17 December 2020 - Citing ‘eroded market conditions’ and a global industry capacity which has ‘expanded faster than demand’, ADM Animal Nutrition has said it will end production of dry lysine (l-lysine HCl 98%) in H1 2021.
ADM Animal Nutrition will focus instead on l-lysine liquid 50% and encapsulated lysine products.
Throughout 2020, ADM said it has been working closely with swine and poultry feed producers to transition to liquid lysine, and the company will continue working with its customers to ensure a seamless transition within its product portfolio before ending production of dry lysine next year.
In an announcement, Pierre Joseph Paoli, President, Feed Ingredients and Additives at ADM Animal Nutrition, commented: “We’re seeing good growth from existing and new customers, and we’ve received great feedback as we’ve worked closely with producers to transition them to our liquid lysine products and delivery systems, as well as to our innovative new encapsulated lysine products.”
Discussing the development further with Feedinfo this afternoon, Paoli also said the announcement is for all global markets and this is a permanent decision.
"Generally, lysine market prices have been decreasing in the past few years and such price levels are not economically interesting for us. Dry lysine production requires additional processing steps as we convert the liquid form to dry, resulting in a higher production cost per unit. Meanwhile, market prices are low because of global overcapacity combined with lower recent demand due to the effects of ASF and COVID-19," he said.
Paoli added: "We will continue to offer some [dry lysine] volumes in January, February to honour all contracts with our existing customers and complete our obligations. We need to make decisions about how long we will continue offering but there won't be any supply of dry lysine by the end of H1 2021. At the same time we are continuing to invest in the production of liquid lysine and offer this product to markets worldwide."
Feedinfo notes that prices for lysine products generally have been rising globally since Q3 as Chinese producers lifted their offers because of higher production costs. Amino acid producers outside China have followed the uptrend and lifted their selling prices. Feedinfo assessed lysine HCl prices on a DDP US basis at $1.55-1.75/kg on 17 December.
