Lysine market relaxes again
The price of lysine for immediate delivery has increased substantially in the last two months of last year. This was due on the one hand to an increase in the use of lysine worldwide as a result of high protein prices. On the other hand, shipments from Asia were delayed, which resulted in a huge demand at that time.
At the end of December/beginning of January the delayed shipments reached the market and supplies were plentiful once more. The front end of the market thus returned to normal. Subsequently, the market fell further from February to June due to a large supply and low demand, because the industry had ample coverage for Q1.
The expectation for 2013 is that the market will remain relatively weak due to:
- Expansion of production capacity (4 producers will expand in 2013)
- More efficient production methods (new bacteria strains, resulting in 3-6% more production)
- Cheaper production (molasses as a substrate mean lower production costs, but the price of corn will also be lower)
- Lower demand compared to 2012, partly as a result of anticipated lower protein prices.
To what extent the above points will actually have an impact in 2013 remains to be seen, but it is obvious that there will be more supply in 2013 than there was in 2012. As a result, we anticipate that prices will be under pressure for the time being.