Vitamin E, Vitamin A, Lysine, Valine, and...

effamall.com 20 NOV, 2024

Market Supply and Demand Stabilizes This Week

During the 46th week of 2024, inquiry volume on Mobaobuy.com remained relatively stable, experiencing a slight decline of 6.2%, while transaction value decreased by 7.5% compared to the previous week. However, the order conversion rate remained high at 98.3%.

This week, the top three products by transaction volume on Mobaobuy.com were 70% L-Lysine Sulfate, L-Threonine, and Dicalcium Phosphate. The weekly average transaction prices for 70% L-Lysine Sulfate and L-Threonine rose by RMB 66/ton and RMB 69/ton, respectively, while the price for Dicalcium Phosphate fell by RMB 94/ton.

Product Prices Remain Firm

This week, overall quotations and transaction prices on Mobaobuy.com maintained stability with a slight upward trajectory.

Manufacturers are adopting firm or even increasing pricing strategies amid stable demand, while trying to keep prices steady for selected products. During the essential procurement process, downstream buyers have limited choices and insufficient bargaining power, forcing them to follow the upstream pricing strategies. Conversely, EUROTIER, held in Hanover this week, saw a significant increase in both exhibitors and visitors compared to the last event two years ago, greatly improving the market environment and atmosphere. This has restored confidence among industry insiders, and robust prices in the Chinese market are more conducive to driving up export prices and increasing overseas orders for Q1 2025. Consequently, producers are keen to sustain prices and strive for better pricing on procurement orders for Q1 2025. Meanwhile, some manufacturers are reducing prices in private negotiations to secure more orders.

Following BASF’s statement on the resumption of force majeure on October 17, various market rumors have emerged and gained traction during EUROTIER. These rumors have acted as a stimulant for participants, reinforcing Vitamin A and E manufacturers’ resolve to maintain their pricing stance. However, the extremely higher prices compared to a few months ago have led to muted trading activity. This situation has once again prompted upstream companies to consider the importance of finding a price level acceptable to both upstream and downstream players, referred to as price expectation management - a successful strategy employed by leading vitamin manufacturers in recent years.

Over the past week, prices for 70% L-Lysine Sulfate have increased slightly. While some leading manufacturers continue to keep their prices lower, numerous Chinese factories have raised their quotes by RMB 50-100/ton. This shift comes after a recent surge in inquiry volume for 70% L-Lysine Sulfate, which was previously considered weak. Factories have generally reported an uptick in inquiry volume of 10%-30%. As inquiry and procurement volume escalate, factories that were once concerned about overstock are experiencing reduced sales pressure and are joining the trend of price increases. In reality, the supply and demand dynamics for 70% L-Lysine Sulfate have not significantly changed. The recent increase in production rates by some manufacturers suggests that there is insufficient justification for a substantial price increase.

Industry opinions regarding the trend of Threonine are diverse. Despite manufacturers' determination to maintain prices and the release of new production capacity, factory sales policies and current inventory levels among end users and traders suggest that manufacturers will stick to their market sales strategies in the short term, which are tied to low-priced sales of other amino acids. Major fermented amino acid manufacturers are well-positioned, especially with the current strengthening of Threonine price, which has contributed to an increase in overseas orders and prices. Stocking up in overseas markets ahead of Christmas and for domestic markets before the New Year and Spring Festival is likely to keep amino acid prices stable with a slight upward trend over the next two months.

Long-term Impact of International Trade Policies

Last week, we discussed the progress of the EU’s anti-dumping investigations into Lysine and Choline Chloride, recognizing that overseas trade policies are beginning to disrupt European supply chains as geopolitical conditions unfold.

In the next 2-3 months, the EU amino acid market is expected to be significantly impacted by the EU’s preliminary ruling on the anti-dumping investigation into Lysine, expected to be issued by January 20, 2025. Speculations and concerns regarding the results will continue to trouble both upstream manufacturers and downstream feed companies.

This week’s intellectual property dispute at EUROTIER reportedly involved the police and was videotaped throughout the event. Although the young Chinese company involved has thrived over the past decade through collaboration with leading global enterprises, this is perhaps its first encounter with such international intellectual property disputes, making their strong response unsurprising.?

It is important to note that even with extensive groundwork and significant investment already made, leveraging intellectual property disputes is a common strategy in navigating international business competition. Regardless of the outcome - be it a win, settlement, or loss - the harm caused during the process is evident. Over the past decade or two, various damages have been incurred by feed companies, including restrictions on sales markets, asset restructuring failures faced by listed companies, and others that ultimately achieved breakthroughs in independent research and development, gaining proprietary intellectual property rights after navigating years of market challenges. Throughout the resolution of such disputes, end users and cooperative distributors consistently prioritize market risk control, making the impact on the market post-lawsuit undeniably significant.?

The preferred coping strategy involves engaging a professional team to swiftly obtain first-hand information, make prompt judgments and decisions, and formulate response strategies quickly. This includes actively collecting and perfecting the entire chain of evidence to address the lawsuit effectively or reach a settlement as soon as possible. The market needs more rational and strategic communication rather than emotional responses. Calming the market to prevent overheating and negative publicity could be an effective approach. However, this intellectual property dispute may have a greater impact on the development of China’s Valine market. For the involved Chinese company, there is no need to focus solely on the EU market in the short term; retaining the domestic market and exploring non-European markets to secure a greater volume of orders and market share may be the preferred strategy for recent market sales adjustments.?

With anticipated changes in the Russia-Ukraine conflict next year, along with increased challenges and uncertainties in Sino-US and Sino-European trade after Trump’s election, Chinese manufacturers are likely to encounter more barriers in European and American markets. Indirectly related market supply-demand dynamics and uncontrolled factors will continue to evolve.

Meanwhile, market players are becoming increasingly sensitive to news and trends. A recent brief news report sparked heated discussions within the industry over the weekend. Overly optimistic or pessimistic judgements about market trends can significantly influence the mindsets of industry insiders.

Short-term Impact of Weather Changes

Recently, there have been sharp fluctuations in temperature, and this year’s air humidity is generally higher than in previous years, increasing the risk of drastic weather changes. This includes sudden, large-scale drops in temperature or severe winter weather, with heavy snowfall likely. These conditions will impact future transportation and logistics. In the upcoming two or three months, it is essential to maintain a certain level of inventory as a risk control measure.

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