August 22, 2003

 

 

China Methionine Market Weekly Report - Methionine Market in China Continued to Remain Weak (August 22, 2003)

 

An eFeedLink Exclusive Report

 

During the week ended August 22 methionine market in China stayed gloomy as prices remained generally weak, with prices in some regions sliding marginally.

 

Current market prices of powder methionine are at around RMB 24.0 - 24.5 /kg, almost similar to last week's range.

 

DL-Methionine

 

In seven major regions, average transacted prices of powder methionine (delivered-to-feed mill) were at around RMB 23.6-24.0 /kg, with prices in Jinan, Nanjing, Zhengzhou and Beijing areas dropping by RMB 0.20/kg versus last week's prices. The lowest prices were recorded in Zhengzhou area, down to the level of RMB 23.60/kg.

 

Liquid Methionine

 

Under the influence of declining powder methionine market prices, liquid methionine prices also moved downward during the week. Current offer prices are at around RMB 20.50/kg. In China northern and central regions, the general transacted prices were RMB 0.20/kg lower than last week's prices; while in China southern region, general transacted prices were lower by RMB0.10/kg versus last week's prices. General transacted prices were in the range of RMB 20.0 - 20.2/kg.

 

Market Analysis

 

The main cause for the declining prices can be attributed to enlarged supply in a weak demand market situation. Although supply from a major European producer has been restrained, there are signs of ample availability for both powder and liquid methionine in the market. The fact that there is a considerable gap in US$ quotes (currently at US$2.35 - 2.40/kg) and RMB transacted prices points to intense competition among traders and producers for buyers in China, driving RMB transacted prices downward.

 

The recent hikes in egg prices might seen to help in driving up the demand for methionine. But this was not the case as the rise in egg prices was due to lowered production, and thus egg supply, in the hot summer season. As methionine prices weakened, feed millers find no urgency to put in orders, and replenish their inventories on a need-to basis only. 

 

There may be some bright spots in the gloom. The last quarter of the year is the traditional peak season for poultry and egg production in China. Methionine demand is expected to benefit from this seasonal increase. With egg prices moving up, production would increase to take advantage of the higher profit margins. Additionally, with the recent relaxation of restrictions on China's poultry exports to Japan, broiler production is expected to rise. All these are pointing to improving demand for methionine in China.

 

In conclusion, due to intense competition among traders and producers for the current limited market demand prices may continue to slide in the nearby term. However, as demand picks up with last quarter of the year approaches, prices would stabilize.