Exclusive insights into the global market for amino acids
Versatile Gylcine (Food/Feed)
After a steady rise in prices over the summer, towards the end of 2021 the procurement prices for glycine reached their highest level since the Olympic Games in 2008. The reason for this was the fear among manufacturers in Hebei Province of short-term environmental protection measures imposed by the government in order to be able to deliver on the Blue Sky policy during the Winter Olympics in the year 2022. Other selected reasons, however, include the temporary shortage of acetic acid, which is an important basic raw material for the production of glycine.
The Dual Control of Energy Consumption measures on the part of the Chinese government likewise had an aggravating effect. With these, it regulated the energy supply to factories, forcing some manufacturers to massively reduce or even stop their production at times. One of the reasons for this was the allegedly politically motivated coal import ban from Australia. At the end of 2021, the price trend had reached its peak. On the one hand, the Chinese government increased the energy supply again, while on the other, it became apparent that factories would not have to expect hard shutdowns due to the Olympic Games after all.
The current price trend was again fueled by a force majeure at a large glyphosate plant in early 2022. The production of glyphosate also requires large quantities of glycine, which meant the demand for technical glycine fell. This led to a significant supply surplus due to technical reasons within a very short time. A production stop cannot be initiated abruptly; in fact, production needs to be kept running.
We are currently seeing a stagnation in the original price decline. The limited logistics possibilities and local shutdowns of cities (e.g. Shanghai) and provinces are leading to smaller price increases. In the long term, it also remains to be seen how the global supply/demand situation will affect further developments due to the shifts in relations caused by the war.
Lysine Food Grade
Lysine also experienced a significant increase in prices in the fall of 2021 in connection with the aforementioned Dual Control of Energy Consumption.
Here, too, this rising price trend went against the easing in the strict regulation of the energy supply by the Chinese government at the end of last year.
However, since large quantities of lysine are usually required by the agricultural industry in the spring, this trend has now stagnated.
There was a brief uncertainty with the outbreak of the war, as lysine is largely produced from corn or soybeans.
Ascorbic acid and its derivatives
With the Dual Control of Energy Consumption measures in place, prices jumped in origin, but due to a suspected lack of demand during this time, prices are currently regulating back to a more stable level.
It remains to be seen what effect the manufacturers’ annual maintenance period in the summer will have, which has always led to short-term changes in prices in the past.
Each manufacturer defines the duration of this maintenance work for itself.
Since ascorbic acid is originally derived from corn, monitoring price developments there can be helpful in assessing the market.
Availability of Creatine
Creatine is the product that has had, and still has, the sharpest fall in availability. Since the Chinese government strictly regulates the output of upstream producers for reason of environmental policy, creatine manufacturers are not currently expecting to see a turnaround. This means that creatine production is far from being able to run at 100% capacity.
It can therefore currently be assumed that availability will not improve for the time being.
Demand situation of Taurine
Following a price peak at the end of 2021, the market situation recovered somewhat at the beginning of the second quarter of 2022.
It remains to be seen in future the extent to which the demand situation will shift, as up to now fairly substantial quantities of taurine, as well as finished products containing taurine, have been exported to Russia and Ukraine.
Since taurine is traded very price-sensitively in Europe, the current decline in sea freight has a favorable effect on the calculation. Conversely, however, this does not guarantee that raw material prices in China have also fallen.
If you have any questions on the products or would like to receive a quote, please feel free to get in touch with me:
Stefan Koch
Head of BU Life Science
Phone: +49 40 300 501 8141
E-Mail: s.koch[at]tergroup.com