Vitamin Prices Soar 256% in A Week
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BASF has 234 production bases worldwide and operates in 93 countries. We have 112000 employees and a sales revenue of 68.9 billion euros in 2023. The products belong to six major business areas: chemicals, materials, industrial solutions, surface treatment technology, nutrition and care, and agricultural solutions.
Announcement of BASF company：
On the evening of August 7th, BASF (China) announced that due to the fire that occurred at a facility in Ludwigshafen, Germany on July 29th, 2024, BASF Europe (also on behalf of its affected affiliates) announced that from now until further notice, the supply of some vitamin A, vitamin E, carotenoid products, and some fragrance raw materials will be affected by force majeure. The fragrance ingredients involved include ionone, white flower alcohol, DL menthol, rose ether, ethyl linalool, orange blossom tertiary alcohol, and isophytol. BASF actively maintains communication with customers to provide the latest information on the supply capacity of affected products.
1.Event Course
It is reported that the location of the explosion accident in Ludwigshafen is the headquarters of BASF. At around noon on July 29th, an organic solvent leak occurred at a facility in the southern part of BASF's Ludwigshafen base, followed by an explosion and fire. BASF's fire department extinguished the fire at 12:45, and about ten employees were injured.
After a week of waiting, BASF has provided the latest investigation information: the device that caught fire produces fragrance raw materials and precursors for the production of vitamin A, vitamin E, and carotenoids.
All injured employees had already left the medical center on the night of the accident. This incident did not cause air, water, or soil pollution. BASF's environmental monitoring vehicles did not detect any products inside or outside the factory area. The relevant government departments are aware of the incident.
At the same time, BASF also stated, "We deeply regret that the accident caused damage to the equipment, resulting in the suspension of production and supply of the above-mentioned products. The cleaning, inspection, and maintenance work of the equipment has been initiated
2.Market conditions before the accident:
As a feed additive, the prosperity of the vitamin industry is closely related to the breeding industry. In the past few years, due to the downturn in the pig farming industry, farmers have tended to reduce the addition of vitamins, resulting in insufficient demand for vitamins and a decline in prices. For example, the price of VA fell to around 70 yuan/kg last year. This has almost fallen below the cost line
However, since the beginning of this year, with the improvement of the prosperity of the aquaculture industry, the vitamin industry has clearly recovered.
According to import and export customs data, from January to June 2024, China's export volume of vitamin A was 2897.38 tons, a year-on-year increase of 17.44%; Among them, the export volume of vitamin A in China in June was 599.85 tons, an increase of 33.5% year-on-year and 11.13% month on month. From January to June 2024, China's export volume of vitamin E was 54999.74 tons, a year-on-year increase of 29.6%; Among them, the export volume of vitamin E in China in June was 8794.2 tons, a year-on-year increase of 34.3% and a month on month increase of 4.3%.
From the perspective of product prices, vitamin products are generally showing an upward trend. Before the BASF accident, the transaction price in the VA market had reached 90-95 yuan/kg, an increase of nearly 30% from 72 yuan/kg at the beginning of the year; In terms of the VE market, it has reached 90 yuan/kg, an increase of nearly 50% from 60 yuan/kg at the beginning of the year. Correspondingly, the performance of vitamin production enterprises has improved one after another.
According to relevant analysis, we can know that before the BASF accident, the supply and demand market for vitamins was in a tight balance, and the vitamin industry as a whole showed a characteristic of not being weak in the off-season.
3.market response
BASF announced on the evening of August 7th that the supply of some vitamin A, vitamin E, carotenoid products, and some fragrance raw materials has been affected by force majeure due to the explosion accident. This news immediately caused a shock in the global vitamin market. Taking vitamin A as an example, its market price has skyrocketed from 92 yuan/kg before the accident to 180-190 yuan/kg, an increase of nearly 100%. Moreover, the price of vitamin A from a well-known domestic vitamin manufacturer has risen to 320 yuan/kg, an increase of nearly 250% compared to before the accident. The price of vitamin E has also experienced a similar increase.
It is worth mentioning that before BASF officially announced the supply cut-off on the evening of August 7, although the market was generally in a wait-and-see attitude, the price had already started to rise sharply. Among them, the reference transaction price of some VA rose to 180 yuan-190 yuan/kg; The reference transaction price of VE is in 120 yuan-130 yuan/kg. Many dealers had already felt the bad atmosphere in the market at that time. "However, although the price of vitamins in China has also been affected, China is also the most important vitamin producer in the world. According to public information, the main domestic VA manufacturers are Xinhecheng, Zhejiang Medicine, Andisu and Jindawei, with production capacities of 8,000 tons, 5,600 tons, 5,000 tons and 4,000 tons respectively. The main manufacturers of VE are Xinhecheng and Zhejiang Medicine, with the production capacity of 60,000 tons and 20,000 tons respectively. In addition, the VE production capacity of Garden Bio and Xinfa Pharmaceutical under construction is 20,000 tons and 30,000 tons respectively. They all think that the explosion accident in BASF Germany will have a great impact on the global supply and demand of vitamins. Colleagues also have very good business opportunities. For example, Baichuan Yingfu seems to see business opportunities, and has planned to hold a seminar on August 22nd-23rd.
According to media comments, the impact of the BASF explosion on the vitamin industry depends on the extent of damage to the accident equipment. Regardless of whether this accident occurs or not, the vitamin industry is already on an upward trajectory. So, this accident is like an accelerator for the recovery of the vitamin industry.
4.Challenges and Opportunities Faced by the Global Vitamin Market
On January 10, 2018, an explosion occurred in DSM's Swiss factory, which mainly produces vitamin products such as VA, VE, VK and astaxanthin. Affected by the accident, the prices of related vitamin products jumped. According to reports at that time, the price of VA in Europe rose to 360 euros-430 euros/kg; The domestic VA price rose to 1100-1400 yuan/kg, and the manufacturer's quotation reached 1600 yuan/kg.
The accident is still fresh in people in the industry. At that time, after the accident, the price of the affected vitamin products rose all the way. The present situation is the same as that of six years ago, where The quotation are stopped, sales are tight, and prices are soaring.
"The root cause behind the accidents of BASF and DSM's vitamin production devices is that their production devices have the problems of aging lines and outdated technology." Recently, well-known domestic vitamin manufacturers told the media that unlike our domestic chemical enterprises, they often need to stop for maintenance. Like our company, it will be overhauled for more than one month every year. This year, we will follow the usual practice.
The BASF accident has undoubtedly brought great challenges to the global vitamin market. In the short term, the market will face tight supply and soaring prices. This will not only affect vitamin producers and distributors, but also affect downstream industries such as food, medicine and feed, which may trigger a series of chain reactions.
However, the crisis also contains opportunities. For other vitamin manufacturers, this is a good opportunity to expand market share. At the same time, this incident also highlights the fragility of the global vitamin supply chain, which may promote structural adjustment of the industry and promote supply diversification and localization of production.
In addition, this incident once again emphasized the importance of safe production. The safety problem of chemical industry is not only related to the life safety of employees, but also may have a far-reaching impact on the global market. Governments and enterprises of various countries may take this opportunity to strengthen the safety supervision of chemical production.
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