Amino Acid production under Inner Mongolia’s double control policy 04-08-2021

Summary: On 10 March, a circulation on the supporting measures to guarantee the reaching of the double control target during the 14th Five-Year period (2021–2025) was issued by the Inner Mongolia Development and Reform Commission, the Department of Industry and Information Technology and the Energy Bureau of Inner Mongolia. This will have a great impact on the local amino acid enterprises, which are likely to face the risk of a production halt.

 

During two sessions between 5 March–11 March, China announced it will strive to peak carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060.

 

Under such circumstances, the Inner Mongolia Development and Reform Commission, the Department of Industry and Information Technology and the Energy Bureau of Inner Mongolia issued a circulation on the supporting measures to guarantee reaching the double control (controlling the quantity and intensity of energy and resources consumption) target during the 14th Five-Year period (2021–2025). This is aimed at satisfying the following goals in the region in 2020:

 

Energy consumption per unit of GDP: down 3%;

Energy consumption: about 5 million tonnes of standard coal;

Energy consumption growth rate: remains at roughly 1.9%;

Energy consumption per unit of industrial value added: down 4% (by equivalent).

Efforts will be focused to:

 

Control the capacity of high energy-consuming industries;

Improve industry entry criteria;

Speed up the phasing out of outmoded facilities and surplus capacities;

Accelerate the upgrade to energy-efficient technology for high energy-consuming industries.

Since amino acid is a high pollution and high energy-consuming industry, Inner Mongolia's double control actions will have a great impact on local enterprises. Related factories are likely to reduce production. For example, Ningxia Eppen Biotech Co., Ltd. (Eppen Biotech) announced a stop to sign orders on 18 March. The company said that the double control actions of Inner Mongolia may result in a production halt at its factory in Chifeng. In addition, Fufeng Group Co., Ltd. (Fufeng Group) and Heilongjiang Chengfu Food Group Co., Ltd. as well as other producers, also in turn stopped signing orders.

 

It is said that the following companies' factories in Inner Mongolia will slash production by 30%–50%:

 

Eppen Biotech's factory in Chifeng: with capacities of 200,000 t/a lysine and 100,000 t/a threonine;

Meihua Holdings Group Co., Ltd.'s factory in Tongliao: 190,000 t/a threonine;

Fufeng Group's factory in Zhalantun: 100,000 t/a threonine.

Since threonine capacity from Inner Mongolia makes up 52.7% of the nation's total, supply will be greatly affected if the production reduction occurs.

 

Although the double control actions will only lower the production load of certain amino acid enterprises in Inner Mongolia region for the time being, such a policy will serve to limit the domestic release of capacity in the long run. For one thing, new amino acid capacities or expansion projects will be constrained by related policies. For another, capacity utilisation rates of amino acid enterprises will be restrained by the double control actions.

 

It is worth noting that on 15 March, the Animal Husbandry and Veterinary Bureau of the Ministry of Agriculture and Rural Affairs issued a work program aimed at reducing or replacing corn and soybean meal in feeds. This is targeted at guaranteeing a stable supply of food that can be used to make feed. The program also makes it clear that a plan to use rough rice, wheat, coarse cereals, potatoes, miscellaneous meals and other agricultural products to replace corn and soybean meal in feed formulations will be made, and that the plan will be fully implemented within 40 days or so. This illustrates that China highly values the regulation and control of food that can be used in feed production.

 

The reducing or replacing of corn and soybean meal means there is the potential for increased demand for additives in feed. Lysine and threonine are key products of amino acids for animal health. Over the years, they have been widely applied in animal feeds and the compound growth rate of their demand from the downstream has remained at approximately 10%. If the plan is fully implemented, their demand from the downstream will be further increased.

 

You can find out more information at CCM Amino Acid Newsletter. Get your 7-day free trial of CCM online platform to know more market intelligence in China.


About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. CCM is a brand of Kcomber Inc.

 

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