CCM: China's market price of lysine rebounds in May 2016 06-13-2016

In May 2016, some leading lysine producers in China raised their quotations. As of 24 May, most quotations for lysine in the market exceed USD1.24/kg (RMB8.00/kg):


Source: Baidu


  • Global Bio-chem Technology Group Co., Ltd. (Global Bio-chem): 98% lysine up to USD1.29/kg (RMB8.3/kg), 70% up to USD0.79/kg (RMB5.1/kg)
  • CJ Group Co., Ltd.: 98% lysine up to USD1.39/kg (RMB9.0/kg), 70% up to USD0.77/kg (RMB5.0/kg)
  • Meihua Holdings Group Co., Ltd. (Meihua Bio): 98% lysine up to USD1.27/kg (RMB8.2/kg), 70% up to USD0.77/kg (RMB5.0/kg)


According to CCM's research, leading lysine producers started to hike their prices up at the end of April. On 28 April, Meihua Bio and Global Bio-chem quoted 98% lysine at USD1.21/kg (RMB7.8/kg) and USD1.22/kg (RMB7.9/kg) respectively, and both quoted 70% lysine at USD0.73/kg (RMB4.7/kg). The soaring price of pork has stimulated the recovery of the breeding industry, which has allowed leading lysine producers to raise quotations.


As a result, by the end of May, the average market prices of 98.5% lysine and 70% lysine had risen by 3.9% and 11.1% respectively from their April levels.


Prior to these price hikes, in March, given the slack demand for feed and slow consumption of lysine inventories, downstream enterprises held a "wait-and-see" attitude, choosing to consume their inventories and not purchase in large quantities. At that time, most lysine producers mainly dealt with the orders they received before.


Thus, lysine has gradually transitioned to a buyer's market, showing obvious sign of a coming plunge in market price.

 
Moreover, excessive competition hastened the fall in the market price of lysine. The drop in the price of 70% lysine pulled down that of 98.5% lysine. As of April, market prices of 70% lysine and 98.5% lysine had fallen by 23.6% and 15.8% YoY respectively.




Due to the record low market price and low operating rate of plants, lysine is currently in short supply. So far,


  • CJ (Shenyang) Biotechnology Co., Ltd.: has not resumed production yet
  • COFCO Bio-chemical (Anhui) Co., Ltd.: is still relocating its plant from an urban area to an industrial park
  • Global Bio-chem and Shandong Shouguang Juneng Golden Corn Co., Ltd.: is maintaining a relatively high operating rate
  • Meihua Bio and Ningxia EPPEN Bioengineering Stock Co., Ltd.: is maintaining a temporarily low operating rate

 

                                            Monthly market price of lysine in China, Jan. 2015-May 2016



                                                                                    Source: CCM

 

The rebound in market price of lysine may not be very large and may only last a short time, according to analyst CCM.

 

Downstream demand is the key factor affecting the market price of lysine.

 

In 18 May, the Ministry of Environmental Protection of the People's Republic of China released a draft of the Technical Guidelines for Delimiting Livestock Breeding Forbidden Area to solicit public opinion.


The draft offers a list of the areas where pig breeding is forbidden (as of May 2016), including 154 regions in 11 provinces, namely Shandong Province, Fujian Province, Hunan Province, Zhejiang Province, Hubei Province, Guangdong Province, Anhui Province, Henan Province, Guangxi Zhuang Autonomous Region, Liaoning Province and Yunnan Province.

 

So far, over 150 counties/regions nationwide have started the delineation of forbidden breeding areas, Shandong Province, Fujian Province, Zhejiang Province, Hunan Province and Guangdong Province in particular. For instance, after rectification, in Nanhu District, Jiaxing City, Zhejiang Province, the number of live pigs in farm plunged from 1.08 million to 50,000, down 95.37%.

 

As more small farms close down, both breeding areas and the number of pigs in farm continue decreasing. Moreover, the completion and subsequent operation of new farms under construction by large-scale enterprises is still a long way off. Overall, demand for lysine from the downstream pig breeding industry will remain slack in the short term.

 

Thus, despite the fact that lysine producers have cut production and raised quotations, the rebound in market price of lysine may only last a short while.


* This article comes from Amino Acids China E-News 1605, CCM



About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.

 

For more information about CCM, please visit www.cnchemicals.com or get in touch with us directly by emailing econtact@cnchemicals.com or calling +86-20-37616606.


Tag: lysine  breeding


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