Affected by the BASF chemical plant explosion, the average market price of vitamin A has increased by over 160%.

On July 29th, a chemical plant owned by chemical giant BASF at its Ludwigshafen base in Germany exploded and caught fire.

On August 7th, BASF announced that the factory where the fire occurred mainly produces aromatic raw materials and precursors for the production of vitamin A, vitamin E, and carotenoids. The supply of some vitamin A, vitamin E, carotenoid products, and some fragrance raw materials has been affected by force majeure.

BASF is an important global supplier of vitamins, and its Ludwigshafen site is one of the major production bases for vitamin A and vitamin E. The site has a production capacity of 14400 tons/year for vitamin A, accounting for approximately 26.7% of the global market, and 20000 tons/year for vitamin E (oil), accounting for approximately 13.8% of the global market.

Under the "shock wave" of the explosion, domestic vitamin prices skyrocketed in response.

According to data from Baichuan Yingfu, as of August 9, 2024, the average price of vitamin A in the domestic market was 230 yuan/kg, an increase of 162.86% compared to July; The average price of vitamin E in the domestic market is 150 yuan/kg, an increase of 80.72% compared to July.

According to a research report by Open Source Securities, the total global production capacity of vitamin A is 43900 tons, of which 14400 tons are produced by BASF Ludwigshafen, accounting for over 30% of the total production capacity. Other major producers include Xinhecheng (002001) with a production capacity of 8000 tons, DSM with a production capacity of 7500 tons, Zhejiang Pharmaceutical (600216) with a production capacity of 5000 tons, Adisseo (600299) with a production capacity of 5000 tons, and Jindawei (002626) with a production capacity of 4000 tons, accounting for 18%, 17%, 11%, 11%, and 9% respectively.

The global production capacity of vitamin E is about 150000 tons, including 30000 tons from Xinhecheng, 30000 tons from DSM, 30000 tons from Nengtech (002102), 20000 tons from BASF, 20000 tons from Zhejiang Pharmaceutical, 10000 tons from Haijianuo, and 10000 tons from Beisha, Jilin. The production capacity proportions are 20%, 20%, 20%, 13%, 13%, 7%, and 7%, respectively.

It is worth noting that currently, the domestic vitamin industry is in the summer maintenance period, and many vitamin companies have stopped production for maintenance. For example, the vitamin E production line of Zhejiang Pharmaceutical stopped production for maintenance in mid July for a period of 2 months; The Xinhecheng Vitamin E production line is scheduled to be shut down for maintenance from early July to early September; The vitamin E production line of Beisha Pharmaceutical is scheduled to be shut down for maintenance starting at the end of August, and is expected to last for 8-10 weeks.

In addition, on February 15th of this year, DSM announced that it will initiate the process of divesting its animal nutrition and health business, and is expected to achieve business separation by 2025. In early July, the closure was affected by floods, and the supply of vitamin A and vitamin E intermediates at DSM's Swiss factory was affected.

In terms of demand, the downstream demand for vitamins mainly comes from the fields of feed, food, medicine, etc. Among them, feed accounts for about 70%, and vitamins A and E are widely used in animal feed.

Guohai Securities stated that the fluctuation in demand for vitamins mainly comes from changes in the amount of additives in feed. When the profitability of the breeding end increases, downstream consumers have a higher tolerance for the amount and price of vitamin additives.

Since 2023, domestic pig farming has experienced a significant reduction in pig production capacity due to the combination of the pandemic and long-term losses. Currently, downstream farming has entered a profitable cycle, providing strong support for the demand for vitamins.

At the same time, in 2024, overseas vitamins will enter a replenishment cycle, and China, as the main supplier of vitamins, will see a significant increase in vitamin exports. According to the General Administration of Customs, in the first half of 2024, the export volume of vitamin A and vitamin E increased by 17.4% and 29.5% respectively year-on-year.

Everbright Securities stated that with vitamin manufacturers reducing production and stopping maintenance, coupled with the continuous recovery of demand, domestic vitamin manufacturers have a strong willingness to raise prices, which is expected to drive vitamin prices to continue rising in 2024.

Diphenyl ether manufacturer

Article source: The Paper News