Bluestar Adisseo expands methionine production despite sluggish market in China 02-02-2018

Bluestar Adisseo has announced in late January that the Board of Directors has approved the construction of a new liquid methionine plant. The new plant will be located in the Chinese city Nanjing. According to the company’s statement, it will be its third global liquid methionine platform after two plants that are already active in Spain and China. The aim of the additional build is to consolidate the company’s leading role in the global methionine sector.



However, according to market intelligence firm CCM, the move of the company is facing some difficulties, including low prices of methionine in China as well as sluggish demand currently.



 


The new methionine plant is going to be built close to the existing plant in Nanjing, with the aim to maximize synergies and share some facilities as administration houses, warehouse, and logistics. With a designed annual capacity of 180,000 tonnes per year liquid methionine, the new plant is expected to start about the middle of 2021. 



The total investment will be approximately USD490 million, all funded by Adisseo’s own capital. The pay-back period is estimated to be around 4 years. 



According to CCM’s research, Bluestar Adisseo witnessed a significant drop in profit in the first half of 2017, as the price of methionine decreased in China. In 2017, methionine was oversupplied and the demand from the downstream industry was flat. 



Mainly the growing meat consumption in China was helping the company to achieve a growing financial performance of 6% in 2017. As a matter of fact, it is predicted that China will have a 2.2% CAGR in meat consumption over the next ten years, 2.7% in poultry consumption. The proportion of formula feed increased to 71.9% of the total feed output in China in 2016, and it is predicted to continue rising. This is also one of the reasons that Bluestar Adisseo keeps expanding its methionine capacity.






The demand is not as high as expected as the breeding industry in China remains sluggish and avian influenza has been reported. As a result, annual growth in demand for liquid methionine is less than 10%. Furthermore, the market for new methionine and enzymic preparations is not as big as expected, the price is relatively low, and the competition over methionine is fierce. For example, one of Bluestar Adisseo’s largest competitor, Zhejiang NHU, is currently building a 250,000 t/a methionine project as well.



Methionine


Methionine is a type of essential amino acid that cannot be synthesized sufficiently by animals and hence has to be supplied in the diet. The major types of methionine on the current market are powder methionine and liquid methionine.


The current penetration ratio of liquid methionine is estimated around 40% worldwide, while in the US, Mexico and some markets, the penetration ratio of liquid products is above 60%.



Along with the industrialisation of the feed industry in China, India, as well as other emerging countries in ASEAN, the growth rate of demand for liquid methionine, is expected to be higher than powder methionine.



Adding methionine into the feed based on the demand of nutrition can proportion the feed formulation and thus reduce feed cost. In a megatrend of increasing population, the meat consumption will continue growing at the rate of 2% per year and even faster for poultry at around 3%. The poultry meat has a wide suitability, without any limit from religion and regions, with low cost and low cholesterol. As a result, poultry meat is well perceived in both developing countries and developed countries. 85% of total methionine supply is used in the Poultry sector, therefore the increasing demand for poultry meat became the foundation of methionine increase.



About the company


Bluestar Adisseo is one of the world's leading manufacturer of feed additives. The company owns seven research centres and has production sites based in Europe and China to design, produce and market nutritional products worldwide. Adisseo is listed on the Shanghai Stock Exchange and is one of the main subsidiaries of China National BlueStar, a leader in the Chinese chemical industry.


Adisseo is a nutritionist, with a long tradition of applying its expertise to nutritional additives. It is dedicated to serving the animal production industry by helping premixes, feed manufacturers and integrators.



Other leading producers include Evonik, Novus, Sumitomo Chemical, and CJ Group. Novus is taking the biggest market share in North America while Evonik and Bluestar Adisseo in China and Asia-Pacific.



It’s been more than 70 years since Adisseo started to produce methionine in 1946. Adisseo is one of the two global methionine producers capable of producing methionine in both powder and liquid forms. From 2012 to 2016, although there was new capacity from both existing players and newcomers, Adisseo managed to increase market share from 24% to 27%. 




About the article




The information for this article comes from CCM, China’s leading market intelligence provider for the fields of agriculture, chemicals, food and feed.


For more insights in China’s amino acids market, please have a look at CCM’s monthly Amino Acids China Newsletter with analysis on company dynamics, market trends, policy changes, trade updates, and any other newsworthy story.



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