COVID-19's Impacts on China Vitamin Industry

K: Hello all and welcome to today’s webinar- COVID-19’s impacts on China Vitamin industry I’m Kay from Kcomber and by my side is Nicole Kcomber is a leading market intelligence provider based in China since 2001 N: Hello everyone and it’s my pleasure to be here K: This presentation will give you an overview on the current vitamin market situation in China, provide an outlook for the impact of COVID-19 on China Vitamin Industry and demonstrates an opportunity for your own effective vitamin market research in China If you have any question, please write them down in the chat box or send to your account manager so that we can gather them after the presentation and reply you by email And we will record the webinar, upload it to YouTube and send you the link later N: All the information we provide are from our brands CCM and Tranalysis All the information is sorted by CCM You can review the Exit-entry policies and measures and relevant local news during COVID-19 pandemic in different countries And you can also understand the industry developments in China under COVID-19 by reading our researchers’ insights on CCM Impact Factor platform And CCM has online platform covering agriculture, chemical and food& feed industry You can get the industrial reports, newsletters and market data on CCM Vitamin online database Another Brand Tranalysis provides import and export analysis such as import export price, quantity, origin/destination country, specification, trade term, manufacturers, buyers and so on And we will visualize the analysis into different charts and graphics Don’t forget to contact our team if you would like to know more about the platforms K: Right And the agenda today is as follow: First we will have an overview vitamin industry Then we will talk about the dilemma of the operation and the government’s countermeasures under COVID-19 Next is to talk about the Progress of resuming production of China Vitamin industry Besides, we will talk about the Trends and features of China vitamin prices from January to April 2020 And next part will be the partial vitamin varieties related to COVID-19 epidemic prevention and control What’s more, we will discuss the changes of China vitamin export situation from January to February 2020 And at the end, we will also talk about the new trends for China Vitamin industry under the impact of COVID-19 Without further delay, let’s go into the topics N: As you’re aware, China is the world’s largest vitamin producer The output of vitamins accounts for more than 75% and the China’s API output accounts for over 60% among the world’s total And according to the China Feed Industry Association, 11.92 million tons of feed additives were produced domestically in 2019 Among them were 1.27 million tons of feed-grade vitamins, up by 14.7% from 2018 China’s major players in vitamin industry are Zhejiang Garden Biochemical High-Tech Company, Yifan Pharmaceutical Company, Hubei Guangji Pharmaceutical Company, CSPC Pharmaceutical Group Limited, etc Specifically, Garden Biochemical is the world’s largest vitamin D3 producer that has the capacity of 2,000 t/a; Yifan is the largest vitamin B5 producer and its capacity of Vitamin B5 reached to 12,000 t/a; Guangji Pharmaceutical is the largest vitamin B2 maker that has the capacity of 4,800 t/a; CSPC Pharmaceutical is China’s largest vitamin C exporter and its capacity reached to 40,000 t/a Some foreign countries are also major producers and exporters of vitamins, for instance, Germany has the Vitamin A account for 16% of the global market share, Switzerland’s Vitamin E has 20% of the global market share, the United Kingdom has the Vitamin B5 account for 15% of the global market share, India has the Vitamin B3 reached to 20% of the global market share, and South Korea has Vitamin B2 account for 18% of the global market share Four months into 2020, COVID-19 has raged around the world

