Feed additives tracker: Energy prices ease but better market dynamics some way off

Gas prices in the EU and the UK slumped from recent highs but remain elevated, impacting base chemicals production, among others, said Swiss trading software and information platform operator, Kemiex.

Its latest analysis shows that a raft of cooling measures recently announced by China to tame runaway coal prices and ease a power crunch have seen a significant reduction in the price for thermal coal, which is used to produce electricity in that market.

Those measures also had the impact of lowering the price of yellow phosphorus, which is a component in fertilizer and battery production as well as phosphates mixes, and is also used in vitamin C 35%, or as an intermediate for active ingredients such as vitamin B6, said Kemiex’s Stefan Schmidinger.

“The massive drop in coal prices enforced by China’s market supervision authorities leaves some hope for upcoming downside risk in prices and better supply availability, but certainly not before corrective policies on carbon emissions will show effects,” he commented.

The unintentional consequence of China’s energy consumption and carbon emission control policies has been lower production in multiple industries across several regions, with some factories only operating two days a week or at 70% capacity, after negative emissions reporting, found analysts.

Combined, the surging coal prices, power shortages and strict ecological policies slowed economic growth in the third quarter and are now threatening to spill over to supply chains in the fourth quarter, said Kemiex.

The ‘one size fits all’ approach to curbs is currently being reviewed, so as not to further dampen economic growth in China: a better balance of ecology and economy must be found, according to economists.

On a positive note, most market participants expect a better supply and demand picture from March 2022, said Schmidinger.

Feed additive price trends   

Assessing the latest pricing trends for feed additives produced in China, he said notable movers and shakers during October included inositol, choline chloride, vitamin K3, MNB and MSB, lysine Hcl and sulfate, along with valine.

Prices for vitamin C 35% and B vitamins, such as B6, Calpan (B5) or Folic acid (B) increased significantly, the first such hike for those inputs for quite some time, he added.

Looking at issues around choline chloride production in China, one major intermediate soared to almost CNY 28,000 (US$4373.44) per ton from only CNY 5,000 in early September but is now said to have dropped back by 50% again, reported Kemiex.

In terms of vitamin K3, it noted that a key intermediate, which is produced in China, is currently trading significantly higher than six months ago leading to one factory, outside of China, temporarily reducing production amid supply problems.

Vitamin C supply should see expansion soon, added Kemiex. A new China based-factory is starting trial production of its 40,000 tons per site; however, commercial exports and certifications are not expected before Q1, 2022.

Amino acid supply

Meanwhile, methionine entered “overbought” territory in China's local market, said the Swiss startup, with the additive dropping slightly in price despite factories communicating delayed deliveries for some existing contracts. 

Adisseo is reporting an extra 30,000 tons per annum capacity in Europe and significant construction progress made on its large-scale China expansion project.

Another major supplier officially postponed a 150-kiloton project by 18 months, according to feedback to Kemiex.

In November, a 300,000 tons per annum amino acids base in China will be ready for trial production adding considerably to global supply, said those analysts.

Force majeure incidents

“Outside China, availability of larger spot volumes is rather tight for many categories, but smaller quantities and truck loads are still being traded actively,” said Schmidinger.

The past two weeks have seen price hikes for vitamins, carotenoids, sweeteners and preservatives by some of the largest producers, he said.

“Several distributors in Europe and the Americas have notified clients on delayed goods and force majeure situations, to a degree rarely seen before," added Schmidinger.