The 4th week of Lysine market weekly report in 2010: The weak tendency would not change with the sluggish terminal procurement

1.       Domestic market

The 4th week (January 25th ¨CJanuary 31st) in 2010, at present, the insiders was focusing on the news of the further expandable production of the Shandong Golden Corn and Xijie in the following two years. While it would not have impact on the current domestic lysine market in short term, but if the plan favorably put into effect, the domestic lysine productive capacity would be redundancy and the fierce competition would not avoid. Recently, with the successively weak domestic terminal consumption, the lysine exportation was blocked and the unfavorable factors such as the decline in the holistic demand of the domestic feed enterprises had emerged. At present, the lysine price of most domestic regions maintained the downward tendency. This week, the offering price of the lysine (98.5%) was 12.7-13.2yuan per kg, and the low price in northern areas was about 12.6yuan per kg (CJ), decreased 4.0yuan per kg compared with that of December and the range was up to 23%. Since this month, the offering price of domestic big brand manufacturers were decreasing secretly, which was the main reason for the current weak lysine market. Seen from the current situation, the weak tendency was hard to change.

2.       Market analysis

(1) The dynamic situation of the manufacturers: in the first quarter of this year, the weak demand and exported situation existed in the domestic lysine market. Since January, domestic feed sale volume decreased apparently compared with the same analytic period. Among them, the pig plague of most domestic regions and the supply increase before the festival made the domestic feed sale volume decrease 20%-30% of the gross volume compared with the same analytic period. Affected by the domestic traditional festival, the sluggish lysine consumption would continue to the fist quarter of next year; the weak relevant products price was unfavorable to torsion of the domestic downward lysine price.

(2) The mentality of traders: before the lysine price increase, many traders had certain stock volume; the restocking price was about 11.0-12.5yuan per kg. According to the current underselling price, there had certain profitable room. Many traders was uncertain about the lysine trend before the Chinese New Year, moreover, with the actual need for the recouping funds, they were keen to sell; while at present, traders that had no stock volume were hesitating, and claimed that they were not to purchase with the current offering price for a time. With the uncertain circumstance, they were afraid of the risk increase.

(3) The feed enterprises still had large stock volume. In some regions, some feed enterprises had already accomplished the restocking before the Chinese New Year, at the same time, the traders were even cautious toward the current market, at present; traders had some stock volume to some extent. Domestic feed industry was unfavorable to stimulate the feed enterprises restocking, and downstream buyers considered that the price should be further decrease.

3.       Market forecast

In short, recently, insiders hold pessimistic expectation for the feed demand after the festival, as well as that before the festival, therefore, the weak tendency would not change in short term.

4.       Regional transaction details

Table 1¡¡ Average prices of domestic Lysine (98.5%) (Yuan/kg)

Table 2¡¡ Average prices of imported Lysine in China (Yuan/kg)

Figure 1¡¡Average price of imported Lysine in China (Yuan/kg)

Figure 2¡¡Average price of domestic Lysine in China (Yuan/kg)