Feed additive outlook: Rally in amino acid prices, high level of M&A activity

By Jane Byrne contact

- Last updated on GMT

© GettyImages/SERSOL
© GettyImages/SERSOL

Related tags: Ajinomoto Animal Nutrition, Dsm, patent, lysine, L-threonine

Feed additives markets are quite active as Chinese production has returned with a bang after Spring Festival and is now fully operational, according to the Swiss feed additive trading and data platform, Kemiex.

China continues to be impacted by higher raw material prices for fermentation and processing, comments Stefan Schmidinger, partner at Kemiex, adding that a ‘roaring 20s’ scenario is being predicted for energy and industrial commodities by major investment banks. 

Overall, feed additives prices have rallied higher in recent weeks driven by amino acids, he said.

The outlook for sea freight is bleak into at least 2Q or 3Q of 2021. However, freight rates may have peaked: “Schedule reliability lingers on all-time lows. Recent increases in fuel surcharges and general rate increases (GRI) are not supportive either. That means, freight is pushing the total cost of imports from Asia up by 3-10% on average, and even higher for some low-price goods, offering sales opportunities for local producers and stock holders in EMEA and Americas,”​ continued Schmidinger.

Hike in M&A activity in feed additive markets

Separately, Kemiex noted growing momentum behind M&A activity in the feed additives sector.

“We see that Barentz acquired Noack Group late last month in a Central European push, while the Indukern Group announced it is to divest its distribution unit, including animal health and nutrition trading, to Ravago Group.”

Furthermore, the startup reported that French fermentation technology company, METEX, is set to acquire the entire equity stake in Ajinomoto Animal Nutrition Europe SAS (AANE) from Ajinomoto subsidiary Ajinomoto Animal Nutrition Group, Inc (AANG), which includes a production site at Amiens, France. The deal, valued at €15m, is due to close at the end of April this year. 

Patent case, production developments

Meanwhile, in legal developments, DSM has just won a biotin patent dispute, with China’s Supreme People’s Court siding with the Dutch nutritional ingredients maker in a case against the Chinese vitamin maker, Anhui Tiger Vitamin.

The case centered on the stereoselective synthesis of biotin, also known as vitamin B-7. The court ordered Tiger, a subsidiary of the Chinese drug and food ingredient firm, BBCA Group, to no longer make an important biotin intermediate using a DSM patented process, nor make biotin using that prepared intermediate.

The lawsuit relates to DSM’s Chinese patent number ZL 200480008505.7 that claims a process for the stereoselective synthesis of an intermediate used in the production of biotin

In other feed additive production news, Novus and BASF faced production disruption in their facilities in Texas and Ludwigshafen respectively, with limited impact on markets though.

Looking to Eastern European developments, Belarusian National Biotechnological Corporation (BNBC) is to start feed ingredient production at a site in Minsk in autumn 2021, going to full capacity from 2022, with it aiming to produce about 100,000 tons per annum of essential amino acids, such as L-Lysine, L-Threonine, L-Tryptophan, wheat gluten, and high-protein feed concentrates.

BNBC is also looking to export parts of its output to Western Europe through a well-known distributor and will enter vitamin production from 2022 to 2025, said Kemiex.

Strategic trends for EU27, US imports

And, over the past few weeks, those Swiss trading experts have been strategically tracking historic vitamin and amino acid trade flows into the EU.

They see that, since 2000, China’s market share of those vitamin sales into the EU increased by 56%, up +42ppt, and, even higher, if only feed grade vitamins are considered.

In recent years, Kemiex found that several non-Chinese producers have pivoted their product offering from essential additives to more specialized products to escape price pressure or are now contracting these products from Asian toll manufacturers. “Most interesting is increasing lysine exports from China along with the boost in vitamin C imports to the US during 2020.”

feed additive exports china since 2000 kemiex

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