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Executive Talk

December 19, 2013
Adisseo: Bringing value through precision and dedication
An eFeedLink Executive
Newly-appointed managing director of Adisseo for the Asia Pacific region,Francois Pellet shares market insights with eFeedLink andtells us how the animal nutritioncompany, which has been producing powder methionine and liquid analoguefor the last 20 years, continues to strive to be the partner of choice in the region.
by Geraldine EE
Having recently taken on the new role, what is your direction for Adisseo in Asia?
My goal for Adisseo in Asia is to bring value to our customers through our products and services and to grow with our key accounts.Wefocus on our customers, helping them make the best use of our products and extract the full value of their raw materials, hence contributing to their competitiveness and profitability. These daily actions are inspired by our ambition to be the partner of choice of our customers.
What are some factors which have impacted demand for your product ranges of Rhodimet® methionine, Microvit® vitamins and Rovabio® enzymes?
In many countries,likeChina,Indonesia and India, the growing urban population is eating more chicken. Chickens areincreasingly produced in an industrial scale, which requires more amino acids and methionine.Past experience shows that methionine market growth typically exceeds poultry feed market growth. Even in mature markets like Europe and North America, we can see 3% growth in methionine consumption, which exceeds the 1%-2% growth in poultry production.
In addition, globally, genetics is improving and dietary nutrients' densities are increasing, with higher levels of amino acids. With increasing cost of soybean meal, formulations are increasingly lookingon lower crude protein content, while maintaining digestible amino acids.
How has the increasing use of non-conventional feed raw materials affected demand for your products?
We see great opportunity to help our customers better utilise unconventional feed ingredients like canola/rapeseed meals, DDGS, cotton seedmeal and peanut meal, which tend to be more variable in quality, namely contents of digestible amino acids. Enzymes such as Rovabio®, with 19 naturally-occurring NSP (non-starch polysaccharides)-degrading enzymes, helps to enhance utilisation of these unconventional ingredients in formulation. In addition, our Precise Nutrition Evaluation (PNE) service enables customers to assess the actual nutritional value of incoming ingredients instantly.
Can you tell us more about the Precise Nutrition Evaluation (PNE) service?
Adisseo's 24/7 web-based PNE serviceprovides precise prediction of digestible amino acids and apparent metabolisable energy of ingredients, based on in-vivo calibration.Besides being the only company that has developed in-vivo calibration, we have developed calibration models specifically for Asian raw materials to cater to the Asian market. Customers simply have to scan their raw materials with their on-site NIR unit and upload their spectra to the website andreceive results within minutes.
Formulating based on digestible amino acids instead of crude protein and total amino acids ensures digestible amino acidrequirements are met at least cost regardless of the choice of raw material.Not only does the rapid and precise assessment of nutritional profile help save considerable cost, it could lead to revolutionary ways of managing feeds and feeding programme.
How do your solutions translate to dollars and cents?
Through our scientifically-proven solutions, we hope to help our customers improve efficiency and save costs, amid high raw material prices and growing competition. For example, Rovabio® Max formulation matrix can result in cost saving of US$20-US$30 per tonne of feed in typical broiler formulations by improving utilisation of certain key ingredients. Also, formulating with liquid analogue or Rhodimet® AT88 at its true nutritional value of 100% bio-availability on equimolar basis or 88% on product basisallows feed mills to save US$0.50 - US$1.00 per tonne of feed.
What is your outlook of the demand for Adisseo's products?
Demand for our products is very much driven by poultry feed development. Worldwide, demand during the first half of 2013 was sluggish due to bird flu in China, high feed cost leading to the low profitability of the meat industry and the economic crisis. However, demand for feed additives rebounded in the second half as poultry production picked up strongly due to cheaper feed costs, recovery of poultry production in China, higher beef and pork prices and seasonal festivities.
We are confident inthe demand next year as the economics of poultry production should remain good and broiler meat consumption should expand further.Looking ahead, we expect poultry feed production to grow 5% to 7% annually in the next 3- 5 years in Asia Pacific (excluding China), possibly slightly higher than China.
Our growth will be led by our large customers, who are mainly poultry integrators that are today growing faster than the market. We are also rather well-positioned with customers who are growing quickly in Asia, North America and Brazil.
What can we expect of your product portfolio in the next 1-3 years?
Powder methionine Rhodimet® NP99 and liquid analogueAT88 contributed to more than half of Adisseo's revenue in 2012. Meanwhile, we have been actively promoting our rumen-bypass methionine - Smartamine® and Metasmart® in dairy rations to enhance dairy productivity. In 2014, we will launch Selisseo® - a next-generation organic selenium with 100 % efficient selenium supply to enhance productivity and meat and egg quality. Other feed additive solutions are being developed in the spirit of strong scientific base and high value creation for our customers and will be in the market in a few years.

