Persistent Demand Slump Impact the Nutra and Pharma Industries, US Manufacturing Orders from China Down 40%
Persistent Demand Slump Impact the Nutra and Pharma Industries, US Manufacturing Orders from China Down 40%

Persistent Demand Slump Impact the Nutra and Pharma Industries, US Manufacturing Orders from China Down 40%

  • 08-Dec-2022 1:48 PM
  • Journalist: Jacob Kutchner

The most recent Supply Chain data indicates a 40% decrease in the US manufacturing orders of various nutraceutical products and active pharmaceutical ingredients, including Vitamins, in China. Due to the drop in orders, industry experts predict that Chinese factories will close two weeks earlier than usual in preparation for the Chinese Lunar New Year, which will be celebrated on January 21 of the following year. As a national holiday, the seven days following the holiday are recognized. Many manufacturers will be closed for the holiday in early January, which is substantially sooner than last year.  

Carriers have begun putting their active capacity management plan into practice by announcing more blank sailings and stopping services to balance the supply and demand. "The unceasing decline in container freight charges from Asia, brought on by a collapse in demand for nutraceuticals and APIs, is forcing ocean carriers to cancel more sailings than ever before as vessel utilization approaches unprecedented lows. 

The maritime sector appears to be going through a particularly rough patch. As new tonnage enters the market, there is a mix of diminishing demand and overcapacity. Economic ambiguity, geopolitical tensions, and fiercer market competitiveness will all complicate the container transportation industry further. 

The possibility that there are some preliminary indicators of an inventory correction of nutraceuticals and pharmaceutical products including Vitamin B12, Vitamin C, Vitamin B9, Melatonin, Glucosamine and others is also a matter of conjecture. As carriers cancel more ships and there is little upward momentum as we approach Chinese New Year, the overall business volume and order flow out of Asia remain muted. Experts state, "Space has already tightened, so even though demand is low, space may be more expensive in January and throughout Q1 2023.” However, the need to restart the order and delivery cycle and inventory depletion appears to be trending upward.

However, imports of various nutraceutical and pharmaceutical products into the United States from Asia fell to their lowest level in 20 months in October. There is not much potential for further price reductions as the spot rate for a container from Asia to the United States West Coast has passed the breakeven point. Los Angeles and Long Beach, two significant ports on the West Coast, have seen the biggest decline in trade. 

The nutraceutical and pharmaceutical industries may be negatively impacted by these declining orders from Asia, according to ChemAnalyst, as there is a lot of speculation that the Chinese government will be forced to modify its zero-COVID policy in 2023 as a result of deteriorating economic trends and the most recent protests.

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