According to market intelligence firm CCM, China is witnessing a boost in vitamins prices recently, which is threatening the sufficient supply for feed manufacturers.
The demand for vitamins significantly increased as the peak season for the production of feeds comes. The tightened supply thus pushed up vitamin prices.
The price of many vitamins in China is soaring in the beginning of H2 2017, mostly due to the strict environmental policies and the related increasing costs as well as production cuts. Some vitamins, like vitamin B5, saw price increase up by USD77,000 per tonne from June to September alone. This increase represents a growth of more than three times in just three months. Vitamin D3 price, as another example, was rising about 450% in the same period.
DSM, the Dutch health and nutrition giant, has also announced to raise the prices of vitamin C produced in China by at least 10%. The explanation by the executive management refers to the development of the production sites as well as improving the environmental performance. It is worth notable, that over 90% of the worldwide produced vitamin C is manufactured in China, along with many other key vitamins.
In August 2017, the fourth round of the central environmental inspection in China has begun, which is lifting the already environmental pressure for manufacturers once more. Furthermore, the air pollution treatment campaign for the Beijing-Tianjin-Hebei region has started, which is one of the major regions for vitamins production. Notably, the tight supply situation was strengthened by an increasing export volume of many vitamins in recent months, which followed the strong demand overseas for Chinese manufactured vitamins.
China has shown great determination to treat environmental problems. As the inspection is to be carried out, Shandong and Hebei, as the leading provinces for vitamins production, will be affected to some extent. Those enterprises who cannot meet the environmental standards will be definitely eliminated from the market, which is to reduce the total production. What's more, demand from the feed industry will increase as the peak season comes in the next half. In this context, the price rise of vitamin products is predicted to continue in H2 2017.
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Impact on feed producers
China’s feed producers are getting under large pressure in the time of surging vitamin prices. Nutritional additives for the animal feed production have been reached up to three times higher prices.
As a result, a growing number of manufacturers in China secretly lessens the input of vitamins in their feed production to balance out the higher costs. However, this leads to a nutritional level of feed quality under the accepted standards of the Ministry of Agriculture in China. As a recently conducted study shows, about one-third of China’s animal feed manufactures didn’t add the sufficient number of vitamins for their products.
Furthermore, the study revealed, that 38% of Chinese manufacturers have used an excessive amount of copper and zinc for their feed, which in the end can be harmful to the animals directly, but also to the environment and the human end consumer of animal products like dairy products or meat.
Looking at the vitamin types that are particularly lacking in Chinese substandard feeds, vitamin B1 has the largest share of 26%, while vitamin A and vitamin E are following the ranks with 21% and 19%, respectively.
Vitamins in feed
Vitamins are low molecule organic compounds, and essential for animal metabolism. It cannot be synthesised in bodies of animals, so one way to get them is through feeds. Mineral feed is generally a mixed feed that comprises of minerals for the nutrition of farm animals enriched with vitamins, flavouring agents, facilitating agents, as well as medicated ingredients.
The worldwide feed premix market has grown to a market worth of around USD6.37 billion in the year 2016. According to market insiders, the general rate of growth in the next years is estimated at a CAGR of 3.4%. Vitamins are generally the major input into feed premixes.
Looking at China in the global feed premixes market, the country is leading the production together with the USA as it also counts as one of the fastest growing markets for consumption among other BRICS states.
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