Veterinary APIs and feed market

"Dual control of energy consumption" has become a crucial driving force for the contradiction between supply and demand of the veterinary APIs market. On Sep 16, the state planning agency published new policy guidelines. The policy is to improve the dual control level of high-energy intensity and total energy consumption, propose strictly setting the dual control index of energy in each province, and improve the management and assessment system.

To sum up, the main reasons for the above situation are as follows:

1) China must meet its carbon emission targets and achieve a green planet;
2) Losses at Chinese power producers have left large gaps in power supply;
3) This year, the price of raw materials has skyrocketed, but the price of finished products has not increased correspondingly, leading to serious internal competition among Chinese enterprises and serious losses. The state needs to control the total supply and force export enterprises to raise their prices to maintain a reasonable market price order.
4) China's economy has also been badly hurt by the rise in the value of RMB vs USD.

To protect people's livelihood, the only way to achieve this goal is to limit industrial electricity consumption.

For the veterinary APIs and feed additives industry, the above mentioned policy brings about the reduction of the start-up rate caused by power limit and the overlay impact of the short supply of the upstream raw material.

Overall, there will be no difference in the market supply shortage and price increases. However, the market performance of each product will be different.

On Sep 13, the Yunnan provincial government issued a document stating, "Strengthen production control in the yellow phosphorus industry to ensure that the average monthly output of yellow phosphorus from September to December should not exceed 10% of the output in August 2021 ( namely to cut production by 90%)”. The market price of phosphorus rose in response, and the supply of dichloroacetonitrile, a critical upstream raw material for Florfenicol, was limited and pushed the price rise. The synthesis process of dichloroacetonitrile applies phosphorus pentoxide as a solid dehydrator for remove water. Affected by the high price of upstream raw materials and its production capacity, the cost of Florfenicol rose rapidly. It can't even wait for the API Trade Show scheduled on 12-14/Oct. Before the Mid-Autumn Festival holiday, the price quickly exceeded 600 yuan, and by September 22, the average market price was 635 yuan, the highest since 2018.

Production restrictions, shutdowns caused by the dual control policy on energy consumption are combined with increased seasonal demand. As a result, we estimate that the price of Florfenicol will continue to rise after API Show and through the end of the year, and it is more likely that there continue to be an enormous supply gap.

In the middle of September, as two Doxycycline factories located in Henan and Hebei provinces stopped production for routine maintenance one after another, almost all the Doxycycline manufacturers were in a suspension or semi-production state. The output was limited, the goods in circulation on the market were not sustainable, and the market was strong at a transaction price of 670-685yuan/kg. It was almost the same as last August when production stoppage led to a sharp drop in supply. In the absence of quick entry of new suppliers and with relatively stable demand, the average price of Doxycycline HCl will most likely hit 700yuan/kg again.

The current vitamin market as a whole is running smoothly. The routine summer maintenance has ended one by one. Being affected by the high cost of raw materials, upstream factories desire to raise prices. Hit by the deteriorating return from the pig and poultry breeding, the overall demand is weak, the downstream stock intention is not high, mainly to replenish for ready need. The traders' inventory pressure becomes more remarkable,negotiation transaction is common.

Because of the dual control of energy consumption, the cost rose significantly, the market concern increased. How the future market will go, we suggest a wait-and-see.

The cost of critical raw materials is recently going up. Manufacturers' quotation is firm, and the market becomes relatively strong. Choline Chloride price is estimated to maintain a high level in the short term. We suggest more attention to be focused on the cost change.

The production of D-Calphan is more decentralized, and new manufacturers are entering the ranks of suppliers. There is a minimal possibility for market manipulation. Prices are still hovering in the bottom range, and despite the pressure of rising costs, the supply side lacks strong determination to raise prices.

We have the following products in stock for immediate shipment:

Standard:EP 8.0, CPV2020
Manufacturer: Hebei Jiupeng
Welcome to contact us for TDS and typical COA.

The product is used as a feed supplement for nutrition fortification.
Quality: China national feed additive standard GB/T 7299-2006.
Pharmaceutical standard: CP/USP/EP
Manufacturer: Various sources.