Chinese lysine producers still applying the brakes but prices starting to rebound: analyst

By Jane Byrne contact

- Last updated on GMT

Chinese lysine producers still applying the brakes but prices starting to rebound: analyst

Related tags: Amino acid

Most of China’s nine major lysine manufacturers, which between them account for over 61% of the global market, are back up and running, but nearly all of them are still on a go slow, said Chinese based analyst firm CCM.

There have been lower sales of the amino acid over the past few months due to reduced animal inventories, lower feed consumption and a soft soy meal market. Chinese producers have been either halting production through maintenance programs or cutting back on output in an effort to support prices.

Xuejian Shi, a senior researcher in CCM's food and ingredients team, told FeedNavigator that, in general, the price of lysine had been falling for the three months prior to November, owing to market oversupply and sluggish demand. However, the situation has changed in the past two weeks, with many manufacturers having raised their quoted prices for the feed additive.

“The market price has started to rebound,”​ he said. “Manufacturers have low lysine inventories due to the low operating rates in recent months. And downstream companies have been expecting lysine prices to continue decreasing, and therefore haven’t been purchasing lysine at a high volume. As a result, their stock levels are also low.”

Lysine prices for August to October 2015, from CCM’s price monitoring data, were as follows:

Aug 2015          70% Lysine     USD$882.80/t             98.5% Lysine  USD$1,373.24/t

Sept 2015         70% Lysine     USD$815.66/t             98.5% Lysine  USD$1,286.23/t

Oct 2015           70% Lysine     USD$787.34/t             98.5% Lysine  USD$1,244.00/t

Production plant status

Looking at the status of Chinese producers’ operations during October and November, Shi reported that Global BioChem Technology Group, one of the biggest lysine manufacturers globally with production capacity of 480,000 tons per annum (t/a), resumed production in early November after purchasing corn raw material at a good price. It is currently manufacturing around 200 tons of lysine per day, said the analyst.

Production at CJ Group’s Shenyang facility, which has 100,000 t/a, has been suspended for nearly a month. Its Liaocheng facility, which has 150,000 t/a output, has also halted production for maintenance for two weeks, he continued.

The Ningxia Eppen Biotech company’s Ningxia factory, at 210,000 t/a, and its Chifeng plant, with 200,000 t/a, are both only operating at 50% of their total capacity, said the researcher.

He said COFCO Biochemical (Anhui) Limited, with 90,000 t/a, has currently suspended production, as has the Shanghai East Hope Group.

Zhucheng Dongxiao Biotechnology Co Ltd, with capacity of 40,000 t/a, resumed production at the end of October at a high operating rate, said the CCM analyst.

Shandong Shouguang Juneng Golden Corn Co Ltd, said the analyst, just completed relocation of its factory in October and then resumed production this month at a relatively high operating rate. That plant has a tonnage output of 40,000 per year.

Heilongjiang Chengfu Group Co Ltd’s plant, with 70,000 tons per year capacity, is also currently up and running, but at a low operating rate, added Shi.

Export volumes up

Data from China Customs shows China’s lysine export volume during January to September 2015 totaled 202,984 tons, up by 10.35% YoY.

Global demand for lysine is around 1.85 million tons per year, while demand in China is around 0.68 million tons annually, according to data from the China Fermentation Industry Association.

Its data puts global lysine capacity at 3.54 million t/a, with Chinese production covering around 2.13 million t/a of that.

In China, most of the lysine is domestically produced, while the country's export volume of the amino acid accounts for about 30% of its output.

Manufacturer

Capacity

0perational situation in October and November

Global BioChem Technology Group Co Ltd

480,000 t/a

After purchasing raw material corn at a low price, Global Bio-chem resumed lysine production in early November. It is currently producing around 200 tonnes of lysine per day.

Ningxia Eppen Biotech Co Ltd

Factory Ningxia 210,000 t/a; Factory Chifeng 200,000 t/a

Operating rate is about 50%.

CJ Group Co, Ltd

Shenyang facility: 100,000 t/a; Liaocheng facility: 150,000 t/a

Production at CJ Group’s Shenyang facility has been suspended for nearly a month. Its Liaocheng facility has also halted production for maintenance, which will last for two weeks.

Meihua Holdings Group Co Ltd

Factory Xinjiang 200,000 t/a; Factory Tongliao 60,000 t/a

Operating rate is about 50%.

Shandong Shouguang Juneng Golden Corn Co Ltd

50,000 t/a

Golden Corn just finished its factory's relocation in October and then resumed production in November at a relatively high operating rate.

COFCO Biochemical (Anhui) Co Ltd

90,000 t/a

Suspended production.

Zhucheng Dongxiao Biotechnology Co, Ltd

40,000 t/a

Resumed production at the end of October at a high operating rate.

Shanghai East Hope Group

80,000 t/a

Suspended production.

Heilongjiang Chengfu Group Co Ltd

70,000 t/a

Currently operational, but at a low operating rate.

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