Rumours about the future of the small plant at Grenaa gained credibility in August when BASF reported a €26 million charge for restructuring of its vitamin C operations. The German group declined at the time to reveal how this money would be spent.
It said in a statement today that the site, staffed by 77, had an annual capacity of 4,000 metric tons and is no longer competitive due to its low capacity and the continuous decline in prices for vitamin C.
Prices for vitamin C have been falling ever since Chinese companies began making it several years ago. Although prices appeared to stabilize after a period of consolidation in the late 90s, they continue to drive downwards, with a 20 ton container selling at just €2.60 per kg this week.
The market is now shaped by five Chinese players who have forced European manufacturers BASF and DSM to bring in sweeping cost-cutting measures. In May DSM closed its manufacturing plant in Belvidere in New Jersey, leaving it with reduced yet more efficient capacity at the last remaining European plant in Dalry, Scotland.
But while DSM still has significant capacity at Dalry - said to be around 22 tons - and has underlined its commitment to the European market, BASF now sources most of its vitamin C from Asia.
It gets an annual 12,000 metric tons of crystalline vitamin C from Japan's Takeda in an exclusive arrangement, and also has a partnership with China's North East Pharmaceutical Group.
"We will continue to strengthen this relationship," said spokeswoman Karin Moeschke.
A further 6,000 tons of vitamin C for direct compression are produced at a plant in North Carolina but only part of this is made by BASF.
"They are developing into a feed ingredients company and have the largest full portfolio in this sector. But they have a very low profile in pharma [supplements]," said chemicals consultant Ulrich Marz.
BASF is still a significant supplier of carotenoids and other vitamins used in food, and will continue to produce powder formulations of vitamins and carotenoids and microencapsulated food ingredients at its other Danish plant in Ballerup.
But as companies like Weisheng Pharmaceutical get contracts for food-grade vitamin C with leading food and beverage makers, such as Coca-Cola and Kraft, the European firms will need to focus on more complex formulations with higher safety standards.
Meanwhile the low costs at which the Chinese are operating are unlikely to be sustained in the long-term. It is widely recognized that many of the producers are losing money, with one smaller player thought to be close to exiting the market.
There have also been threats of anti-dumping with two US animal feed additive firms filing petitions against six Chinese vitamin C producers at the Supreme Court of California in late February.