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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