Feed additive market tracker: Methionine producers show caution; threonine and lysine production capacity push

25-May-2023 - Last updated on 25-May-2023 at 15:11 GMT

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Driven by demand weakness and supply overhang, market prices for methionine have been dropping for over a year now, to reach unsustainable levels for producers, noted Stefan Schmidinger, chief economist, Kemiex.

Chinese company, NHU, has postponed the start-up of its 150,000 t/a Dl-methionine capacity expansion operation, which was schedule to go live as early as June, with construction and preparatory works almost finished, said that commentator.

There are noteworthy trends in some respects though in relation to the methionine market.

"From January to April, exports of methionine from China to Europe doubled year-on-year to around 15,400 Mt, driven by significant quantities sailing in the direction of Germany. And Japanese imports of methionine have also picked up over the past two quarters supported by a weak Japanese Yen."

Meanwhile, recent market reports linking elevated sugar prices as a driver of higher fermentation costs for feed-grade amino acids such as threonine or lysine have drawn sceptic responses from procurement departments, stressed Schmidinger.

"In fact, only a few producers in Brazil and elsewhere use domestic sugarcane as their main feedstock for manufacturing those amino acids, while Chinese producers mostly rely on corn or other starches as substrates."

The inflated cost of corn starch in China over the past three years next to a hike in other operating outlays linked to energy, heating, or feedstock such as liquid ammonia made from coal or naphtha were the actual reasons behind the higher fermentation costs for those additives, he said. "Yet only a few market participants discuss a potential and continued downside movement of domestic corn starch prices to pre-2020 levels that would lower cost of production."

Looking to lysine market developments and a large-scale project for up to 500,000 t/a l-lysine is anticipated in China, with further deep corn processing capacity to go onstream into a vastly oversupplied market.

For l-threonine, another 250,000 t/a capacity is expected to come online during Q3 2023 in the latest country-wide capacity push that partially aims to increase amino acids while lowering the grain and soybean inclusion levels in feed, also in line with China's food security policies, noted the analyst.

However, local factory prices in China for threonine, tryptophan and valine remain firm in a manufacturing sector that continues to struggle with economic realities and subdued global demand, as per the latest Caixin China General Manufacturing PMI; that report is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 650 private and state-owned manufacturers.

Furthermore, this week sees CJ Bio inaugurating its new tryptophan and threonine project in Brazil.

As regard vitamin price trends, in China, vitamin B3 continued its upward momentum due to the scarcity in chemical intermediates that are also used in the agrochemicals sector.

Vitamins K3 prices are rising after dropping to below US$10 per kg earlier in the year, while vitamin A, vitamin B12, vitamin C and others are trading sideways or lower.

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