By Lydia Ma, Senior Analyst
Chinese vitamin B3 export prices have sharply increased by 38% over the past two weeks due to a shortage of raw materials, which has led to most Chinese vitamin B3 manufacturers stopping their production.
FOB China export prices rose from $4.50-4.70/kg on 13 April to $6.20-6.50/kg on 27 April. Now, producers are reluctant to sell, while manufacturers, traders, and end-users have reported extremely low stock levels.
China, India, and Switzerland are the only countries with vitamin B3 capacity. The shortage of raw materials in China started at the beginning of 2023. A lack of paraquat led to a shortage of pyridine, a key raw material for vitamin B3. Demand for paraquat has declined due to rising demand for glyphosate, an alternative herbicide to paraquat.
Due to raw material supply uncertainty, a large vitamin B3 producer stopped offering prices for several months and was hesitant to sign long-term contracts. The producer suggested in early March that this situation would probably last until September.
A US trader said in early April that all the suppliers it had been talking to had lined up their orders until June, which meant August delivery into the US at the earliest.
Meanwhile, the Chinese domestic market was described as "more active" than the export market.
Chinese domestic prices increased from CNY 35.00-40.00/kg to CNY 50.00-52.00/kg over the past two weeks. However, very few deals were concluded above CNY 50.00/kg as there was insufficient material to trade.
Earlier in April, a source mentioned that producers could consistently sell material against a backdrop of rising prices due to the lack of supply. The source noted that deals had been concluded at CNY 32.00/kg, CNY 35.00/kg, CNY 38.00/kg, CNY 40.00/kg, and CNY 42.00/kg in recent months but noted that contracts previously signed at CNY 25.00/kg were still being executed.
An international producer started offering prices at CNY 52.00/kg (equivalent to $6.70/kg) with limited volume in China's domestic market on 20 April.
Some producers were “not executing” previously signed low-priced contracts and were prioritising domestic contracts priced above CNY 40.00/kg (equivalent to $5.17/kg), according to sources. Some producers were said to have orders booked as far out as October.
On 20 April, an international trader said it was offering at $5.50/kg FOB China, adding that deals had not yet been concluded at that level because Indian producers were still offering at $4.50/kg FOB India.
During the last week of April, a Chinese producer indicated prices at $6.20-6.50/kg, adding that producers had no stocks and all factories had stopped production. It suggested that producers might restart production in May and added that although prices were increasing rapidly, producers were not gaining any profit margin.
In North America, prices increased from $4.40-4.46/kg to $4.75-5.00/kg in the past month.
A North American trader said, “B3 is going nuts, nothing [available] below $5.50/kg in China, the market is heating up fast.”
A buyer said that recovery prices from China are at or above $6.00/kg. The source said there was still a lot of stock in the pipeline in the US, with material being sold at highly discounted prices to the higher FOB China prices, but it was no longer possible to buy in the $4.00s/per kg range.
A significant portion of Q2 requirements are already covered in North America.
A US trader expected vitamin B3 prices to remain firm for the rest of the year.
DDP NW Europe prices increased from €4.10-4.50/kg to €4.30-4.50/kg in the past month.
A European producer said that enquiries and demand for vitamin B3 had increased recently, adding that suppliers were unwilling to commit to supplying forward. It suggested that prices could reach $8.00/kg FOB China.
The source said that niacin was at a price level without any profit margin, which was why some Indian manufacturers were producing less and had closed their factories.
“Now €4.50/kg and above is being offered. There is quite some material on the water on the way to Europe. So some customers are okay for material, but others might be getting nervous. We need to put a premium in case of risks from China," said the producer.