Amino Acids China E-News 1702

Date: 2017-03
Pages:25
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“Recommended article for Amino Acids China E-News 1702:

Intensifying competition in Chinese methionine market

In early 2017, some leading Chinese enterprises announced their plans to move into the methionine business or progress their existing businesses:
Zhejiang NHU Co., Ltd. (Zhejiang NHU) concluded pilot production at its methionine project (50,000 t/a) in Jan. Meanwhile, it disclosed that it would raise funds of ≤USD715 million (RMB4.90 billion) in order to expand its methionine production capacity to 300,000 t/a by 2020
Bluestar Adisseo Co., Ltd. (Adisseo) has developed a brand new solid methionine product, Rhodimet® A-Dry+, based on its liquid methionine production technology. A production facility for this new product is currently being built in Burgos, Spain, and is expected to be put into production in late 2017
Chongqing Sanxia Paints Co., Ltd. (Sanxia Paints) won approval from the board of directors for its plan to purchase a 100% stake in Ningxia Unisplendour Tianhua Methionine Co., Ltd. (Ningxia Unisplendour) in Jan. The deal is estimated to cost USD446 million (RMB3.06 billion). Ningxia Unisplendour has promised a net profit of ≥USD60 million (RMB408.00 million) by 2019

In fact, international methionine giants have also taken action. The largest global methionine producer Evonik Industries AG (Evonik) started construction of its second Singapore-based methionine plant (150,000 t/a) in Oct. 2016. The new facility is expected to become operational in 2019. Later in Nov., the company signed a technology purchase agreement with METabolic EXplorer SA for the latter’s entire technology portfolio for the fermentative production of methionine.

Evidently, the leading methionine producers are optimistic towards the future development of the methionine industry in Asia, especially in the Chinese market.

China is the largest consumer of methionine worldwide – demand hit 255,000 tonnes in 2016. Methionine is a necessary additive in animal feed as it cannot be synthesised by animals themselves and has to be ingested. “”Domestic needs for methionine are likely to keep growing by 10%-15% in the coming years,”” a trade source disclosed to CCM.

The huge potential of this business has attracted many enterprises towards it, and market competition has intensified as a result.

Given the complicated production techniques involved, the global methionine industry has so far been monopolised by several international giants, including Evonik, Adisseo, Novus International, Inc. and Sumitomo Chemical Co., Ltd., who account for 90% of the supply in the international market. In particular, the largest, Evonik, accounted for 35% of global sales in 2016, followed by Adisseo with 27%.

Yet, recent years have seen an increasing number of new players in the domestic methionine market, such as Ningxia Unisplendour, Adisseo, Zhejiang NHU and Sichuan Hebang Bio-technology Co., Ltd. (Sichuan Hebang). In the next few years, these producers plan to achieve the following production capacities:
Ningxia Unisplendour: 100,000 t/a
Zhejiang NHU: 300,000 t/a
Sichuan Hebang: 100,000 t/a (phase I [50,000 t/a] to be put into production in H1 2017)
Adisseo’s Nanjing-based plant: 140,000 t/a

If these capacities are achieved, national total capacity is expected to exceed 600,000 t/a, vs. a possible domestic demand of 447,000 tonnes by 2020 (based on an annual growth rate of 15%). In other words, serious overcapacity is foreseeable even if there are no imports made or any new production facilities built.

Besides overcapacity, Chinese methionine manufacturers are also confronted with heavy environmental pressure. The state has conducted rigorous environmental inspections nationwide since 2016, and has paid increasing attention to environmental issues. For instance, Sanxia Paints received enquiries from the Shenzhen Stock Exchange into rumours regarding Ningxia Unisplendour’s environmental problems.

Yet, such stringent environmental policies can also be seen as a double-edged sword. Methionine enterprises can take this opportunity to strengthen their pollutant treatment capabilities, enabling them to stand out among the fierce market competition.”

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