Feed additive production hit as COVID-19 outbreak reported in key China hub

14-Dec-2021 - Last updated on 15-Dec-2021 at 08:21 GMT

Multiple companies, including feed additive producers, have halted production in a critical manufacturing hub in China as the authorities try to contain a COVID-19 outbreak.

Zhejiang has reported 217 locally transmitted cases with confirmed symptoms in just eight days since the first case on December 6, according to Reuters.

Thousands of people in the area are in quarantine and some domestic flights have been suspended as officials noted a rapid escalation of the outbreak.

Swiss trading and data platform, Kemiex, informed its clients last Friday [December 10] that Zhejiang's Shangyu and Zhenhai districts were ordered to shut down operations as more than 100 positive cases were reported.

“Inbound and outbound roads were blocked,” commented Stefan Schmidinger, partner at Kemiex.

Vitamin, carotenoid production hit

Companies affected are Zhejiang NHU Pharmaceutical and Shangyu NHU Bio-Chem, two major manufacturers of feed grade vitamin A, vitamin E, vitamin D, biotin and carotenoids including astaxanthin, beta-carotene and canthaxanthin, he told FeedNavigator.

“Vitamin markets are in wait-and-see mode as the full impact on supply is still under evaluation.

“So far, a few days into the disruption, we don’t see any crazy price exuberances yet. Some sellers have turned more hesitant for the time being.”

Among the other companies affected are Zhejiang Guobang Pharma, a producer of azithromycin, ciprofloxacin, clarithromycin, and enrofloxacin, and Zhejiang Jingxin Pharma, which manufactures ciprofloxacin and levofloxacin.

Beijing Winter Olympics

Schmidinger said that the authorities have also issued a recommendation to citizens and migrant workers to refrain from traveling up until the Lunar New Year.

Base and worst-case scenarios, as he sees it, could be a re-opening in January next year or even in late February 2022, given that additional restrictions related to the Beijing Winter Olympics and Chinese New Year are looming.

The Chinese authorities are closing a raft of factories in northern production hubs to reduce pollution and ensure blue skies for the Beijing event. The areas affected will be Hebei (Tangshan, Tianjin, Shijiazhuang, Zhangjiakou, Chengde), Shandong (Jinan, Weihai, Weifang), Shanxi (Taiyuan, Datong, Changzhi) and Henan provinces (Luoyang, Zhengzhou), noted Kemiex.

And those constraints are only going to add further to the supply chain pressure.