Feed additive tracker: Amino acid prices easing, markets await lysine expansion projects

By Jane Byrne contact

- Last updated on GMT

© GettyImages/William_Potter
© GettyImages/William_Potter

Related tags: Suez Canal, lysine, threonine, methionine

Prices for amino acids including lysine, threonine and tryptophan are showing a slight downward trend from the record-highs of late, according to data from Swiss trading and data platform, Kemiex.

Vitamin pricing is diverse with markets mostly following the course of vitamins A, C and E.

The US dollar has been strengthening against China’s yuan, offering a short-term relief for US dollar-denominated buyers, said Stefan Schmidinger, partner at Kemiex. 

The yuan logged its worst month since August 2019 in March, according to Reuters, as expectations of a quick US economic recovery and rising US Treasury yields have buoyed the dollar.

However, several investment banks believe the long-term weakness of the US dollar will continue, driven by fundamentals; some of those financial institutions are expecting the currency pair to even reach levels of 5.60 to 6.05 in the mid-term, commented Schmidinger. 

China manufacturing: Are higher prices and revenues translating into higher profits?

Fufeng Group, one of the world’s major amino acids producers, just reported its financial results for 2020, offering a situational update on Chinese manufacturers, said Kemiex. The Chinese company's revenue increased +3% to US$2.5bn, but gross profits declined -14% to US$430m amid higher input material cost of corn and others. Its lysine and threonine businesses posted strong revenue growth of +86% to US$148m, and +7% to US$195m respectively. Revenue of other key products: MSG stood at US$1.1bn (-7%), starch sweetener at US$212m (-15%), xanthan gum at US$125m (-8%) and other amino acids at US$ 144m (+17%).

Markets are also observing two significant expansion projects for lysine by Meihua and Yuxing Biological, adding up to 500,000 tons of annual capacity once finished, while Nenter is in the final steps of finalizing a 900-ton API and intermediates project, increasing annual output from 250 tons, remarked Schmidinger. 

Regulatory update

On the regulatory side of feed additive developments, we see the European Food Safety Authority (EFSA) concluding that vitamin B2, produced by Guangji Pharmaceutical, lacks data as regards its toxicological profile. The Parma-based agency's latest safety and efficacy opinion​ ​shows the substance met the standard for other parameters, however. Vitamin B2 currently cannot be imported from China and marketed in the EU, albeit EFSA has adopted several opinions previously.

In mid-March, China’s Inner Mongolia region issued a new sustainable energy policy resulting in serious attention and reduced operating rates at some major lysine, threonine, and API producers, reported Kemiex. "The province is home to energy-intense sectors and wants to transform its energy use, prompting a re-evaluation of existing production facilities and, from 2021, a cessation of new approvals for high-energy industries such as charcoal, calcium carbide, PVC, ammonia (urea), methanol, ethylene glycol, caustic soda, and soda ash."

A noteworthy ruling of China’s Supreme Court relating to an infringement of trade secrets removes 10% of global vanillin supply, a common flavor enhancer, as one major producer must pay compensation and stop production, said the Swiss platform. "It comes one month after DSM won a patent case against Anhui Tiger related to the synthesis of Biotin, or Vitamin B7 or H, and could be a sign of serious crackdowns against breach of intellectual property (IP) rights."

Kemiex has published volume four of its global trade analysis, focusing on Vitamin B1, B6 and B12 imports to Europe and US. In previous reports, the company analyzed a spike in Vitamin C imports to the US in the first half of 2020, higher methionine imports from China and Malaysia, as well as plenty of strategic insights on prices, trade hubs and import patterns of single EU countries and for a range of vitamins and amino acids.

US Methionine Imports (003)

Suez Canal incident exacerbates schedule reliability

Kemiex has also evaluated the impact of the accident that occurred on March 23, whereby the Ultra Large Container Vessel (ULCV), the Ever Given, blocked Egypt’s Suez Canal, creating a lengthy bottleneck for shipping between Asia and Europe, as well as the east coast of the US. A successful rescue mission freed the ship on March 29, faster than feared, and the traffic jam of up to 400 ships was cleared within a week. 

"Our clients reported some ripple effects such as cancelled sailings as the ships could not meet their round-trip schedule anymore, but overall, the damage to our sectors [feed and food additives and pharma ingredients] was rather limited,​" Schmidinger told us.

Meanwhile, another mega container ship, MSC TINA, collided with a pier on March 27 at the Ambarli Port, in Turkey, with the vessel suffering sizeable damage as a result of the incident.

Prompted by the Ever Given blockage, supply chain executives are looking beyond sea cargo, and again at freight train services connecting China and Europe, which cost less than air but move cargo faster than sea, reported Schmidinger. 

Even, without the Suez Canal incident, carrier schedule reliability remains the lowest recorded for any February at 34.9%, or an average delay of 6.8 days, according to issue 115 of the Global Liner Performance report by Sea-Intelligence, he said. 

"Surprisingly, the Suez incident had no visible impact on freight rates, which remain at elevated levels. And it comes as no surprise that Cosco Shipping just reported its highest profit in 12 years, with those financials driven by record freight rates over the past 12 months,"​ said the Kemiex representative. 

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