On 2 March, 2016, Shandong Longlive
Bio-technology Co., Ltd. (Longlive Bio-technology) announced on the Investor
Relation Management platform that it has put xylo oligosaccharide (XOS) into
the European feed market, and that it is partnering with an Italian pet food
giant for raw material supply.
At the same time, Longlive Bio-technology
pointed out that Herbalife International of America, Inc., one of its clients,
has imported Longlive Bio-technology's XOS and has successfully put the XOS
nutrients project into trial production, which helps Longlive Bio-technology to
lay a foundation for promoting XOS in overseas additives markets.
Longlive Bio-technology signed a supply
contract with Wm Wrigley Jr Company (Wrigley) in 2015, becoming the largest
xylitol supplier to Wrigley in Europe. This move also helped Longlive
Bio-technology to establish in the European food additive market.
Longlive Bio-technology has a promising
future in the feed industry. China's consumption of XOS used for feed additives
approached 1,600 tonnes in 2015, and is estimated to grow by 5% in the future.
XOS can effectively enhance the growth of intestine bacteria, and improve body
immunity.
Since 2003, the Ministry of Agriculture of
the People's Republic of China started to approve XOS to be used as a feed
additive in the livestock industry. As China further promotes feed without
antibiotics, substitutes for antibiotics will enjoy bright market prospects.
Longlive Bio-technology is China's largest
XOS producer, with a capacity of 4,000 t/a. Another production line for XOS
(6,000 t/a) is under construction. According to the original plan, this
production line should have been put into operation in Dec. 2015.
Market price of XOS in China, Jan. 2015-Feb.
2016
Source: CCM
Longlive Bio-technology also released the
2015 performance briefing when it proclaimed to put XOS into the European
market. However, the performance was unsatisfactory.
Revenue: USD122.04 million (RMB776 million), up by 2.54% YoY
Operating profit: USD5.92 million (RMB37.65 million), down by 1.79% YoY
Total profits: USD10.08 million (RMB64.10 million), down by 38.5% YoY
Net profit: USD7.75 million (RMB49.29 million), down by 42.61% YoY
Fuel ethanol is the main reason for the
poor performance.
Longlive Bio-technolog's fuel ethanol which
is transported to China's oil system is priced at USD0.14 (RMB0.91) * the price
of No.93 gasoline. Affected by the international crude oil price slump, the
sales price and sales volume of fuel ethanol declined. Data from the New York
Mercantile Exchange shows that the price of Brent crude oil averaged
USD54.4/bbl in 2015, down by 47% YoY and hitting a record low of the past 10
years.
The Chinese government reduced the
subsidies on processing fuel ethanol from USD125.81/t (RMB800/t) in 2014 to
USD94.36/t (RMB600/t) in 2015.
As the Chinese government promotes the
policy on de-stocking of old corn, it is expected to increase the subsidies on
processing fuel ethanol, which is good for the development of Longlive
Bio-technology.
Longlive Bio-technology's financial
performance, 2010-2015
Source: Longlive Bio-technology
This article comes from Corn Products China News 1603, CCM
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Tag: XOS feed