for 33% of the market.

Vitamins downstream mainly include feed, medicine and cosmetics, food and beverages, of which the feed industry accounts for 48% of vitamin demand.Global feed productionHas maintained a steady growth of about 2%.In the short term, it will fluctuate in the region due to the adverse effects of the economic crisis and bird flu, but the development of the global aquaculture industry is relatively stable, soThe demand for vitamins is relatively rigid.. Due to the cost of vitamins in feedAccounting for less than 2% of the proportion, the price of vitamins is transmitted more smoothly.

2. Industry format: China is a big country in vitamin production and export, and the vitamin industry shows strong cyclical characteristics.

2015年China's vitamin output is 256000 tons, accounting for 68.5% of the global output.Of which the export volume reached 198000 tons, accounting for 77.3% of the total domestic output.China has become the largest country in vitamin production and export.China's vitamin industry in the global pricing and competition patternHave a great say.

Since the supply-side reform measures were put forward by the state in 2015, the pattern change of the vitamin industry has an exogenous variable of environmental impact.As the production of vitamins is mainly chemical synthesis, the production process is more complex through multi-step reactions.Belongs to the heavy pollution industry, several rounds of environmental protection verification covers Zhejiang, Shandong, Hubei and other major vitamin producing areasThe government's requirement for chemical enterprises to enter the park also led to the relocation or withdrawal of some enterprises. In 2015, the operating rate of many varieties of B vitamins decreased due to various environmental protection events, and the reduction of market supply led to a rapid rise in prices.

Due to the drastic changes in the supply side, China's vitamin industry has experienced several rounds of ups and downs since 2006.The fluctuation of product price and profit shows obvious periodic characteristics.

At the same time, most varieties of vitamins have been integrated and rebalanced in the market over the years.A relatively stable oligopoly pattern of about 4-6 has been formed.

3. Vitamin A: VA market has a high degree of industry concentration, collaborative price protection strategy and high tacit understanding of implementation rhythm.

The global production capacity of vitamin An is 33000 tons, with an annual demand of about 25000 tons; the total domestic demand for vitamin An is about 6000 tons, with domestic production of 10, 000 tons, and 40% of domestic vitamin A production is exported. The main manufacturers of citral, the most important intermediate in the synthesis of vitamin A, are BASF, Xinhe Cheng and Japan.Among vitamin A manufacturers, only BASF and Xinhe Cheng are self-sufficient in citral.

The price of vitamin A has soared in recent years.Frequent accidents at the BASF citral plant directly led to the announcement of a reduction in vitamin A production by force majeure such as Andisu, and the short-term extreme tension between supply and demand pushed prices skyrocketing.

Since BASF announced the restart of citral plant in the second quarter of 2018, the price of vitamin A has dropped from a peak of nearly 1500 yuan / kg to 250 yuan / kg at the end of October.This is consistent with the previous fluctuation trend of vitamin A prices. But unlike in the past, prices will fall to a low for a long time.The price of vitamin A has risen by 50% in the past month, and the latest price has reached 385 yuan / kg.

This time, BASF took the lead in raising the price of vitamin A products, and then domestic companies successively adopted the strategy of following the quotation, the strategy of coordinated price protection among industries and a high degree of tacit understanding of the pace of implementation. the strength and response speed of price bottoming and rebound under oligopoly exceeded market expectations.It is proved that when the price is low, the oligarchs will tend to mutual insurance alliance.

Vitamin B: the VB5 industry is divided into three parts, and the oligarch's price increase led by Yifan has become the norm in the industry.

The market pattern of vitamin B5 is dominated by domestic enterprises with Yifan Pharmaceutical as the leader. At present, there are only six manufacturers in the world: Yifan Pharmaceutical, Shandong Xinfa, Shandong Huachen, BASF, DSM and Brother Technology.The six-year patent lawsuit between Yifan and Xinfa in 2007-2013 has become a landmark event in the evolution of the industry pattern. The success of Yifan and the stricter environmental protection in Shandong led to the suspension of production in the industry, which made the industry change hands. In addition, Brother Technology's production capacity of 5000 tons of vitamin B5 was put into production in 2017, becoming a new entrant in the B5 market after Yifan and Xinfa.

At present, the global production capacity of vitamin B5 is 25000 tons, the annual demand is about 19200 tons; the domestic production capacity is 19000 tons, the annual demand is about 3400 tons, and the total domestic output is 15000 tons.The stricter environmental protection situation since 2015 has led to the suspension of production in Shandong Xinfa and Huachen, which has led Yifan to become the maker of the industry's price strategy.

As a result of the patent dispute lawsuit and the short-term agreement reached after the new short-term production restrictions, the price of vitamin B5 began to rise sharply at the end of 2013.The increase in product prices since 2015 is due to environmental protection and production restrictions, which has led to the extremely unstable supply of the two major manufacturers in Shandong.Yifan took advantage of the price increase to grab a larger excess profit, butAfter the new production capacity of 5000 tons of Brothers Science and Technology was put into production, it became a turning point for the reversal of the price situation.The price of vitamin B5 fell from a high of 750 yuan / kg in 2017 to around 60 yuan / kg in 2018, proving that the industry's high profits are unsustainable and the competitive landscape needs to be rebalanced.

The future B5 industry has been divided into three parts, and the industry pricing strategy has formed a new form of "Yifan taking the lead, new development and brothers following the rise".The price of B5 rose from a low to 230 yuan / kg, rising by more than 300% in less than two months, including the decline in the operating rate of Shandong Xinfa and its brothers due to environmental protection.But at the bottom of the price, the seemingly loose price alliance between oligarchs is the main driver of this round of price rise.

5. Judging by the law of "price alliance": VD3 is expected to become the next variety of vitamins in price increase.

Vitamin D3 industry presents a competitive pattern which is mostly strong and dominated by domestic enterprises. Vitamin D3 is mainly dominated by domestic enterprises, and Garden organisms account for half of the market share. The global production capacity of vitamin D3 is 9000 tons, the annual demand is about 6000 tons, the total output is 5700 tons, the operating rate is about 60 percent, and the supply is relatively loose; the domestic demand for vitamin D3 is 1500 tons, the domestic output is about 5300 tons, and the proportion of exports is more than 70 percent.The important intermediate NF cholesterol is mainly purified by lanolin, and the purification technology is mainly in the hands of Japanese refined chemical, Singapore Enkai, Indian Dishman and Garden Biology.

Observing the price trend of vitamin D3, the price has a pulse rise every year, and the price center has moved up obviously in the past two years. As a strong competition pattern is difficult to be shaken in a short time, Garden organisms have a stronger say in the market than the previous analysis of vitamin An and B5 market leaders, and the price strategy of large manufacturers should be more consistent with the previous analysis, and the volatility is greater than the former two.