Guy Soreq, Founder and CEO, Glowlit
Back in November, prices of vitamin C have increased by 200% in less than a month. There is an ongoing anti-dumping investigation against China.
Around the world, Vitamin C is in short supply. Distributors fortunate enough to have stock are raising prices and allocating goods to the most urgent demand. Back in November, prices of vitamin
C have increased by 200% in less than a month, with spot offers entered into Glowlit reaching double digits in USD.
Meanwhile, India is conducting an anti-dumping investigation on imports of vitamin C from China. The complaint was initiated by Bajaj Healthcare Limited, and backed by Amoli Organics Pvt Ltd, Reckon Diagnostics Pvt Ltd, and SR Biochem. In September 2020, these companies argued that Chinese vitamin C dumping
has led to a decline in local producers’ market share, profits, return on capital employed and cash profits. Until today, only two Chinese vitamin C manufacturers have been named as interested parties in dumping of material in India, CSPC Weisheng Pharmaceutical (SHIJIAZHUANG) Co., LTD & Shandong Luwei Pharmaceutical Co Ltd.The investigation will cover market activity from FY17 - FY20.
As the two countries battle for their share of the Indian market, the government of India may respond with tariffs raising the price of imported products (as they did in 1999 against Russia and the EU). Chinese manufacturers will need to find new channels globally which will cause supply of Vitamin C to increase over demand in certain parts of the world. Though today we face a shortage, the tables are likely to turn. Buyers should consider this, and promote their potential to be long term purchasers, when negotiating with suppliers for hard to come by product today.
THE OAK AND THE REED
Countries are flexing their control over soft commodities
markets amidst continued rising prices around the world. We are seeing yet another wave of protectionist policies intended to control domestic grain prices. While these measures may offer some relief in the short term, they are likely to lead to further erratic market behavior in the medium and long terms. Today we are reviewing the latest in shifting economic policies, and reminding our readers to stay nimble as the aftershocks reverberate across our supply chains
In Russia, the government has launched export duties on grains in response to rising prices. The duties started as a €25/t ($30.33/t) levy on wheat shipments, and will be raised further to €50/t beginning the 1st
of March. Duties for corn and barley exports are next, beginning mid-March. Russia accounts for 20 percent of the global wheat market, and is among the top 10 exporters for all grain crops, so we can be sure that the world will feel the impact of these decisions.
DIFFERENT APPROACH BY ARGENTINA
Meanwhile, the government of Argentina has taken a different approach, forcing price caps on food and other goods ahead of the midterm elections this October. The worsening business climate has forced companies to leave the Argentine market. Most notably, Walmart
departed after 25 years in the country. The CEO of Danone has also announced that the company is reviewing its operations in Argentina. As suppliers are forced to sell at a capped price, we are likely to see a ripple effect across the supply chain
In the long term, these policies may disincentivize production of crops for the following season as producers’ profit margins narrow. So how can we build contingencies to help our businesses cope with the onslaught of aftershocks to come? We suggest three ways:
- Daily (yes, daily!) risk assessment. Log into Glowlit over your morning cup of coffee to assess daily changing prices. Remember that your report is open and updating live for one full week after a price entry.
- Weekly (don't overdo it) communication throughout the supply chain. Be sure to communicate both upstream and downstream of your position in the market.
- It's never too late to establish and maintain relationships with alternative suppliers and logistics networks. It all boils down to these important words: know your products.