As you can see on our platform Impact Factor, at present, the epidemic in China has been brought under control while some European countries and the US have become the hardest-hit areas, and India will become the hardest-hit area, which undoubtedly poses a challenge to the global production and supply of vitamins K: Yes, the coronavirus brought many difficulties to our vitamin producers After the Chinese New Year, various provinces and cities in China issued notices of delayed resumption of work in February 2020 under the impact of COVID-19 epidemic Most of the requirements for resumption of work in various places are not earlier than 24:00 February 9, 2020 And Hubei Province, which has a severe epidemic situation, requires all kinds of enterprises to resume work no earlier than 24:00 on February 13 Therefore, the resumption date of domestic vitamin manufacturers has been delayed by at least 9 days And the shortage of raw materials is also a big problem:The supplies of partial raw materials in producing vitamin in China are relied on import Taking Vitamin D3 as an example, gelatin is one of the auxiliary materials for the production of vitamin D3 The import of Chinese gelatin mainly comes from European and American countries From January to February 2020, China’s total import of gelatin is 895.360 tons, France, Uzbekistan, Germany, the United States and Spain have been the top 5 countries that China imported gelatin from And the lockdown of cities and the limitation on export to prevent and control the epidemic, China’s gelatin market is in short supply, and domestic vitamin D3 manufacturers have to raise prices N: Right, what’s more, vitamin companies have to face the difficulty with transport In February 2020, the COVID-19 epidemic led to the stagnation of domestic chemical logistics transportation, and it was difficult for vitamin manufacturers to ship Guangji Pharmaceutical that located in Hubei said that shipments were blocked due to severe epidemics Since the goods cannot be sent out, customers considered preferential procurement from overseas, and the company’s overseas market was affected Starting from March 2020, due to the control of the domestic epidemic in China, the chemical logistics transportation has been partially restored And another thing vitamin companies have to face is the unfavorable foreign trade situation About 70-80% vitamin production in China are for export In order to prevent and control the COVID-19 epidemic, many European and American countries had lockdown policy along with the imported products been strictly quarantined and certain restrictions have been imposed on import trade At the same time, the COVID-19 epidemic slowed down the economic growth of European and American countries China’s pharmaceutical, chemical, textile and apparel and other major foreign trade companies encountered a sudden drop in overseas orders and cancellations, and vitamin companies faced an unfavorable export environment K: In order to alleviate the adverse impact of the epidemic on the transportation industry, Chinese governments have adopted a number of measures to promote the recovery of the transportation Like the notice issued on Feb. 15 and March 3rd, and the announcement issued on March 6 on the charges and fees And the Notice on Phased Reduction of Port Charge Standards and Other Matters on March 9 From March 1st to June 30th, the two port operating service charge standards for cargo charges and port facility security charges set by the government will be reduced by 20% respectively And general Administration of Customs took measures to stabilize the foreign trade Like simplified the custom clearance process and supporting materials, reduce some fees and carry out special training to guide the enterprises

China has taken a number of measures to promote the resumption of work and production in an orderly manner and achieved good results As of 28 March, operating rate of China’s Industrial Enterprises above Designated Size reached 98.6%, and that of Hubei was 95% The production and operation of some API companies with competitive advantages in China in producing antibiotic, antipyretic and analgesic have returned to normal, and the rate of resumption of work and the rate of major products reached more than 80% N: From the progress of resuming production of China Vitamin industry under COVID-19 from Jan-Apr, 2020 From the table, we can see that no matter it is Guangji Pharmaceutical Company located in one of the epidemic-stricken areas, Hubei, Wuxue or it is Zhejiang NHU Company whose logistics is affected by the epidemic, with the support and instruction of the government and local Health Committee as well as the efforts of the company themselves, their production are backing to normal gradually K: There’s no doubt that price was affected by the epidemic, let’s review the Trends and features of China vitamin prices from January to April 2020 In first four months, price of vitamins in China kept generally stable first and then went up During the Spring Festival, it remained stable due to the inactive market After the holiday, price generally rose because of the outbreak And prices of vitamin D3 as well as other products have shot up in March and April We can see the features of vitamins those leading the price rising trend: The varieties with higher capacity concentration (such as VA, VD3); varieties for epidemic prevention and control (such as VC and VD), varieties those lack of raw materials (such as VB3 and VD3), and production discontinued varieties (such as VB7, VB1 and VE) The ex-work price of VA (feed grade) went up in April by 55.94% compared with that in January while food grade went up by around 43% The ex-work price of VB1 (feed grade) went up in April by around 78% compared with that in January while food grade went up by around 70% and pharmaceutical grade went up by around 70% N: Wow K: Right You see that top 5 increased of average ex-work price in April compare with in January are VitaminD3 (feed grade), VitaminD3 food grade, VitaminB7 feed grade up, VitaminB7 food grade up and VitaminB1 feed grade N: You mentioned the variety for epidemic prevention and control is also leading the price rise Let’s go to our next part- Analysis of partial vitamin varieties related to COVID-19 epidemic prevention and control First let’s take a look at VC A Notice on Further Guaranteeing the Supply and Safety Application of Clinical Drugs was issued on 22 Jan. by Division of Drug Administration of Shanghai Municipal Health Commission and Shanghai Municipal Clinical Pharmaceutical Management Quality Control Center It is said that vitamin C can be used as a prophylactic drug for clinical practice According to overseas reports, New York-Presbyterian Hospital is using vitamin C to treat COVID-19 patients For severe patients, they will receive intravenous injection of vitamin C. It is reported that patients who receive vitamin C treatment are in much better conditions than those who do not Due to the depression in domestic vitamin market, the inventory is low And producers has risen their prices in March and April As a result, the ex-prices of vitamin C (99% powder feed grade) went up in April by 55.31% compared with that in Jan

