A lot has happened since the last amino report was published last year. Amino acid prices have increased dramatically, global supply chains are strained, the COVID-19 pandemic is continuing while vaccine rollouts are faltering, and international geopolitical tensions are still disrupting international trade flows.
Let us pause for a moment and analyse the reasons for the high amino prices we are experiencing.
In other news
The Ever Given blocked the Suez Canal
The Ever Given, a 224 000 t, 400 m long container ship recently blocked the Suez Canal after running aground sideways. According to some sources, an estimated 200 vessels (carrying grain, oil, liquefied natural gas, and containers) backed up on both sides of the canal. The huge ship was apparently driven sideways by strong winds plaguing the area for days before the ship ran aground. Recent reports, however, suggest that human error could be to blame. The Suez Canal carries around 10–12% of global shipping, and an estimated USD 9 billion (ZAR 135 billion) worth of goods are transported via the waterway daily.
The Chinese government unveiled its 14th five-year plan
During its most recent National Congress Meeting, the Chinese government unveiled its 14th five-year plan. In keeping with the environmental focus of recent years, the plan states that a sharp reduction in energy consumption and carbon dioxide emissions in heavy and intensive industries must be achieved by 2025. This includes all vitamin and amino acid producers. While production costs will most certainly increase, some of the measures will also force producers to limit production by increasing energy prices for energy-intensive industries and industries with excess capacity. This will have a direct impact on all feed additive producers in the short term but will also stunt future capacity expansions.
Novus filed an anti-dumping duty petition
In late July 2020, Novus filed an anti-dumping duty petition with the United States (US) Department of Commerce (DoC) against competing French, Spanish, and Japanese methionine suppliers to the US market. The reason given was the steep increase in imports, which more than doubled between 2017 and 2020. In February of this year, the DoC released its preliminary findings. They found that the case had merit and suggested anti-dumping duties on methionine produced by companies in France (43.82%), Spain (31.98%), and Japan (135.1%). The final determinations from the DoC are expected by early May.
The Chinese swine herd seems to be recovering
The Chinese swine herd seems to be recovering well after ASF wiped out nearly half the herd with continuous outbreaks over the past two and a half years. New farms and processing plants have been constructed, and thousands of breeding animals have been imported from Europe to replenish breeding stock. The groundbreaking ceremony of the latest mega-farm was held in March in Gansu Province. East Hope started construction of a CNY 780 million (ZAR 1.8 billion) breeding and growing facility, with a planned capacity of 1 million hogs per year. The facility boasts the latest in bio-security systems, as well as sophisticated waste recycling systems to minimise environmental pollution. ASF is still present in China, and a number of outbreaks have been reported in recent months. Although these outbreaks will hamper efforts to increase pork output, valuable lessons have been learned. It would be naïve to expect a repeat of the enormous devastation caused by the previous outbreak; however, it may still have a serious impact on pork production.