For the Quarter Ending September 2023
The price trajectory of Vitamin B2 exhibited a notable decline in the third quarter of 2023, with FOB values falling from $45500/mt to $42550/mt from July to September, signaling a pessimistic close to the quarter. The corresponding low demand and high availability of supplies that participants had on hand to meet the total demand were the main factors that supported this price decline. The US economy's growth continued to worry the Federal Reserve throughout the quarter, raising the possibility of higher inflationary pressures. The US manufacturing sector contracted in July for the ninth consecutive month, according to the data, as businesses trimmed employees and production as new orders fell as a result of a slump in overall demand. Due to the sufficient supply provided by domestic producers, the demand for nutraceuticals, particularly vitamin B2, entering the United States from outside decreased substantially from the second half of the quarter Q3. Furthermore, even as the Federal Reserve continued its vigorous monetary tightening in an attempt to lower record inflation, the increase in inventories indicated a broad lack of demand from consumers overall. A number of positive economic indicators were found later in the second half by states participating in Soft Landing Summer, indicating that the US economy is avoiding the recession that many had predicted due to Fed intervention.
Vitamin B2 values in China saw a stabilization towards the conclusion of the third quarter of 2023, with an average of $37560/mt in September, after starting the quarter at a negative $38820/mt in July. Due to escalating deflation, high youth unemployment, and weak foreign demand, the second-largest economy in the world grew less rapidly than expected in the first half of 2023. This trend continued in the second half of the year, and the economy began the third quarter of 2023 on a negative pedestal. String currency—a stronger Yuan (RMB) relative to the USD—and rising end-user demand (both locally and internationally) have been the two most important reasons driving China's price increase for Vitamin B2 in the second half of this quarter. The arrival of China's golden week in September also contributed to the ensuing price increase for the Q3 quarter since there was a slight increase in manufacturing and freight because of an increase in demand and queries prompted by possible shortage fears. Due to the strengthening of the Yuan and the decline in the value of the US dollar, exporting nutraceuticals—including vitamin B2—became more expensive, impacting both domestic and international markets.
In Europe - After beginning the third quarter of 2023 with a negative $49000/mt in July, vitamin B2 price values in Germany's domestic market stabilized toward the end of the third quarter, averaging $47900/mt CFR Hamburg in September. The primary driver prompting the Vitamin B2 suppliers to drop their quotations over the course of the quarter has been an excess of inventory levels, which have met the overall demand. Industry analysts reported that the German industrial sector was still having trouble at the commencement of the third quarter. German suppliers of nutraceuticals reported significant declines in output, new orders, and factory prices at the start of the third quarter of 2023, indicating that the situation has gotten worse. Another factor contributing to the sales decline was the constant, sharp decline in new orders, the largest fall in over three years. Customers were waiting and lowering stock levels over the course of the time period, indicating a lackluster demand for all types of commodities, including Nutraceuticals. Uncertainty in the economy, the geopolitical situation, and the tighter financial conditions all influenced the decline in demand. Prices, however, increased because of higher manufacturing costs in China as well as higher freight costs in advance of China's Golden Week holiday (a big importer) in the latter half of Q3 2023.
For the Quarter Ending June 2023
The North American domestic market for Vitamin B2 showed a decreasing price trajectory during the second quarter of 2023. The price negotiations for FOB New Jersey decreased from $48500 per MT to $48000 per MT between April and June 2023, showing a marginal decrease of 1.0% during the quarter. Demand for Vitamin B2 from end-users in the pharmaceutical and nutraceutical industries was lower across the US due to prudent inventory levels on their shelves. Inflation in the country has declined in line with energy prices. However, despite falling energy prices, there is still significant underlying inflation, well above the Federal Reserve's target, according to industry experts. Despite the mixed sentiment on Vitamin prices, the country's nutraceuticals market has shown mixed market patterns. Compared to a loss of 1.9% over the previous 12 months, the USDX has lost 2.5% for the year to 12 May 2023. As a result, the US dollar has become strong and has captured demand, allowing buyers and wholesalers to profit from both the potential and volatility of the country's market, including that of nutraceuticals.
