"Digital deal making and communication has become a real alternative for many companies, as we see a significant mindset shift from previously very conservative corporates," Stefan Schmidinger, partner, Kemiex, told us.
In terms of key price developments, following a COVID-19 driven reflation rally into April, vitamin E 50% declined slowly and then stabilized in the first half of August, reported the Swiss feed and food additives trading platform.
In the week starting August 10, Chinese vitamin E (VE) players like Zhejiang NHU Limited and ZMC increased list prices significantly to around RMB 92 [around US$13], noted Kemiex. Local traders offered bulk loads 30-40% lower the same week. Then DSM and Jilin Beisha Pharmaceutical Co., Ltd. adjusted ex-China prices strategically below Zhejiang NHU and ZMC mid-August.
“VE is now at an inflection point, looking for further price direction,” said Schmidinger.
Gas pipe incident
A potential incident to shake up VE prices was a waste gas pipe accident on August 19 at Shangyu NHU Biochem in China’s Hangzhou Bay Economic and Technological (E&T) Development Zone, he said.
Market participants feared a negative impact on VE production. However, such concerns would seem to have been misplaced:
“Latest updates on the situation would indicate no major impact for VE, Biotin and D3 output," commented Schmidinger.
Moreover, he noted, a new VE production project linked to NHU in Weifang, in China’s Shandong Province, is set to go live anytime soon, which will further bolster VE production in China.
“From a bird’s eye perspective, VE export prices are now hovering somewhere in the middle of the base price of US$5 and the top price of US$15 seen for VE during the past seven years,” said the Kemiex lead.
Interestingly, it is possible to have both a bearish and bullish outlook on the VE market right now, said Schmidinger.
“One argument of the bears are these record-high China export volumes during 1H 2020, which, at flat demand, could mean sufficient inventories into Q3, or even Q4 and beyond. The bulls are ready too, as few producers control a significant share of the supply, and we have seen them raising reference prices.”
Vitamin A – potential supply disruptions
The waste gas pipe incident at Shangyu NHU Biochem, unfortunately, could have implications for vitamin A production. There are reports that vitamin A output there would be hit, potentially resulting in a production delay of few weeks or one month.
“As BASF reported issues with VA and AD3 in June, possibly lasting into 4Q, the market is currently weighing these supply disruptions against record-high export volumes from China, and build-up of local inventories, during 1H 2020. Anything is possible,” said Schmidinger.
In other vitamin price developments of note, this week saw Jiangxi Tianxin raise list prices for feed grade vitamin D3 to US$75-87 and it earlier announced it was set to expand vitamin D3, cholesterol, vitamin A and B5 capacity.
“Early August, a major [VD3] producer, Zhejiang Garden, raised its prices to almost these levels, as they experienced a drop of -29% in profits year on year," said the analyst.
Meanwhile, ZMC is on maintenance until mid-September, and Tonghu, a producer of vitamin D3 and cholesterol, reportedly stopped production for four weeks mid-August, according to Kemiex.
“Markets are currently a playground for speculative games and the coming six weeks will be decisive,” remarked Schmidinger.
In terms of the vitamin C price moves, Kemiex said the downside trend from COVID-19 highs continue amid adequate supply from mono producers and balanced inventories.
Vitamin K is a product that is related to and dependent on the chromium and leather industry.
Zhenhua became the world's largest producer of chromium chemicals after acquiring 100% of another major player, Chongqing Minfeng Chemical (100'000 t/a).
“Other chemical sub-sectors are showing similar, albeit early signs of asset restructurings due to price pressure and industry consolidation,” said the analyst.
Tight raw material Trimethylamine (TMA) adds upward price pressure to choline chloride as a major domestic TMA producer in China is said to be on maintenance.
Local ethylene oxide price, another intermediate, also rose +9% since early August, said Kemiex.
The trading platform noted that amino acids are caught “between the devil and the deep blue sea.”
Apart from L-Threonine, and to a lesser extent L-Tryptophan, most of the other amino acids returned to pre-COVID-19 levels, said Kemiex.
L-Valine saw a sharp drop due to oversupply and low demand.
“There are differences in markets as material ex China is typically more volatile compared to European prices. Some producers became more defensive in quoting, hoping for firmer amino acids pricing in 2H 2020 as they find themselves whipsawed: high input prices for corn and other raw materials, as well as lower output prices near production cost, and far from sustainable CAPEX replacement cost.”