Ve business cycle has come: in the past 21 years, we have issued many reports emphasizing that looking forward to the next 2-3 years, the merger of DSM and nente technology will significantly improve the competition pattern of the industry. VE is expected to usher in a super business cycle again, and there is still much room for rise in the current price level. Recently, the conflict between Russia and Ukraine has intensified, and Europe and the United States have successively announced sanctions plans against Russia, further aggravating the tension of natural gas supply in Europe. Natural gas is the key raw material for the synthesis of acetylene (the upstream raw material of VE). The shortage of natural gas in Europe has further exacerbated the shortage of vitamin supply in Europe. According to Bloomberg news, affected by the interruption of supply of key intermediates, DSM’s q1ve production is expected to decline by more than 30% in 22 years, and will affect q2ve production. Affected by the decline of VE output of DSM, the supply of VE market is tight, and the impact of low inventory of downstream enterprises is superimposed. Recently, ve manufacturers have increased their quotations, and the ve business cycle has come.
The optimization of supply pattern and the support of m-cresol cost promote the good prospect of vitamin E Market: by the end of 2021, the total global ve (oil) production capacity was about 140000 tons / year. In August 2019, nengte technology sold 75% equity to DSM and established a joint venture company yimante for vitamin E and its intermediate business. The concentration of VE industry has been further improved, which is conducive to the improvement of the competition pattern of global ve industry. At the same time, after the acquisition, nengte technology will enter the stage of shutdown and transformation to reach the standard level of DSM production, but the re production progress of nengte technology ve production line is always lower than expected. On the cost side, m-cresol is an important intermediate in the production of VE. In recent years, its price has been rising all the way, which has brought room for price increase for VE. At present, China still relies on imports of m-cresol. In 2019, some m-cresol production lines in Langsheng, Germany were converted to menthol, and overseas supply was tightened. In January 2021, China’s Ministry of commerce finally determined that there was dumping of imported m-cresol originating in the United States, the European Union, the United Kingdom and Japan, and imposed anti-dumping duties on imported m-cresol originating in the above countries within five years. The rising price of m-cresol provides cost support for the upward price of VE, and the market prospect of VE is good.
The boom of the breeding industry is picking up, and the growth of feed demand is good for the vitamin E Market: the downstream demand of VE mainly comes from feed, medicine, chemicals and food and beverage, of which feed is the most important downstream demand of vitamin E. Since 2021, the covid-19 pneumonia epidemic has been alleviated, and the majority of pig breeding groups have actively supplemented the livestock, laying a foundation for the recovery of pig production capacity in China, and the stock of pigs and sows has continued to rise. Therefore, on the demand side, with the recovery of the national economy and the recovery of pork consumption in the catering industry, the demand for upstream vitamins in the pig industry is expected to grow steadily.
Investment suggestion: under the oligopoly pattern of VE industry, the change of supply side is often the main driving force for the change of vitamin E price trend. Affected by the decline of VE output of DSM, the supply of VE market is tight, superimposed with the impact of low inventory of downstream enterprises. Recently, ve manufacturers have increased their prices, and the ve business cycle has come. Suggestions: 1) the fine chemical industry leader Zhejiang Nhu Company Ltd(002001) ; 2) Vitamin technology transformation ensures profitability, and the pharmaceutical business opens up the growth space of the company Zhejiang Medicine Co.Ltd(600216) .
Risk analysis: industry cyclical risk; Covid-19 epidemic continues to bring the risk that the demand is lower than expected; Safety and environmental protection risks; Exchange rate fluctuation risk.
