CCM: Henan Julong's breakthrough in developing 4-HIL

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Publish time: 26th April, 2016      Source: CCM
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  Henan Julong succeeded in developing new production technique of 4-HIL. Meanwhile, the company intended to expand its L-tryptophan business, which also put itself under the risk from downturn in tryptophan market price.

  

                                                    Source: Baidu

  

  On 7 March, 2016, Henan Julong Bioengineering Co., Ltd. (Henan Julong) made an announcement about its success in developing new production technique of 4-hydroxy-L-isoleucine (4-HIL). This new technical produces 4-HIL by biological fermentation. To be specific, entner-doudoroff and pentose phosphate oxidize and inactivate the enzymes in the branched chain, which largely improves the conversion rate of L-isoleucine and makes it possible to mass produce high purity 4-HIL. Notably, Henan Julong is the first enterprise to produce 4-HIL by biological fermentation globally. 4-HIL, a new insulinotropic agent, can be used for the treatment of diabetes mellitus Type II and the regulation of blood lipids.

  
Henan Julong is China's leading amino acid manufacturer. Its products include L-tryptophan, L-threonine and food-grade L-leucine. Particularly, it is the largest tryptophan producer in China with the capacity of 7,000 t/a in 2015, accounted for 17% of the global sales. 

  

                            

  

  Moreover, Henan Hongda Bio-Pharmaceutical Co., Ltd., the company's wholly-owned subsidiary, obtained the Drug Production Certificate on 1 March, 2016, laying the foundation for its extension to the biological medicine business. Besides, on 8 Nov., 2015, Henan Julong set up another wholly-owned subsidiary, Henan Julong Biotechnology Co., Ltd., for its expansion in L-tryptophan business.

  
The increasing demand pushed Henan Julong to expand its L-tryptophan business. According to CCM's research, in 2015, China's output of tryptophan reached 12,000 tonnes, up by 9% YoY. Particularly, domestic consumption rose by 9%, while the export increased by 13%. However, the company will also face the risk from downturn in market price of tryptophan. According to CCM's price monitoring, China's overall market price of tryptophan has continued sliding since 2015. In Feb. 2016, the market price of 98% tryptophan fell to USD8,086.79/t (RMB53,000/t), sharply down by 53.37% YoY.

   

  Monthly market price of 98% tryptophan in China, Jan. 2014-March 2016

  

                                                                             Source: CCM

   

  The low market price of tryptophan was caused by:

  
1. Fall in purchase price of raw material

  
Due to the huge stock of corn in China, the purchase price of corn kept decreasing. For instance, Henan Julong uses corn as the basic raw material to produce tryptophan. According to data from Henan Julong, its purchase price of corn was USD261.52/t (RMB1,710/t) on 14 March, down by 9.94%, compared with USD287.53/t (RMB1,880/t) in the first business day in 2016.

  
2. Competition from soybean meal

  
The market price of soybean meal, a substitute for tryptophan, continued going down. China's import of soybean increased greatly. Thus, with sufficient supply of raw material, the price of soybean meal declined sharply. According to CCM's price monitoring, the market price of soybean meal was USD389.99/t (RMB2,550/t) in Feb. 2016, down by 19.59% YoY. Soybean meal contains around 0.6% of tryptophan. Therefore, breeding enterprises prefer the cheaper soybean meal to tryptophan to reduce cost.

   

  Monthly market price of 43% soybean meal in China, Jan. 2014-Feb. 2016

  

                                                                                     Source: CCM

  

  

   

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  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. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.

   

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  Tag: tryptophan