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Vitamin C: Distruptions to Production in China to Maintain Firm Market

Source: FLEXNEWS
30/06/2008

30 June 2008 - Vitamin C prices have moved dramatically higher in recent months with Chinese manufacturers adjusting quotations higher in line with rising energy and corn prices.

The continued weakness of the US currency has also been identified as a contributing factor behind the recently very bullish market.

The momentum has been maintained by prospects of additional shorter term disruptions to production and logistics of Vitamin C output in China during the Olympic Games.

The Chinese government has already imposed restrictions on the transport and shipment of hundreds of chemicals and certain additives during this summer.

Local governments have instructed some chemical and additive producers to operate extended plant shutdowns during the period 20 July – 30 August 2008.

This instruction is in line with the Chinese government’s ambition to reduce coal based energy consumption and pollution during and around this year's Olympic Games.

China has two Vitamin C factories located at Shijiazhuang, not far from Beijing.

The rush to export commodities from China before the start of the Olympic Games is already pointing towards congestion at the major shipping ports and is expected to put further pressure on global Vitamin C inventories.

Some analysts say the Vitamin C market price may ease somewhat during Q4 2008, once Chinese authorities have relaxed restrictions thereby allowing producers to return to normal output.



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