Bullish-Bearish Trends Coexistent as Prices Reach Watershed for the Third Time in 2024 (Ⅰ)

Effamall.com 24 Jul, 2024

Weak Demand, Inactive Inquiries, and Tepid Transactions

During the 29th week of 2024, inquiries and transactions on Mobaobuy.com continued their downward trend, with a decrease of 45.0% and 36.5%, respectively. However, the conversion rate reached as high as 90.9%.

This week, most amino acid varieties experienced varying degrees of declines in inquiries, with the exception of 70% L-Lysine Sulfate, which saw an 83% increase, and Sodium Bicarbonate, which kept the same level compared to the previous week. Moreover, inquiries and conversation rates for other conventional varieties, such as Dicalcium Phosphate (DCP), showed a downward trend.

These numbers reveal a lack of downstream demand and dissatisfaction with current upstream prices. However, the high conversion rates indicate that orders are driven by imminent consumption needs rather than price fluctuations.

Import and Export Data Represent a Prosperous Market Outlook

The General Administration of Customs of China (GACC) has recently published import and export data for June 2024.

Table 1 Statistical Analysis based on Amino Acids Import-Export Data for June 2024

? ? ? ? ? ? ?(Source: Analysis based on import and export data published by GACC)

Export volumes for 98.5% L-Lysine HCL showed consistent growth with a 14.0% year-on-year and 9.7% month-on-month increase in June 2024. The first half of the year also saw a 24.3% year-on-year increase, equivalent to over 100,000 tons in total and an average of 18,000 tons per month, leading to a significant decrease in its domestic supply by nearly half and delayed delivery times for several months. Additionally, the average export prices for 98.5% L-Lysine HCL improved both year-on-year and month-on-month.

Export volumes for 70% L-Lysine Sulfate achieved substantial growth, with a 14.1% and 14.8% year-on-year and month-on-month increase in June 2024. In the first half of 2024, there was a 32.5% year-on-year increase, amounting to an average monthly increase exceeding 20,000 tons, helping to balance domestic supply and demand. Therefore, there was little change in average export prices. Nevertheless, the current supply-demand condition, together with manufacturers’ scheduled summer overhauls in July and August, and the notable drive for replenishment observed among major swine breeding companies, may potentially exert a greater impact on market supply-demand dynamics.

The export volumes of L-Threonine products in June 2024 increased by 35.7% year-on-year but decreased by 12.5% month-on-month. However, the overall export volume in the first half of the year still surged significantly by 42.6% year-on-year, leading to an average monthly fall of 15,000 tons in domestic supply and tight market conditions.

Methionine export volumes in June 2024 recorded a 115.2% year-on-year increase but a 6.1% month-on-month decrease. The first half of the year saw a doubling of export volumes year-on-year, by about 132.6%, with the monthly average increase of around 14,000 tons, covering the new capacity released last year. Meanwhile, the import of Methionine in the first half of the year dropped by 16.6% year-over-year. While the domestic market has remained stable overall in recent months, future trends will depend on import and export fluctuations.

Persistently Weak Demand

On July 15th, 2024, The Overview of National Industrial Feed Production for June 2024 was jointly released by the Animal Husbandry and Veterinary Bureau under the Ministry of Agricultural and Rural Affairs and the China Feed Industry Association. This report revealed that the national industrial feed yield totaled about 25.61 million tons in June 2024, marking a 0.3% month-on-month increase but a 4.2% year-on-year decline.

In the first half of 2024, the national industrial feed yield reached 145.39 million tons, down 4.1% year-over-year.

Table 2 China’s Industrial Feed Production in June 2024

? ? ?(Source: The Overview of National Feed Production for June 2024, jointly released by the Animal Husbandry and Veterinary Bureau under the Ministry of Agricultural and Rural Affairs and the China Feed Industry Association)

The current Chinese market reflects weak demand overall, especially with weak stability in corn prices and a downtrend in soybean meals, resulting in weakening feed prices.

End Users’ Low Inventories and Spot Procurement Contributes to Overall Market Stability

This year, the market has seen shortened fluctuation cycles and narrowed ranges, displaying a unique blend of bullish and bearish trends. One distinctive feature of this year’s market dynamics is that the off-season prices are not as weak as anticipated, and the peak season prices are not as strong as expected. Since the beginning of the year, except for traders or integrated industrial and trade groups, most end users have adopted purchasing strategies based on imminent needs and reduced inventories, stabilizing market demand amid price fluctuations.

While prices for some amino acids have weakened lately due to month-end performance pressure, others remain firm driven by supply shortages.

Manufacturers’ summer overhauls and return-to-work schedules require attention from the market.

Many purchasing managers are monitoring popular vitamin varieties closely, with strategical waiting advised for a thorough analysis before engaging further.

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