Summary:
On 10 March, a circulation on the supporting measures to guarantee the reaching
of the double control target during the 14th Five-Year period (2021–2025) was
issued by the Inner Mongolia Development and Reform Commission, the Department
of Industry and Information Technology and the Energy Bureau of Inner Mongolia.
This will have a great impact on the local amino acid enterprises, which are
likely to face the risk of a production halt.
During
two sessions between 5 March–11 March, China announced it will strive to peak
carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060.
Under
such circumstances, the Inner Mongolia Development and Reform Commission, the
Department of Industry and Information Technology and the Energy Bureau of
Inner Mongolia issued a circulation on the supporting measures to guarantee
reaching the double control (controlling the quantity and intensity of energy
and resources consumption) target during the 14th Five-Year period (2021–2025).
This is aimed at satisfying the following goals in the region in 2020:
Energy
consumption per unit of GDP: down 3%;
Energy
consumption: about 5 million tonnes of standard coal;
Energy
consumption growth rate: remains at roughly 1.9%;
Energy
consumption per unit of industrial value added: down 4% (by equivalent).
Efforts
will be focused to:
Control
the capacity of high energy-consuming industries;
Improve
industry entry criteria;
Speed
up the phasing out of outmoded facilities and surplus capacities;
Accelerate
the upgrade to energy-efficient technology for high energy-consuming
industries.
Since
amino acid is a high pollution and high energy-consuming industry, Inner
Mongolia's double control actions will have a great impact on local
enterprises. Related factories are likely to reduce production. For example,
Ningxia Eppen Biotech Co., Ltd. (Eppen Biotech) announced a stop to sign orders
on 18 March. The company said that the double control actions of Inner Mongolia
may result in a production halt at its factory in Chifeng. In addition, Fufeng
Group Co., Ltd. (Fufeng Group) and Heilongjiang Chengfu Food Group Co., Ltd. as
well as other producers, also in turn stopped signing orders.
It
is said that the following companies' factories in Inner Mongolia will slash
production by 30%–50%:
Eppen
Biotech's factory in Chifeng: with capacities of 200,000 t/a lysine and 100,000
t/a threonine;
Meihua
Holdings Group Co., Ltd.'s factory in Tongliao: 190,000 t/a threonine;
Fufeng
Group's factory in Zhalantun: 100,000 t/a threonine.
Since
threonine capacity from Inner Mongolia makes up 52.7% of the nation's total,
supply will be greatly affected if the production reduction occurs.
Although
the double control actions will only lower the production load of certain amino
acid enterprises in Inner Mongolia region for the time being, such a policy
will serve to limit the domestic release of capacity in the long run. For one
thing, new amino acid capacities or expansion projects will be constrained by
related policies. For another, capacity utilisation rates of amino acid
enterprises will be restrained by the double control actions.
It
is worth noting that on 15 March, the Animal Husbandry and Veterinary Bureau of
the Ministry of Agriculture and Rural Affairs issued a work program aimed at
reducing or replacing corn and soybean meal in feeds. This is targeted at
guaranteeing a stable supply of food that can be used to make feed. The program
also makes it clear that a plan to use rough rice, wheat, coarse cereals,
potatoes, miscellaneous meals and other agricultural products to replace corn
and soybean meal in feed formulations will be made, and that the plan will be
fully implemented within 40 days or so. This illustrates that China highly
values the regulation and control of food that can be used in feed production.
The
reducing or replacing of corn and soybean meal means there is the potential for
increased demand for additives in feed. Lysine and threonine are key products
of amino acids for animal health. Over the years, they have been widely applied
in animal feeds and the compound growth rate of their demand from the
downstream has remained at approximately 10%. If the plan is fully implemented,
their demand from the downstream will be further increased.
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