Import of Methionine Increased Rapidly in H1


1. Review in H1 of 2006

The bird flu affected the entire feed raw material market in
China in the first half of 2006. Great pressure was produced on
the market demand of methionine. In the first half of 2006 except
January and February, great quantities of methionine were
imported from abroad. The possibility of speculative hoarding
could not be ruled out. With the demand reduction caused by the
bird flu, the price of methionine in the domestic market went
all way down. The price of imported methionine touched the bottom
at the end of March, being 5.68% lower than that at the beginning
of the year. Methionine producers in foreign countries then
started to increase the selling price on the pretext of
production restriction and crude oil price rise. Despite great
quantities of import, the price of methionine still kept firmly
in April and May. In June, however, the price of methionine
reduced under the pressure of extremely soft market demand.
   According to customs statistics, the average import price of
methionine in February was the lowest in the first half of 2006,
being US$2 034.34 per ton. The price was relatively firm in the
other months.
   The average import price of methionine was US$2 102.24 per
ton in the first half of 2006, an increase of 7.62% over 2005.
    The import amount from February to June 2006 was higher than
the same period of 2005. The import amount reduced after May.
The total import amount from January to June 2006 was 40.5
thousand tons, an increase of 33.2% over the same period of 2005.
   Major import sources of methionine for China in the first half
of 2006 included Japan, Belgium, Germany, France, the United
States and Russia. Major import companies were still Adisseo,
Sumitomo, Tokuyama and Novus. The product imported from Novus
is mainly liquid methionine.


2. Factors influencing the
   methionine market in H1 of 2006

    2.1 The international methionine price continued to lead the
domestic market
Methionine used in China is mainly imported from abroad. The
domestic methionine market has been controlled in the hands of
foreign methionine producers for long years. The price in the
domestic market is determined by the trend in the international
market. After the successful acquisition of Adisseo of France
by Blue Star Group, the leading role of the international
methionine market in China will be gradually weakened.

    2.2 The present status of poultry-raising sector left no
room for optimism
With the impact from the bird flu in the first half of 2006, the
total amount of poultry in China reduced to 60%-70% of the amount
in normal years. Prices of eggs and poultry meat also maintained
at a low level. Due to the high price of corn, the production
cost went up. The poultry-raising sector had thin profit or even
suffered loss. The sales amount of feed was therefore affected.
The output of feed in China in the first half of 2006 was around
10% down compared with the same period of 2005. As a result
methionine had a soft demand.

   2.3 The production cost increased because of the high oil
price in the international market
The international oil price maintained at a high level in the
first half of 2006. The price was US$60 per barrel in January
but increased to around US$73 per barrel in June. The production
cost and the logistic expenses of methionine increased
drastically, providing a support to the firm price of methionine
in final months of the first half of 2006.

    2.4 Producers changed marketing tactics
Methionine producers started to implement price control tactics
from April 2006. They controlled market sources and increased
price quotations. Besides, buyers usually have a mentality of
making purchases when the price is going up. In spite of the
demand reduction, the price of methionine still went up. Due to
the lack of substantial demand, however, the price had a rational
downturn in June.

3. Factors influencing the
   methionine market in H2 of 2006

    3.1 The impact from the bird flu will not be eliminated in
near future
With the shadow of the bird flu, the possibility for a price rise
of eggs and poultry meat is quite small. Beset by various poultry
diseases, the poultry-raising sector mostly makes no profit
today. It is expected that it is hard for the poultry-raising
sector to restore to the normal state at the end of 2006. The
demand of methionine will meet great pressure.

    3.2 Methionine resources will still be quite adequate
Due to the impact from the bird flu in the first half of 2006,
the actual demand of methionine in China was much lower than the
import amount. According to experts, there is quite a lot of
inventory today, feed producers only make slow purchases and
competition pressure in methionine producers can not be eased
in near future. The overall price trend of methionine will likely
be affected and methionine producers will therefore still
implement production restriction tactics in the second half of
2006.
    As the restoration of the poultry-raising sector in China
will be quite slow in the second half of 2006, the demand growth
of methionine will still meet great pressure. In case of an
energy price rise in the second half of 2006, methionine producer
will implement production restriction tactics to maintain the
price because of the increase in production cost and freight cost.
If the demand in the poultry-raising sector recovers in the
fourth quarter, the possibility for foreign methionine
producers to use the opportunity and increase price can not be
ruled out. If the demand in the poultry feed market is still slack
in the fourth quarter, however, the price of methionine will
likely maintain at the present level.

Table 1  Import Price of Methionine in China in H1
    (US$ per ton)
Month           January    February    March    April    May    June
Average price    2 086.4    2 034.34    2 078.72    2 085.47
    2 137.02    2 177.28
Source: CNCIC Chemdata

Table 2  Major Import Sources of Methionine For China in H1
              (thousand tons)
Country    Japan    Belgium    Germany    France    USA    Russia    Others
Amount    17.0    13.3    4.3     4.4     0.8     0.51    0.19
Source: CNCIC Chemdata

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