BASF has confirmed that its Japanese joint venture partner Takeda will stop manufacturing vitamin C by the end of 2007, leaving DSM as the only major vitamin C producer outside of China with its Dalry plant in Scotland.
Vitamin C prices have soared in recent weeks from less than $4/kg to well over $10/kg. This is in part due to sharp rises in the price of maize, a raw material in the vitamin C production process.
However, it is not clear whether the other major factor is the withdrawal of export subsidies that have historically enabled the Chinese to sell vitamin C so cheaply, or new environmental rules that have forced plants to shut down for maintenance.
Leo Hepner, a consultant to the food and pharmaceutical industry, said a handful of Chinese companies were now able to dictate terms to the global market: "Vitamin C used to cost $15/kg, and then the Chinese came in and started selling it below cost for $3.50, which has forced almost all of the other major players to throw in the towel and exit production." He added: "The only reason the Chinese could sell it at these prices was due to export subsidies. But now that these have been withdrawn, prices have gone up again."
Prices had also spiked as manufacturers shut plants down for maintenance in the wake of new environmental rules, said Martijn Adorf at DSM Nutritional Products.
Under new European Regulations, EU importers of substances like ascorbic acid must now supply detailed information about suppliers' plants, including evidence that waste streams were treated in accordance with international standards and good traceability systems were in place, he said.