Which are your main regions of growth?
The main drivers of global methionine consumption are China and Asia. BesideChina, Thailand, Philippines and Korea are the three most important markets for Adisseo. In these highly technical and demanding markets, Adisseo's three product ranges are well-recognised and valued. In the near future,I expectIndia, Indonesia and Vietnam tocontribute significantly to the region's growth. Though currently a small market, Myanmar's development will pick up because of investments from Thailandwhich are driving its growth.
What is the expected growth in methionine demand in Asia?
In 2013, growth will likely be in the range of 6% to 7% due to the slowdown in the first half of the year, after growing about 10% per annum in the last three years.In 2014, we expectmarket growth to beclose to 10% in Asia, against 6% worldwide, which means an extra 50,000-55,000 tonnes of methionine will be needed by the global market.
What is the development of Adisseo's fully-integrated liquid analogueplant in Nanjing, China?
The downstream part is already operational and has received its Free Sales Certificate from the Chinese authorities in August 2013, whilethe start-up of the upstream process should be completed by the end of this year. The first batch of Rhodimet® AT88, which is of the same specification and quality as produced in our Burgos plant in Spain,has been sold to our Chinese customers.
In 2014, the volumeproduced will bemeant only for the Chinese market. We expect to export to Asia Pacific in 2015. With this, our customers can expect a reduced delivery lead time of 8-14 days, versus 35-45 days when the product was shipped from Europe.

How will the increasedmethionine capacity inChina affect Adisseo's competitive position?
This increased capacity is necessary to keep up with the growth of customers who have been using liquid analogueand customers wishing to switch from powder methionine to liquidanalogue. In fact, liquid penetration in China has grown considerably in recent years, enabling us to double our Rhodimet® AT88sales in China since 2010. With the new plant, offering a domestic product ofguaranteed quality will be an accelerator for our growth.
Having said that, there are markets for both liquid and powder products. Integrators and large feed mills prefer liquid analogue whereassmall feed mills and premix producersprefer powder methionine. In India, for instance, where the market is made up of many small feed mills scattered all over the country, powder methionine constitutes 95% of methionine consumption.
How will Evonik'splanned increase in methionine production affect the market?
Our new plant in China and Evonik's new plant in Singaporeare known and anticipated by the market, which explains falling methionine prices during the last 18 months, despitehigh dietary inclusionrates. As a reference, current market price of methionine in Asia has already reached a level equivalent to that in the early 2000s, when oil prices were below USD40 per barrel, less than half of what it is today.
In spite of this,the global market definitely needs this kind of investment, considering expected methionine market growth of about 50,000-55,000 tonnes every year. Their new powder methionine plant will complement our liquid analogueplant in serving the Asian markets. These two state-of-the-art plants further demonstrate the commitment of two major players towards the Asian markets and its development.
What are other events that have affected the methionine market?
Since the price jump in 2005 due to Hurricane Katrina, demand-supply has been very tight and we have been struggling to satisfy demand for methionine, especially with the strong growth in China. Prices have been slowly decreasing since mid-2011 but we do not foresee large price variation and are not expecting large variation in the coming months.
However, in the first nine months of this year, when unsold local volumes of methionine were exported out of China due to the bird flu in China, the additional powder methionine supplycaused a hiccup in the Asian market. Despite the small volume, the impact on the market and the minds of the buyer has been strong, leading to falling methionine prices.
Is Adisseo planning a further increase in production capacity?
With market growth, there will be a time when new investments will be needed to keep up with the growth of the industry.However, shouldthe current imbalance between oil and methionine prices continue, we must evaluate the timing of any new production capacities. We are seriously thinking about these, but it is still in its early days. As we say in French, 'pas à pas', which means 'step by step'.


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