Amino Acids China E-News 1602 (12 issues per year)

Mar 10, 2016, 13:45 ET from ReportBuyer

LONDON, March 10, 2016 /PRNewswire/ -- After the Spring Festival, came the off season of Chinese farming industry. In Jan., 201 6, the domestic stock of live pigs and adult sow were declined.

Live pig stock: 373.43 million heads, dropped by 2.7% MoM
Adult sow stock: 37.83 million heads, dropped by 0.4% MoM

Under this influence, the domestic prices of amino acids were rather low in Feb. In particular, the prices of lysine, threonine, tryptophan and methionine were at the lowest level of recent two years. Attracted by the high prices and decreasing stock of live pigs, many investors are planning to invest in the pig farming industry in China. In Feb., 201 6, New Hope Group and Da Bei Nong Group announced to invest heavily in constructing live pig farming projects, following COFCO Corporation, Chia Tai Ent Co, Ltd. and Wens Corporation. These actions were expected to accelerate the rebound of the pig farming industry, and then push up the consumption of amino acids.

"China's production should be based on efficiency. We should properly expand the total demand but reduce the overcapacity and inventory at the same time, so as to make the supply system fit with the changing demand structure," said Chinese president Xi Jinping at the 1 2th meeting of the Central Leading Group for Financial and Economic Affairs on 27 Jan., 2016.

Under this background, the utilization rate of products, instead of the capacity expansion speed, will become a new standard to evaluate the development of Chinese amino acids industry.In Feb., 201 6, the price of methionine in China remained low, because increasing supply has outstripped demand. As supply continues to increase, the price is unlikely to rebound in the short term.

Recently, Chinese feed enterprises have been entering into pig farming, encouraged by environmental policies and the huge profit margins in selling pigs and pork. Meantime, this may change the market risk and the client area of the corn deep-processing industry in China.

Chinese minor amino acids enterprises accelerated their capacity expansion, thanks to the high added-value of the products and national policy support. However, the industry is not yet mature enough to scale up production because of the limitations of existing production technology.

In Feb. 201 6, Shenghua Biok's acquisition plan of acquiring 1 00% of the shares in Blaze Loong Technology was rejected by CSRC, because the actual controller of Shenghua Biok breached their commitment during the period June 201 5-June 201 6.

Despite this, Shenghua Biok is likely to restart the acquisition plan after June 201 6.

Hubei Bafeng had completed restructuring and turned loss into gain in 201 5. Meanwhile, it has successfully passed the GMP inspection in its APIs refined production line, which is helpful for the company to get out of operating predicament.

In 201 5, the market price of domestic tryptophan showed a downtrend, mainly due to a decline in price of competing productsoybean meal and intense competition among manufacturers. It's forecasted that the price of tryptophan will slightly rise at the beginning of 201 6.

In 201 6, the market price of China's threonine continues to decline, because of the imbalance between supply and demand. The competition on price between Fufeng Group and Meihua Bio may become intensified, which makes threonine price unlikely to rise.

Chinese lysine prices rose abnormally after the Spring Festival. However, CCM is of the opinion that this increase isn't going to be enormous and it's likely that the price will sink back down later, considering the price and supply situation of its raw material, corn.

In the whole year of 201 5, China's export volume of lysine was almost identical to the same period of 201 4, mainly because the downstream demand from export markets trended to saturate and favorable export policy didn't push up export volume. Meanwhile, China's export price of lysine maintained low level, under the impact of low corn price.

In 201 5, China's export volume of cysteine continued to decrease, because of the decrease in its export to Southeast Asia.
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