"Follow the feeling of going." Li Liangcai, director of supply and marketing division of Henan Huaxing Pharmaceutical Factory, likes to repeat this sentence when discussing the price of penicillin industrial salt.
And now, he feels better and better. Since the beginning of this year, penicillin industrial salt has soared from US$6/BOU (billion units) in the trough to US$11/BOU (see the C3 report on April 10th in this report). This upward trend has not yet stopped. In the last week, there was a new wave of “surge” prices, which rose from $11/BOU to $16/BOU.
As the country's largest penicillin manufacturer, Huaxing Pharmaceutical has benefited a lot and Li Liangcai is certainly full of optimism.
The price monitoring data from HealthNet shows that the actual domestic transaction price of penicillin industrial salt is currently in the range of US$15 to US$16 per BOU. Although the transaction volume is not large, it is also a transitional period. However, the change in export prices is not very obvious. The prices of big orders in February are still at US$9/BOU, and occasionally a few can reach US$13/BOU.
“From the current situation, (domestic prices) are bound to drive export prices to increase in the coming months.” Health researcher Ba Yanfeng told the “First Financial Daily”.
The market generally believes that the main reason for this round of soaring prices is still because some manufacturers in the second and third camps have stopped production due to environmental pressure. The first camp companies also have limited production cuts, resulting in tighter prices. At the same time, in turn, it also makes price control more focused on the hands of a small number of large companies such as Huaxing, Hua Yao, and Harbin Pharmaceuticals. However, Li Liangcai denied that there are likely to be several major manufacturers joining forces to continue pushing up prices. "This is a market action. We all do things differently," he told reporters.
With such a good market condition, other companies certainly will not sit back and watch the benefits of several giants. At present, many companies that have stopped production have begun to plan for resumption of production, including direct competitors with Chinese penicillin. It is reported that the South India Petrochemical Company has resumed the production of penicillin industrial salt in the near future. In the past few years, the company was a major customer of China's penicillin industrial salt exports to India. In 2006, India filed an anti-dumping litigation dispute against China for penicillin industrial salt. The company is the most important promoter.
"Now that such a market, it also means that their procurement costs will increase, and resumption of production is also due to the consideration of procurement costs." Bay Yanfeng analysis. However, Li Liangcai believes that the impact on domestic companies should not be too great. "They are now re-producing about 1,000 tons, still can't reach our workshop."
Interestingly, in this round of price hikes, the benefits and damages seem to be dialectical. “We have now invested 150 million yuan in environmental protection, and the pressure still exists.” Li Liangcai said that this is not yet about to be Since the "Pollutant Industry Pollutant Discharge Standard" that was implemented on January 1, 2008, after three years of transitional period, environmental protection investment will surely double.
Because of the high cost of environmental protection, in the past few years, many international penicillin giants have given up production and switched to low-cost Chinese procurement. Due to overcapacity, domestic domestic export prices of penicillin industrial salt continue to drop. This time the price increase, these big buyers also have to consider the issue of recovery.
At the same time, of course, damaged downstream raw material purchasers include, for example, amoxicillin preparation plants. Due to raw material price increases, amoxicillin manufacturers also collectively increase their prices (for details, please refer to our report on April 17th, C3). Corresponding to the sharp rise in penicillin industrial salt last week, the price of amoxicillin raw materials has also increased from 300 yuan/kg to the current 360 yuan/kg.
"The increase in the price of pharmaceutical preparations is not a long-term solution. The price of raw materials will continue to rise further. We will see an inversion of costs." Liu Wenwu, executive vice president of Sichuan Yuzhong Pharmaceutical, told reporters. For this reason, Suizhong Pharmaceutical has decided to suspend the procurement of raw materials. China Chemical Industry Network Management As for the current round of market conditions to be continued, Li Liangcai believes that it is not easy to say, depends on the overall improvement of corporate environmental protection. And Ba Yanfeng believes that it may continue until July and August. By then, it will be the off-season sales of penicillin products. It is unlikely that downstream manufacturers will bear such high raw material procurement costs during the off-season.

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