Following BASF’s lifting of the Force Majeure for Lutavit® A 1000, Lutavit® A 500, vitamin A Palmitate 1.6 Mio I.U./g, Lutavit® E 50, Lutavit® E 50 S, and vitamin E Acetate 94% products for its animal nutrition business, Feedinfo News Service caught up with Christopher Rieker, Vice President, who will be speaking at our event in Amsterdam providing a frank review of the issues faced following the incident, how they were resolved, and BASF’s next steps.
The Force Majeures for these vitamin products and for citral and isoprenol-based aroma ingredients had been in place since November 2017. These declarations came on the heels of the 31 October 2017 fire, which forced BASF to shut down its citral plant in Ludwigshafen.
The repercussions of the citral plant incident on the supply of vitamins A and E to the global food and feed markets were huge. The global vitamin A 1000 feedgrade market in particular remained extremely difficult in the months following the incident, witnessing an unprecedented spike in prices. Prices for vitamin A feedgrade have only returned to pre-incident levels in recent weeks (i.e. price in the EU reported by Feedinfo on 2 July 2018 was around a level of EUR 70/kg – EUR 75/kg).
On July 2, BASF also confirmed that the ramp-up of its downstream production for animal nutrition products is going as planned. And the lifting of Force Majeure for additional vitamin derivatives and for several affected carotenoids within the animal nutrition business will follow subsequently.
“The lifting of Force Majeure for additional vitamin A and E products and for several affected carotenoids within animal nutrition business will follow in a step-by-step approach”, Dr. Chris Rieker, Vice President, BASF Animal Nutrition told Feedinfo News Service. “We are on track to supply Lutavit® AD3 and carotenoids to our customers in the various regions as planned, taking into account respective lead times”.
The start-up of citral production in Ludwigshafen was announced by BASF back in April. When asked why BASF didn’t declare the lifting of the Force Majeure for vitamins A and E earlier or if there were doubts about building up sufficient stock, Dr. Rieker was quick to point out that BASF never had doubts about building up sufficient stocks.
“Our outlook on the restart of the vitamin A and E plant in Ludwigshafen and the availability of vitamin products was correct and is still valid: We were only able to fully restart these plants once the supply of citral was re-established and the corresponding intermediates for vitamins A and E became available”, he stressed. “The downstream products of BASF’s human and animal nutrition businesses (vitamin A, E, several carotenoids) from the Ludwigshafen site were expected to become available for shipment or transport six to 12 weeks after completion of the citral plant start-up. Actual availability strongly depends on the product”.
BASF has been very transparent on product availability ever since the incident started. The company launched a dedicated website (https://nutrition.basf.com/en/Citral-plant.html) featuring the latest information on the start of downstream production and the expected start of key product supplies. The image below, taken from the website on 2 July 2018, displays the estimated timetable for animal nutrition plant ramp-ups in Ludwigshafen.
“We have received a lot of positive feedback for the website. We will constantly update this site until we are back to normal business for all our products”, commented Dr. Rieker, who will be giving a further review of the issues faced, how they were resolved, and additional topics in front of a live audience at Feed Additives Global 2018 in Amsterdam on 27 September 2018.
Over the last couple of months, the company has also achieved key milestones at the BASF Petronas Chemicals aroma ingredients complex in Kuantan, Malaysia, where the company also manufactures citral. Prior to the start-up of citral production in Ludwigshafen, limited citral volumes from Kuantan were made available to support the affected businesses during the Force Majeure situation in Ludwigshafen, i.e. for manufacturing downstream products. Such volumes were according to BASF shared in a fair and reasonable manner and according to applicable law.
Asked how critical it will be to ensure that the citral plant in Kuantan is running at full capacity, Dr. Rieker argued that the investment in Kuantan, mainly focusing on aroma ingredients, is a significant pillar contributing to supply security and business continuity throughout the citral value chain. However, in his opinion BASF can completely meet the needs of its customers for animal nutrition product lines with its citral value chain in Ludwigshafen moving forward.
For BASF, ensuring a reliable supply in the citral value chain is paramount in order to avoid a repeat of vitamin A market crisis, more so than finding alternative solutions to using citral in the production process.
“The question is not whether or not to replace citral with another precursor for vitamins; the objective is to ensure a reliable supply in the citral value chain”, Dr. Rieker said.
