China’s
lysine price has been facing a huge fluctuation throughout the year 2016, with
the bottom in April and the peak in December. According to market intelligence
firm CCM, the fluctuations are mainly the result of changing corn prices and
new transportation policies.
According
to CCM’s price monitoring, the overall downtrend of lysine price in China in
2016 went on in the beginning of 2016. It then rebounded and were able to rise
till the third quarter of 2016. After another fall of the lysine price by two
months, a huge surge was witnessed in November and December, leading to the
peak of the price at the end of the year. Looking at the overall year on year
change in 2016, China’s lysine price witnessed an overall rise of USD26.32/t,
compared to 2015.
Monthly
market price of 98.5% lysine in China, Jan. 2014-Dec. 2016
Source:
CCM
The
main two reasons for the large fluctuation can be found in the changes of corn
price in China and the intensified transportation pressure.
The
price of lysine is strongly bound to the price development of corn in China,
seen it as the main raw material. So, when the corn price fell in the first
months of 2016, due to huge oversupply, the lysine price was reduced as well. The
rebound in April was then the reaction of tighter supply in the domestic market
before the launch of the national auction for temporarily stored corn.
The
rebound of lysine in November is the result of the winter start in China,
leading to a prioritised transportation of coal for heating instead of food
additives like lysine. Another factor is the new traffic regulations,
implemented in September, which require a lower transportation capacity. These
effects led to a reduced supply and hence surging prices.
However,
in January 2017, the price of lysine decreased again. This trend is mainly due
to lessened transportation costs as a result of relieving strategies for corn
transportation, flat sales during the spring festival in China, and lower
demand for feed, because many farmers sold more animals in the spring festival
time.
The
downturn trend then continued in February as well, as the demand for lysine is
still on a low level. Also, the price peak in December was more an artificially
pushed price by manufacturers in the shadow of corn prices and high
transportation costs, which did not last long as those prices are hard to keep.
Looking
at the exports of lysine ester and salt from China in 2016, a boost of 26.62%,
compared to 2015, can be seen. According to CCM, this trend can be explained by
the low export price of lysine, combined with the continuing depreciated RMB.
Overseas manufacturers have been preferred the cheap food additive from, China
instead of the local ones.
What’s
more, China’s manufacturers witnessed great net profit performances in 2016,
due to the lower production costs. The future looks promising as well, due to
the high lysine price, increasing exports, and the still falling costs of corn
in China. Hence, domestic manufacturers are very likely to continue the great
performance ongoing.
About CCM
CCM is
the leading market intelligence provider for China’s agriculture, chemicals, food
& ingredients and life science markets.
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