Feed-Grade Amino Acid Industry Ushers in Dramatic Changes   

By Liu Xiaofeng, Beijing Pro-agri Communication Co Ltd

1. Overview of the feed-grade amino acid market

Protein is one of the four nutrients required for the normal growth of animals. Animal feed is usually added with soybean meal and fish meal as the main source of proteins and is also added with some synthetic amino acids as a supplement of proteins. Synthetic amino acids can promote the growth and development of animals, improve their meat quality, enhance their milk or egg production, lower feed costs, and increase feed utilization.
   Currently, common feed-grade amino acids include lysine, methionine, threonine and tryptophan. The global annual demand for feed-grade amino acid is about 2.43 million tons, with an estimated value of about US$6 billion.
   The global annual demand for lysine is about 1.4 million tons (with a value of about US$2.3 billion), methionine about 800 000 tons (US$3.2 billion), threonine about 210 000 tons (US$420 million), and tryptophan about 5 000 tons (US$100 million).
   From the perspective of the industry chain, amino acids are involved in chemical production in the upstream and animal feed and cultivation in the downstream and are located in the front end of the value chain. Synthetic amino acids account for less than 1% of the animal feed in volume but 5% to 8% in cost.
   In China, more than 80% of feed-grade protein resources are imported from abroad, and their prices fluctuate frequently. It is estimated that the rational use of synthetic amino acids can annually reduce the cost of the country's soybean meal by RMB5.6 billion and increase the cost of corn, lysine and threonine by RMB3 billion, thus reducing the overall feed cost by RMB2.6 billion a year. If the price of tryptophan further drops, the four kinds of amino acids can be used regularly at the same time. This way, they can annually reduce the consumption of soybean meal by more than 7 million tons in China, thus reducing the feed cost by at least RMB10 billion a year. In addition, by reducing the crude protein level in the animal feed, the emissions of nitrogen and ammonia of animals can significantly reduce.

2. Fast development of China's feed-grade amino acid industry in the past 5 years

In 2004, China's lysine industry ushered in a climax, and the number of lysine manufacturers in the country reached 14, with a combined capacity of 430 000 t/a. The next year, the country's lysine imports exceeded exports for the first time, and the country ended its long-term dependence on imported lysine and became a lysine exporter. Later on, due to overcapacity, the lysine industry began a brutal reshuffle. Large manufacturers constantly expanded their production capacity and increased their market share, while small ones were eliminated. By 2010, the number of lysine manufacturers in China dropped to only six, but their combined capacity increased to 650 000 t/a.
   In 2004, Fuzhou Fucheng MSG & Food Co Ltd started producing threonine and became China's first feed-grade threonine producer, with a threonine capacity of 5 000 t/a. By 2008, the total threonine capacity in China had reached 37 000 t/a. In 2010, the capacity reached 137 000 t/a, and the output reached about 96 000 tons.
   The development of tryptophan is also rapid in China. In 2009, the production capacity and consumption of tryptophan in China were 700 t/a and 400 tons, respectively. In 2010, the capacity surged to 9 720 t/a, but the consumption was 800 - 1000 tons. The number of tryptophan manufacturers in the country rapidly increased from two in 2008 to ten in 2010.
   In 2010, the Chongqing Unis methionine project was put into production. Meanwhile, the Bluestar Adisseo methionine project and the Dalian-based Sumitomo methionine project were under construction. Dachan Group has developed a fermentation-based methionine production method and also plans to put the technology into industrial production. It is expected that in the next 3 to 5 years, the large-scale industrial production of methionine will be achieved in China.
   Since China became a net exporter of lysine in 2005, it has now achieved the mass production of threonine and tryptophan and exported a large amount of the two amino acids. By 2010, its feed-grade amino acid output reached 670 000 tons, accounts for 30% of the global total, and its annual export of lysine and threonine together had reached about 240 000 tons. The industrial production of methionine in the country is no longer a distant dream. In just five years, China's feed-grade amino acid industry has undergone tremendous changes.

3. Analysis on the development trend of feed-grade amino acid markets

Prior to 2005, the world production of amino acids was relatively stable. The global lysine production was mainly dominated by Japan's Ajinomoto, the United States' ADM and South Korea's CJ. Ajinomoto occupied 60 % of the global lysine market. Back then, the global consumption of threonine was only 50 000 to 60 000 tons a year, and its main suppliers were Ajinomoto and Degussa. The two companies accounted for more than 90 percent of the global threonine market. Before 2008, the two companies also completely dominated the global tryptophan market. Since 2009, the relatively stable global methionine market has undergone substantial changes. Nippon Soda Co Ltd quitted from the methionine market due to the market instability and the continued capacity expansion of competitors. In China, several methionine projects are under construction, and Sumitomo, Adisseo and Degussa are also aggressively expanding their methionine capacity in the country. The global capacity and consumption of the 4 common amino acids and their major producers are shown in Table 1.

Table 1 Global capacity and consumption of common amino acids and their major producers
Amino acid    Capacity (kt/a)    Demand (kt)    Major suppliers    Market share of major suppliers    Other manufacturers    Industrial concentration level                                                                                                                             
Methionine    950    800    Degussa, Novus, Adisseo, Sumitomo    95%    Volga, Chongqing Unis    High
Lysine    > 1600    1400    Dachan, Ajinomoto, CJ    65%    HAKKO, ADM, Degussa, Fengyuan    Low
Threonine    >300    210    Ajinomoto, Meihua Group (China), Star Lake (China), Degussa, CJ    90%    Dachan, Fufeng, ADM, etc    Common
Tryptophan    15    5    Ajinomoto, Degussa    95%    Feng