“Incidents beyond one’s reasonable control can never be excluded completely. However, we are closely reviewing our existing business continuity measures to further intensify and extend them”, he added. This review includes a holistic risk assessment along the whole citral value chain (from sourcing of raw materials to production, supply chain, quality and EHS, etc.) “Our goal is to actively reduce risks, also by making targeted investments. Experienced specialists are dedicating their resources to ensure a fast implementation of risk reduction measures”.
Dr. Rieker also wished to add: “We are sorry to have caused such an inconvenience for our customers. We saw that it was crucial to be very quick with setting up a holistic crisis management. That helped us to communicate transparently with our customers and define clear timeframes for the repair work and ramping-up process. We got very positive feedback on the way we communicated with customers as well as for our Force Majeure website, which offered and still offers weekly updates on the situation. We also saw the high importance of the measures that we installed to help mitigate the consequences of this unforeseeable event for our customers. Last, but not least, we learned how crucially important it is to have a team of highly dedicated people working day and night, 24/7, to get back to a normal supply situation. That is what I am most proud of”.
New Vitamin A Plant
And despite the challenges experienced by BASF in vitamin A, the company is still on track with its project to build its new plant in Ludwigshafen. This facility, scheduled to come on-stream in 2020, is expected to increase BASF’s total annual production capacity of vitamin A by 1,500 metric tons. Reference value for this amount is Vitamin A acetate with 2.8 million International Units.
Providing an update, Dr. Rieker said: “We very recently started construction of the plant with piling. Procurement of equipment is in full progress”.
“Ultimately, the new facility will significantly increase our total annual production capacity of vitamin A for animal and human nutrition. We want this investment to ensure long-term supply for our customers with high quality vitamin A and to help us meet the growing demand of the market”, he added.
Lutavit® A NXT
BASF continues to see strong development in the vitamin A feedgrade market. And the company also expects its new Lutavit® A NXT products to help support its commitment to sustaining long-term supply reliability and to meeting the globally growing demand for vitamins.
Launched exactly one year ago (July 2017), Lutavit® A NXT is a new vitamin A product line in which ethoxyquin (EQ) is replaced by butylated hydroxytoluene (BHT) as stabilizer. The product was launched in anticipation of last summer’s suspension of the EU authorization for ethoxyquin and feed containing ethoxyquin (Regulation (EC) No 2017/962).
“We do not compromise on feed safety, and we want to support our customers in staying compliant with new regulations, like the suspension of EQ in the EU. We expect Lutavit® A NXT products to be as successful as their predecessors in terms of product performance and quality”, commented Dr. Rieker. “So far, many customers have already run internal trials and confirmed the performance of Lutavit® A NXT – as best in class compared to similar competitor products. By stabilizing Lutavit® A NXT with BHT using our proprietary formulation technology, we offer a high-quality product compliant with the latest EU regulations. This shows that we never compromise on feed safety”.
For Lutavit® A 1000, Lutavit® AD3 and Lutavit® A 500 S, BASF has already switched globally to Lutavit® A NXT. The company’s vitamin A oil products were already not stabilized with EQ.
“We are offering Lutavit® A NXT products to our customers around the globe. Producing these products with only one formulation technology, our production process is globally harmonized”, Dr. Rieker said.
And a quick word on vitamin E – a market seen to be in a free fall today with prices heading towards all-time lows (cf. price graph above).
Current discussions in the market relating to vitamin E involve the use of alternative products for vitamin E and a possible review of vitamin E inclusion rates in diets. Moreover, market players are always interested in new production techniques with potential lower production costs (e.g. a Chinese company has succeeded in producing industrial quantities of iso-phytol from farnesene via the fermentation of sugars by yeast).
But Dr. Rieker remains cautionary. “When looking at alternative products to vitamin E and respective inclusion rates, one must clearly be aware of the fundamental functions this vitamin has. As such, vitamin E is essential for healthy and well-performing animals. As an essential nutrient, which all animals have to take up with their diets, it cannot be replaced by any other molecule without the risk of serious deficiency syndromes”.
Despite the tremendous challenges BASF has had to deal with in the past several months, the company continues to produce all intermediates along the value chain internally – a strategy which is seen to help the company with its cost position in the industry.
“We are confident that we will regain the trust of customers to cover their demands as competitively as before”, Dr. Rieker concluded.