The company produces vitamin A for the animal and human nutrition industries as well as the cosmetic industry.
The new plant will be located in Ludwigshafen, Germany and will be integrated into its existing Citral Verbund operations.
It won’t be on stream, however, until 2020.
When asked why it will take four years to get the facility up and running, Christopher Rieker, VP of animal nutrition at BASF nutrition and health division, told us: “Vitamin A production is a complex process. With an adequate and thorough planning process, we can ensure a safe and superior product quality according to our highest standards. This will lead to high supply reliability.”
He would not disclose what percentage of the 1,500 metric tons from the new plant, when on stream, will go towards the feed sector, or what the total vitamin A capacity at BASF would be on site completion, citing competition grounds.
Rieker said the current Vitamin A market is stable without major pressure points.
So, on the factors behind BASF’s decision to build a new facility then, he said: ʺOur key driver is to support the growth plans of our customers. We want to ensure the long-term supply of high quality vitamin A in order to meet the growing market demand.”
In February this year, BASF raise its prices for its vitamin A products by 20% saying, at the time, the price hike reflected the global market supply and demand dynamics for the vitamin.
It was the first time since 2013 that the German group had increased the price of that additive.
Vitamin A market
BASF told our sister site NutraIngredients it estimates the total size of the global Vitamin A market as currently being around 7,500 metric tons, with the majority of production taking place in Europe and China.
The European field is dominated by BASF along with two other companies, DSM and Adisseo. Collectively they account for 60% of the market in that region.
In China, three companies lead production in that vitamin, including Zhejiang NHU, Zhejiang Medicine and Kingdomway.
Those Chinese players have been raising their prices over the past year. “The up-regulation of the vitamin A price [in China] makes purchasers believe there is a shortage of supply of [the] vitamin. It may be a virtuous circle to help boost the market price,” noted CCM analyst, Shi Xuejian, in a market report in May.
He said then that all three producers were running at normal production yet the supply was getting tighter, leading the analyst to conclude the producers were cutting down their trading volume.