K: Speaking of epidemic prevention and control, VD3 should also be mentioned A research report published in Immunopharmacol on Dec. 2019 pointed out that vitamin D may be effective in the treatment of RNA virus infection in lung As the novel coronavirus is the kind of RNA virus, Professors believed that vitamin D can boost immunity and protect against COVID-19 Vitamin D3 is a necessary nutrient in animal feeds According to domestic institutions, the global annual consumption of feed-grade vitamin D3 is about 8,000 tonnes, and the annual demand growth rate is about 2-3%, while the annual demand growth rates of food-grade and pharmaceutical-grade vitamin D3 surpass 10% After a decline since 2019, the inventory of vitamin D3 in the domestic market is at an extremely low level In April, Garden Biochemical stopped quoting And Zhejiang Weishi as well as Taizhou Hisound raised their quotations significantly The ex-work prices of vitamin D3 feed grade in April increased by 199.37% compared with that in Jan N: Kay we talked a lot about the domestic market, our audience must be curious about the export situation under the impact of COVID-19 So what are the changes in vitamin export? K: It’s a good question Nicole China’s vitamin export situation was weak from January to February 2020 The vitamin export volume from January to February 2020 was 41,270 (forty one thousand two hundred and seventy) tons, a decrease of 2% from the 42,182 (forty two thousand one hundred and eighty two) tons from January to February 2019 The export value was US $ 329,586,708, which was 15.07% lower than the US $ 388,058,971in January to February 2019 The end of January 2020 coincided with the Chinese New Year holiday And you know that during the holiday, domestic vitamin manufacturers routinely stopped the production, and factories and traders generally stopped shipping N: But the COVID-19 epidemic in late January has prompted increased the enthusiasm for overseas downstream users to purchase, thus pushed up vitamin prices overseas Why the export was weak in Jan. to Feb? K: Multiple reasons Domestic vitamin manufacturers have delayed the resumption of work due to coronavirus, transportation was restricted, and as a result the fulfillment of the export orders signed previously delayed At the same time, the export of vitamins by domestic traders was also adversely affected by the epidemic That’s why the whole vitamin industry export was weak in Jan. to Feb N: It is worth noting that among these vitamins, the export volume of China’s vitamin C increased by 11% year on year in January-February 2020, while the average export price fell sharply by 45.36% K: China is the world’s largest producer and exporter of vitamin C. Since January 1, 2020, China cancelled the license administration measures on Vitamin C and some other export of goods The export volume of vitamin C has remained high And the export price has continued the trend of 2019 which was out of step with the volume N: We can see that the epidemic will inevitably slow down the global economy, feed industry, food industry and other industries downstream of vitamins will also be adversely affected In addition, China’s major foreign trade companies such as pharmaceuticals, chemicals, machinery and electronics, textiles and apparel, and light industrial technology have suffered a sudden drop in orders or some orders have been cancelled China’s vitamin exports are facing challenges from the global COVID-19 outbreak K: So the last part let’s see the new changes and trends for China Vitamin industry under the impact of COVID-19 In the short term, we can see that production has been affected, but the domestic COVID-19

epidemic has been controlled It is expected that China’s vitamin production will rebound slightly in the second quarter of 2020 In the medium term, at present, the epidemic is spreading globally, the outbreak continues to escalate in Europe and the United States and it will slow down the global economy growth The slowing demand on downstream is expected to have a medium-term adverse impact on China’s vitamin exports Under COVID-19, China’s strict environmental regulations on highly polluting industries such as pharmaceuticals and chemicals are hard to loosen Which will prompts the vitamin industry to speed up the elimination of outdated production capacity And it will also enhance their resilience to force majeure events such as this kind of outbreak In response to the prevention and control of the COVID-19 epidemic, the quality requirements and inspection and quarantine of vitamin feed additives, food additives and vitamin additives for medical use in European and American countries will be stricter To meet the requirements of overseas market standards, China’s domestic vitamin industry standards will be improved, and product quality requirements will be further improved N: Thank you so much for sharing Thank you all very much for attending and we hope you could get some key points out of the presentation If you have any questions left, please write them down in the chat box or send to your account manager, we will get back to you by email as soon as possible K: All the information was enabled by our brands CCM and Tranalysis If you want to find out more, I recommend you to have a look at our websites and contact our team to get further information We will have more upcoming webinar and you can also give your suggestions to your account manager Thanks again and have an awesome day See you in our next webinar! N: Thanks Bye!