In the second quarter of 2023, the Asia-Pacific Vitamin B2 market showed a bearish price sentiment. Price negotiations for FOB Shanghai, China, began to decline, falling from $40340 per tonne to $39200 per tonne between April and June 2023. This price fall has been in place since the middle of the second quarter of 2023, as demand for Vitamin B2 from end-users in the pharmaceutical and nutraceutical sectors declined both domestically and internationally. Chinese Vitamin B2 producers were forced to sell the product at lesser margins because of lower demand and inquiries from regional and international customers. In the second half of the quarter, China's nutraceutical market began to pick up as companies began to expand domestically and internationally, but this did not prove beneficial for the Vitamin B2 market. With demand and inquiries having fallen in the latter weeks of April, there was ample supply from local suppliers, which was the other factor driving prices lower. China's manufacturing activity contracted for a third consecutive month in June, albeit at a slower pace, as pressure mounts on the authorities to unleash more stimulus to support the nation's economy. Analysts have begun to downgrade their forecasts for China's economy for the rest of the year after May industrial production and retail sales data missed expectations, a sign that the post-pandemic recovery seen in the first quarter began losing momentum in the second.
The second quarter of 2023 for the German Vitamin B2 market was not as bullish as earlier predicted, with price discussions for CFR Hamburg falling marginally from USD 51,000 per tonne to USD 50,000 per tonne. Gas prices in Europe have fallen to their lowest levels in April since the energy crisis began, increasing optimism for a stronger economic recovery, which undoubtedly improved trade from Asia. However, due to the more than sufficient stocks of Vitamin B2 held by domestic providers at a time of low demand, price negotiations eased during the quarter. With the slight improvement in European economic conditions, the European Union (EU) has plans to reduce its dependence on Chinese imports by boosting the country's manufacturing industry. To avoid potential future shortages, they have been stockpiling goods in warehouses, which has led them to lower their price margins later in Q2 in order to reduce their inventories. Inflation in Germany rose again in June by more than 6%. However, the impact on the country's nutraceuticals industry is yet to be seen. According to several industry experts, weaker-than-hoped-for economic performance in China since the reopening of the country from strict COVID-19 restrictions, a looming US recession, and continued monetary tightening appear to be weighing on German business sentiment.
During the first quarter of 2023, the price trend for Vitamin B2 showed a decline, with prices in New Jersey settling at $54670 per MT in January and $50150 per MT in March, respectively. Industry players had predicted that the pharmaceutical and nutraceuticals industry would remain in rough waters during the first quarter of 2023 following the previous quarter's market turbulence. However, consistent end-user demand and low to moderate inquiries from downstream providers managed to control the market dynamics. The relaxation of China's zero-covid ban during the first week of January had a favorable effect on the first half of the quarter as the supply chain and trade remained strong, leading to a decrease in freight costs. The second half saw a sharp reduction in demand, which lowered prices. Domestic merchants dropped manufacturing orders by as much as 40% in the second half of the first quarter due to a decline in local consumer demand and record-high warehouse stocks.
In the Asia Pacific, China's decision to remove harsh COVID-19 limitations in the first week of January provided the trillion-dollar economy, which had suffered significantly over the previous four years, fresh vitality. As a result, the first quarter of 2023 turned out to be somewhat favorable for China. However, the FOB Shanghai pricing pattern in the domestic Chinese market during the first quarter of 2023 was negative, with prices declining from $45655/MT in January to $42650/MT in March. The price of Vitamin B2 in the domestic market for nutraceuticals and pharmaceuticals saw a roll-over sentiment for two consecutive weeks in January after a week-long Lunar Holiday. Technically speaking, the markets started off strong when they got back from holiday, with more local and foreign orders and shipments, but things eventually took a turn for the unthinkable. Following a week-long holiday and the markets' recovery from the covid-induced lull, China's manufacturing sector had a significant decline in the second half of 2022. China's decline is mostly attributable to a decline in end-user demand in both domestic and international markets.
The pharmaceutical and nutraceutical industries in Europe got off to an unfavorable start in the first quarter due to an increase in orders and shipments from domestic and international markets. The prices for Vitamin B2 decreased during the first quarter of 2023 from $56970 per MT in January 2023 to $53080 per MT in March 2023, respectively. Because the outlook for supply and demand appeared promising, most of the quarter, participants in the local market recognized favorable arbitrage. As China's surprise covid re-opening and the protracted Russia-Ukraine war reduced inflation pressures, the European market showed encouraging signs. This, combined with an improvement in end-user demand from both producers and suppliers, paved the way for a quick recovery in activity. In the second half of the quarter, the cost of shipping containers between Asia and Europe also dropped significantly to pre-pandemic levels or lower, illuminating a strong demand and supply dynamic.