Interview: Hij's insights into the market for feed amino acids.

The first sugar-based biological (CJ bio) product has for many years been a leading product based on the feed additive market, such as lysine, sucrose, tryptophan, and the recently listed L-methineNow CJ Bio is a global bioscience company, the world's largest lysine and tryptophan production companyvhBIn order to have a better understanding of the challenges and opportunities of the future feed additive market and CJ Bio's business direction in feed-grade amino acids, Feedinfo News interviewed Mr Yoon, Global Sales and Marketing Director of Higer BiovhBthe global feed industry has grown by about 2% per year since 2013There are some differences in the growth rate of different feed types, pigs and poultry are in a slow and stable growth period, and the aquatic products industry is also growing significantly in China and East AsiaThe upward trend in the feed industry will continueVhBfeed demand in China has been less optimistic in recent yearsWhat are the current factors affecting the needs of this region? Do you see some signs of recovery?The demand for feed in China has fallen by about 2% per year since 2013,seokhwan YoonAmong the many possible factors, the decline in meat consumption and the maturity of China's livestock industry appear to be the main reasons for the negative impact on China's feed demandAlthough demand for feed has recovered somewhat this year as pork prices rebound, headwinds, such as government-led feed industry reforms, could still lead to slower market growthIn the long run, the implementation of the Chinese government's two-child policy and environmental protection policies, such as the reduction of crude protein, will eventually lead to an increase in overall feed consumptionthe vhB(Feedinfo News Service) soybean/food derivatives have not had a direct beneficial effect on the increase in synthetic amino acid addition rates over the past few years Have you identified the more favorable areas for soybean/food derivatives? What are your expectations for the next few months?The popularity of the vhB (Seokhwan Yoon) soybeans/grain snr did not show any positive effect on the amino acid market because volatile oil prices dragged down commodity markets and corn prices However, the recent rise in soybean prices has led the market to a favourable state (soybean prices rise, corn prices fall) In the short term, the more favorable market position is the more advanced and diversified feed formula as Europe is widely used In the long run, China's market, followed by the Asian market, will become increasingly attractive, as corn prices are expected to fall sharply after the government's policy is enacted The wide use of DDGS in the vhB feed feed has a positive effect on the increase in amino acid addition rates How do you expect the use of DDSG to affect amino acid demand in the coming months? It is well known that the increase in ddGS consumption promotes an increase in the rate of amino acid addition in feed, resulting in an increase in the total demand for amino acids Recent increases in soybean prices may stimulate demand for grains and feed additives, but given low oil prices limiting the production of ethanol and DDGS, the amount of amino acid additions is expected to remain the same overall This condition does not include tryptophan, as the amount of tryptophan is always positively correlated with the amount added to DDGS and is not affected by price How do you expect the growth rate of global market and feed-grade amino acids to develop in 2015-16?vhB (Seokhwan Yoon) In the last 5 years (after 2011), the demand for amino acids has increased year by year (growth rate: lysine 5-7%, sucone 15-20%, methionine 5-7%, tryptophan 40-50%) However, in 2015, demand growth for these products slowed, mainly due to a decrease in additions due to lower soybean prices In 2015, global feed production declines led to a decrease in lysine growth rates On the other hand, however, the use of other amino acids continues to increase vhB but in 2016, the growth rate of feed amino acids will be higher than in 2015, mainly due to the increase in soybean meal and related product prices We have now learned from the customer side that the demand for tryptophan and lysine has increased, with growth in the second half of the year being higher than the regular seasonal growth Different types of lysine have an inherent composition ratio (powder: particles: liquid s 5:3:2), the choice of lysine type is greater influenced by the selection of feed companies according to their preferred choice of product type (matching feed, premix, integrated feed) rather than directly affected by the trend Market growth is more influenced by suppliers because lysine prices and other factors are affected, and some customers even buy premixed products at the same time In 2015, the market for lysine sulfates and liquid lysine increased more than the powdery lysine market, a phenomenon that appears to be trending across the Western market, particularly in Europe, where lysine sulfate acceptance has increased The projected market size for 2015 is 2.2 million tons of lysine, 1.1 million tons of methionine, 450,000 tons of susine and 24,000 tons of tryptophan vhB (Feedinfo News Service) How do you describe the ratio of supply and demand in the global lysine market? The widely held view is that in global markets, particularly in China, severe overcapacity remains Do you agree with this view?VhB seokhwan Yoon) All amino acid markets, especially lysine, are facing overcapacity It is difficult to give an accurate ratio of supply and demand in the Chinese market, because manufacturers are now discontinuing production or reducing production to adapt to demand In particular, the capacity of one of China's major manufacturers has shrunk significantly Oversupply will continue in 2016, but recent shifts in soybean and pork prices will spur increased meat production to narrow the gap between supply and demand, while capacity utilization around the world remains low The global price of lysine has continued to decline over the past 2-3 years What are the main causes of this phenomenon? In such an environment, the survival of the enterprise is the most critical, technical advantages or a good source of raw materials supply? When do you expect your company's amino acid industry to return to profitability?The reason for the decline in global lysine prices due to the volatility of soybean prices and the oversupply of amino acid markets caused by the vhB .Seokhwan Yoon In addition, speculative attempts by commodity traders have had a negative impact on lysine prices The amino acid industry is not now focused on production technology, but by government policies, raw material prices and other factors Regional advantage is also an important part Technology, however, has always been an important element, especially with regard to raw materials, flexible production and environmentally friendly production There is a saying that China has always been a challenging market with fierce competition, and that the status quo will ease in the second half of 2016 will you see the potential for further technological improvements that are economically viable, or are we reaching the stage of diminishing returns in terms of the production costs of the vhB , Feedinfo News Service, lysine production costs? Based on current energy, carbon source costs, geographically speaking, where is the lowest cost of producing lysine?The development of existing