Daesang to resume lysine production in Gunsan in May; pursues diversification strategy

Production of lysine at Daesang’s factory in Gunsan, South Korea, is set to resume in May after a four-month shutdown, the company told Feedinfo at VIV Asia.

According to Mr. Su Young Son, Team Leader Animal Nutrition Department at Daesang, the restart will be in May and full capacity will be reached in May/June.

At full capacity, the plant can produce 10,000 tonnes/month of lysine HCl and 7,000 tonnes/month of liquid lysine, he said.

Commenting on China’s reopening and its impact on the lysine market, Mr. Son said the lysine price could decrease further, adding that producers in China have increased capacity. He also predicted that demand will likely pick up at the end of 2023.

As for Daesang’s lysine offers, he said that on the one hand his company is telling customers that this year it will be “tough to match Chinese prices”, but on the other hand, to offset this, Daesang is selling Chengfu’s lysine sulphate to its customers — excluding the EU market, where the Chengfu lysine sulphate product currently isn’t authorised.

“We also have a competitive advantage with liquid lysine as Chinese companies are not present in this segment,” he added.

Mr. Son also disclosed that Daesang has plans to produce arginine, valine, isoleucine and tryptophan in China in the future. The production would take place at a factory owned by Heilongjiang Chengfu Food Group, the company with which Daesang signed a contract in August 2021 to produce amino acids in China.

The original intention was to start in 2024, Mr. Son said, but the project has since been delayed.

“June is when we’re hoping our negotiations with Chengfu will be done. So far, the news is good. We will know more in June,” Mr. Son said.

From 2025, in line with the incentive to continue diversifying the business beyond animal nutrition, Daesang also plans to start producing more biobased alternative solutions to products used in other industries.

“The plan is to progressively replace the production of lysine in our own factories by these new products,” he explained.

By Simon Duke, editor-in-chief; Assistance by Lydia Ma, senior analyst

Russian premixer Megamix LLC’s plans to expand capacity for vitamin E 60% adsorbate and vitamin E 50% adsorbate to cover the entirety of the domestic market’s demand are on track, the company told Feedinfo.

Megamix’s vitamin E adsorbate plant reached a production capacity of 2,000 tonnes/year in 2021, and in a January 2022 interview the company said it was aiming to produce 12,000 tonnes/year by the end of the decade. At the time, Vasiliy Frizen, General Director at Megamix, estimated the total potential of the Russian market for vitamin E adsorbate at about 4,000-5,000 tonnes/year.

“Currently, the production capacity of the feed grade vitamin E line fully matches its built-in process capabilities. The potential of the Russian market for vitamin E consumption is growing pro rata to the compound feed output,” Arseniy Vlasov, Deputy General Director for Business Development & Co-owner, told Feedinfo, adding that the growth rate of compound feed output in Russia in 2022 was 7% year-on-year, which was almost double the rate of the previous year.

Vlasov acknowledged that Megamix did, however, experience some setbacks last year for its vitamin E project due to the need to find new partners in the supply chain and overall logistics issues.

“We overcame these challenges and now we are on a good track to reach our goal to achieve a production capacity of least 40% and cover all needs in the Russian market and CIS countries,” he said.

Megamix has also made progress on its project to produce other vitamins: namely vitamin A, vitamin B12, folic acid, biotin, and possibly other additives — a project which was still in the very early stages in early 2022.

Vlasov said his company is currently in discussions with its partners about a joint venture in “one of the mentioned fields”.

They hope that by the end of Q3 they will be able to disclose the details of this next vitamin project.

In the past year, the conflict in Ukraine and the various sanctions have played a big part in how companies in Russia have been operating and adapting their businesses.

“The changes primarily affected purchasing of the key ingredients for premix production,” Vlasov said.

“If previously a significant share of ingredients was purchased from European suppliers, now the focus is almost entirely on Asian manufacturers. Thus, we are able to fully secure the required import volumes of raw materials.”

On the export side, Megamix has seen its business increase for premix products. “In total, the export volumes of Megamix products increased by over 20% in 2022,” Vlasov said. “We have not observed decreased customer demand in our traditional CIS markets (Armenia, Belarus, Tajikistan, Kazakhstan, etc.)”

In January 2022, Megamix estimated its broiler premix market share in Russia at about 38% and its total premix market share at 32%.

According to Megamix’s Deputy General Director for Business Development, the company has been able to maintain its market share amid a trend of growing livestock production output across Russia.

“Taking into account the growth outlook of livestock production in Russia and availability of nearly all kinds of raw materials and energy, we firmly believe that feed additive production in Russia will be steadily growing,” he also commented.

“Moreover, government support is expected to speed up this process. In general, it should be beneficial for all local market players as it could reduce the cost of feed additives, shorten supply chains and lower forex risks,” Vlasov added.

The Russian government previously said it wants domestic feed additives production to rise 5% by 2024 and 5% more by 2030 to partly mitigate the feed industry’s dependence on foreign vitamins and amino acids.

By Simon Duke, editor-in-chief