From struggle to strength: First half of 2024 to see return to normality for feed additive market

By Jane Byrne

- Last updated on GMT

© GettyImages/Monty Rakusen
© GettyImages/Monty Rakusen

Related tags lysine Vitamin China

The results of an industry survey show ongoing profitability pressure in the pharma API and the feed and food additive space.

Moreover, feed, pharma, and food industry professionals have varying expectations for when increased business activity and volume growth will occur, according to a Kemiex trend report​ based on a poll of sector professionals that was undertaken in collaboration with FeedNavigator.

Some 15% of respondents forecast a return to more robust supply and demand dynamics in Q4 2023, but the majority expect market recovery in the first half of 2024. Some 19% of those polled, however, only expect to see a rebound in their businesses in the second half of next year.

“We’ve learned from the survey that efficiency, growth and digitalization initiatives are core to those companies to go from struggle to strength in 2024. While some have already passed their low during 2023, most respondents expect a moderation and return to normality in the first half of 2024 only.

“However, there are some companies in the vitamins space expecting even difficult years ahead, with those players not expecting business to improve before 2025,” commented Stefan Schmidinger, chief economist, Kemiex.

Interviewee profile 

Over 100 industry players responded to the survey. Feed additives for animal proved to be a key area with 73% of survey participants engaging in this field, with vitamins emerging as a significant category.

Respondents included ingredient and chemical makers, premix firms and formulators, traders and distributers, and consultants.

The vast majority of pollsters put Europe as the region where their business activity was based, with Asia Pacific and Oceania following, highlighting that region’s growing importance in the global market.

Changing demand patterns

The majority of companies, he said, would describe 2023 as a difficult year, following a transitional 2022, with exorbitant market volatilities, as well as structural challenges such as changing demand patterns, in a tougher financing environment.

“Asked about their 2023 company or business unit's profit performance compared to previous years, only 15% of the respondents found it a positive one. Numerous companies were satisfied with their results, but the majority was not.

“In terms of market activity, most participants experienced only moderate, regular trading conditions during 2023, different from very active spot markets of the past,” he told this publication.

Excess inventories

Excess inventories from 2022, and destocking in 2023, were a drag to multiple companies, along with other challenges such as fierce price competition for ingredients. 

“Other challenges were fewer customer orders; however, even those with steady business noted shorter planning cycles and lead times.”

kemiex survey
Kemiex survey results: Respondents view of the main drivers impacting growth

Chinese exports

While vitamin prices have been on a downward trajectory since Q2 2022, amino acid prices are seeing a resurgence, found the Kemiex report.

Global trade in key raw materials for animal and human nutrition and health could be on its way to pre-crisis levels, with initial data for Q3 2023 indicating a recovery to the historical trend line. "For example, China's exports of L-Lysine reached 250,000 metric tons after four consecutive quarters of weak trade volumes."

However, experts caution that the next two quarters will be critical in determining whether this recovery is sustainable, said Schmidinger.

China's export quantities in metric tons exhibited significant volatility in 2023 compared to 2022, reported Kemiex in its latest review of the market. “Year-to-date, vitamins B5, amoxicillin or sodium bicarbonates have exceeded 2022 volumes significantly, while high-volume raw materials such as zinc sulphates, vitamin C or citric acid remain behind compared to the volumes shifted last year.” 

lysine trade flows
Lysine trade flows from China © Kemiex November 2023

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