technologies has indeed reached a limit in terms of productivity and productivity improvements in the vhB So we need to develop a new technology development strategy for medium- and long-term development In terms of cost, China has the most advantage sits and Brazil has the lowest advantage In the medium term, China's cost competitiveness continues to grow, but the increase in labor costs, environmental costs and government policies lead to uncertainty vhB Since the l-methionine 100 was first launched on the market, CJ has advocated that the L-MET100 is more efficient in terms of bioavailability than other products of the same type vhB Although it will take time for every customer around the world to reach the L-MET100, the business is progressing well Overall, the l-MET100 price premium will be determined by the customer through long-term practice In fact, many of our customers have reduced the L-MET100 addition rate by about 10%, compared to other chemical equivalents We therefore believe that, over the years, our customers will recognize the efficacy of L-Met in their feed formulations the cost of the vhB is higher than the current crude oil price level of the effective production base compared to the same type of product The l-MET 100's cost competitiveness is driven by the full integration of current production sites, the ultimate achievement of technology and technology-related business models, cost balance between carbon sources and penetration of new technologies and business models in long-term operations The essential difference between biological methods and chemical methods is that the use of biological methods to upgrade technology on existing equipment can minimize cost increases, and CJ has not yet achieved its ultimate goal of technological development In addition, CJ believes that in the long run, the cost of crude oil and other fossil carbon sources will always be higher than the cost of renewable biomass CJ is also preparing a technology development that can be adapted to the high crude oil prices, which is a different business model than the current model To sum up, we believe that at this stage we are cost competitive and will have a cost advantage in the long-term practice in the future vhB Can you briefly describe the potential market growth of other amino acids such as leucine, ithyl leucine and arginine? The demand for proline is growing, especially in Europe In the future, the demand for other BCAA products will also increase (BCAA: Branch chain amino acids: leucine, ithaline and proline) However, the demand for amino acids is determined by their price competitiveness, the manufacturer's large-scale production and distribution capacity Arginine is the fourth or fifth restricted amino acid in poultry and is a functional amino acid in pigs Overall, branched chain amino acids and arginine have market potential depending on their price competitiveness What is the future strategy of vhB CJ in the feed-grade amino acid industry?vhB CJ's strategic focus was once "technology and production-oriented", but now CJ believes that based on these advantages, it is best to "market and sustainability-oriented" as the future focus Over the past decade, CJ has invested billions of dollars in research and development, set up factories, and introduced the most cost-effective products to the market Based on continuous efforts, CJ has become a leading manufacturer, with all L-type products with five amino acids produced by biological processes, two of the world's first products (lysine and tryptophan), and one innovative product (L-methionine) However, after two to three years of market change, CJ recognises that it should build a more comprehensive and integrated approach to strategy based on its weaknesses and threats vhB the first strategic focus is on the "market" As CJ has always focused more on technology, the company lacks the resources to understand the market and customers with the talent, process, and infrastructure Over the next few years, CJ will build internal resources that will enable it to gather information efficiently in the market and effectively communicate the designated strategy to the market VhB 's second strategic focus is "sustainability": sustainable customer service through a physical asset business model CJ will adopt more advanced tools to ensure the accuracy and timeliness of product delivery to customers CJ also believes that the price of a product should remain stable, not volatile To this end, CJ will actively strive for increased demand for amino acids in specific regions and applications vhB in addition, to offer new products to different markets on top of existing production capacity, CJ will not only increase the flexibility of its assets, but will also attempt to balance existing supply so that market participants can achieve a sustainable and healthy state in the long term For example, CJ may produce different lysine products for different geographic regions in one year or two, which will not only allow CJ to better cope with the current capacity imbalance, but also expand its portfolio for future development vhB The First Sugar Creatures (CJ Bio) products that have for many years been the leading product based on the feed additive market, such as lysine, sucrose, tryptophan, and the recently listed L-methine Now CJ Bio is a global bioscience company, the world's largest lysine and tryptophan production company vhB In order to have a better understanding of the challenges and opportunities of the future feed additive market and CJ Bio's business direction in feed-grade amino acids, Feedinfo News interviewed Mr Yoon, Global Sales and Marketing Director of Higer Bio vhB the global feed industry has grown by about 2% per year since 2013 There are some differences in the growth rate of different feed types, pigs and poultry are in a slow and stable growth period, and the aquatic products industry is also growing significantly in China and East Asia The upward trend in the feed industry will continue VhB feed demand in China has been less optimistic in recent years What are the current factors affecting the needs of this region? Do you see some signs of recovery?The demand for feed in China has fallen by about 2% per year since 2013, seokhwan Yoon Among the many possible factors, the decline in meat consumption and the maturity of China's livestock industry appear to be the main reasons for the negative impact on China's feed demand Although demand for feed has recovered somewhat this year as pork prices rebound, headwinds, such as government-led feed industry reforms, could still lead to slower market growth In the long run, the implementation of the Chinese government's two-child policy and environmental protection policies, such as the reduction of crude protein, will eventually lead to an increase in overall feed consumption the vhB (Feedinfo News Service) soybean/food derivatives have not had a direct beneficial effect on the increase in synthetic amino acid addition rates over the past few years Have you identified the more favorable areas for soybean/food derivatives? What are your expectations for the next few months?The popularity of the vhB (Seokhwan Yoon) soybeans/grain snr did not show any positive effect on the amino acid market because volatile oil prices dragged down commodity markets and corn prices However, the recent rise in soybean prices has led the market to a favourable state (soybean prices rise, corn prices fall) In the short term, the market is in a more favorable position.