Hello All,
Several of the predicted pricing concerns with Amino Acids materialized in January.
Real concerns over availability has several purchasers bringing in larger than usual inventory. This, along with diminished inventory at manufacturers and rising freight costs are fueling the price increases.
My family will tell you I am a story teller. {Sometimes I get lengthy} So the short version is in red, longer in blue .
Methionine:
Short… In 2020, Novus won their lawsuit against a couple of companies that were found guilty of product dumping in United States.
Long… Expanding on the short version what this means is the guilty companies were selling their products below what was determined to be their costs. This was done to undercut the price of the American manufacturers. To remain competitive the American manufacturers had to lower their prices. The guilty companies’ objective was to drive the American companies out of business. Methionine continues to be on allocation, by contract or previous use volumes.
Tryptophan:
Short… More use in China with the repopulation of hogs in that country, also import issues.
Long… Expanding on the short version, more Tryptophan is being used in animal diets in United States. Import costs continue to skyrocket.
Threonine:
Short… Availability is getting tighter.
Long… United States does not make enough Threonine, Methionine or Tryptophan for the needs of our nation. Because of this we have to depend on import. Stockpiling, high freight rates, including difficulty getting loaded and unloaded at ports are causing increased pricing.
Lysine:
Short… American manufactures have moved on since they didn’t make enough money making Lysine.
Long… To understand why this is happening might require looking back a few years to remember what took place to shape some of the supply and demand issues.
As Lysine’s use grew in the late 80’s and early 90’s it sold at prices nearly a dollar a pound higher than what they are today.
ADM controlled the market and made so much money in the early 90’s it plead guilty to price-fixing charges in 1996. Despite this they continued to be the major player until about 10 years ago.
This awareness of the profitability on Lysine got many other large companies interested.
Who:
a. Ajinomoto opened its Lysine facility in Eddyville, Iowa in 1986
b. ADM opened its Lysine facility in Decatur, Iowa in 1991
c. Evonik opened its Biolys facility in Blair, Nebraska in 2000
d. CJ Bio America opened its Lysine facility in Fort Dodge, Iowa in 2013
e. During this time numerous Chinese companies opened or expanded their production and began importing to United States.
The 4 American companies had enough capacity to serve all of United States Lysine needs . So what has happened? In the last 3 years Evonik and Ajinomoto have each reduced their outputs, transitioning to products that are more profitable. In the last month ADM announced it is getting completely out of the dry Lysine business, it too is transitioning to new and other products. See ADM's partnership to build world's largest insect protein plant in Decatur, Illinois below.