Zhongyou Securities: The price increase of vitamins has strong sustainability and price elasticity. Leading companies with production capacity will directly benefit.

China Post Securities released a research report stating that the vitamin industry's characteristics of rigid demand, low cost proportion, and high supply concentration make the current price increase, starting from historical lows, have strong sustainability and price elasticity. For related listed companies, their profit increment depends on both the extent of product price increase and the company's own production capacity. Leading companies with large production capacity of relevant vitamin varieties will directly benefit. Key points of China Post Securities: The vitamin industry has initiated a new round of price increase cycle, with prices of several core varieties significantly rising from historical lows. As of March 20, 2026, the price of VE has increased from 55.5 yuan/kg to 85.0 yuan/kg, a 53.15% increase; VA has increased from 63.0 yuan/kg to 95.0 yuan/kg, a 50.79% increase; VB3 and calcium pantothenate have also increased by 40.58% and 13.50% respectively. This round of price increase for multiple varieties started from historical lows, and with upstream raw materials affected by geopolitical factors, it has the characteristics of supply contraction and strong base price. Subsequent increases can be expected. The downstream demand for vitamins is rigid and highly insensitive to prices, providing the core foundation for the sustainability of price increases. From the application structure perspective, feed is the most core demand source for vitamins, with most varieties considered key and irreplaceable feed additives. Vitamins account for a very low proportion of the total feed cost, with the cost of vitamins in egg-laying hens and fattening pigs feed being only 0.51% and 0.15% respectively. Therefore, the sensitivity of the downstream breeding industry to price fluctuations of vitamins is low, providing higher elasticity and room for price increases. A high concentration of supply has been formed in core vitamin varieties, with a few companies dominating, giving top companies strong pricing power and the ability to support prices. Whether it is major varieties like VA, VE, calcium pantothenate, or minor varieties like VB1, VB6, VD3, production capacity is concentrated in the hands of a few companies. For example, the top company's production capacity for calcium pantothenate exceeds 70%, and VA industry's CR3 production capacity exceeds 50% (actual operational capacity ratio is even higher). This high concentration allows the supply side to have the ability to drive price increases through active supply contraction. A review of price trends shows that past vitamin price increases were mainly driven by supply contraction. In the highly concentrated market, any supply disturbance will be amplified, leading to significant price increases. Over the past 20 years, reviews of price trends show that vitamin varieties such as VE, VA, and calcium pantothenate have exhibited large price fluctuations and short cycles. Long-term lows and long-term increases are rare. In past price increases, production shutdowns or reductions (such as factory accidents, environmental inspections) and shortages of core raw materials (such as citral, isobutyraldehyde) were the main drivers of price increases. Due to the rigid downstream demand, product price increases do not suppress demand, making each round of increase highly price elastic. Risk warnings: Risk of vitamin raw material price increases falling short of expectations; increased market competition risk; geopolitical risks exceeding expectations; policy risks exceeding expectations.