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Corn Products China News

Corn Products

Vol.4 Issue 1, 2011

Copyright Š CCM International Limited


Corn Products China News Vol. 4 Issue 1. 2011

Publication date: 20 January, 2011

CONTENTS News in Brief 1 Baolingbao Biology considers transferring raw material price increasing risk through hedge service 1 Corn Starch in Tieling City firstly exported to oversea 1 Anhui BBCA obtains value added tax refunding 1 Chinese CPI in 2010 rises by 3.3% 1 The 6th China (Shanghai) International Starch & Starch Derivatives Exhibition 2011 to be hold

Supply and Demand 2 China to impose VC export quota in 2011?

Import and Export Analysis 3 Chinese corn products Imp. & Exp. analysis in November 2010

Price Update 6 6 7 8

Ex-factory prices of corn products in Dec. 2010 FOB corn price in Dalian Port from Feb. 2010 ~ Jan. 2011 Domestic citric acid price keeps uptrend China's cornstarch price decreases

Market & Company Dynamic 9 DDGS from the US faces anti-dumping investigation in China 10 Quantum High-Tech succeeds in getting listed 11 Meihua Group's dream of listing comes true 13 Shanxi Huarong initiates 60,000t/a citric acid 14 Alliance for China's amino acid industry established 15 Xiwang Food to expand refined corn oil capacity

Competitiveness 15 Sucrose price or to keep uptrend in near future

Corn Supply 16 Analysis into China's corn market in 2011

New Technology & New Products & R&D 17 New energy-efficient fermentation biotechnology promoted

Welcome to the January issue of Corn Products China News, specially published by CCM International. Stepping into 2011, prices of most corn products stably run at a relative high level, caused by stably high corn price. However, it still has exception. Price of cornstarch has decreased in Jan. 2011 all over the country, and VC price still undergoes a low level at the same time. In this issue, CCM has tried to predict that Chinese government is likely to impose export quota on VC industry. In addition, another trade friction between the US and China happened at the end of 2010, that is, China decides to run an anti-dumping investigation into DDGS originated from the US. In 2011, Chinese corn products industry will be full of opportunities. Two companies (Quantum Hightech and Meihua Group) succeed in getting listed to expand their businesses, and a new company (Shanxi Huarong) marches into citric acid industry. By the way, it would be honored to tell you that 2011 is the 10-year Anniversary of CCM, and CCM will continue to provide you more professional, timely, accurate and complete news to you.

Main companies mentioned in this issue


Vol. 4 Issue 1. 2011

Corn Products China News

Corn Products China News at a glance There is a possibility for Chinese government to impose VC export quota on VC in 2011. In November 2010, performance of Chinese corn products’ imports still witnessed downtrend, and import volume decreased by 68% over October 2010. In contrast, the export volume rebounded, which increased by 16%. China runs anti-dumping investigation into DDGS from the US. Quantum High-Tech succeeds in getting listed in China's Growth Enterprises Market, which will facilitate it to raise funds for its business expansion. Meihua Group succeeds in getting listed at the end of 2010, and it will expand its businesses in the near future. Shanxi Huarong begins to establish an anhydrous citric acid production plant with capacity of 60,000t/a. Amino Acids Industry Technology Innovation and Strategic Alliance has been established at the end of 2010.

News in Brief Baolingbao Biology considers transferring raw material price increasing risk through hedge service

O

n January 17, 2011, Baolingbao Biology Co., Ltd. announced that at present the company considers transferring the risk of raw material price increase through hedge service, but there are no specific plans or programs at present.

Corn starch in Tieling City firstly exported to oversea

O

n December 23, 2010, 240.75 tonnes corn starch, produced by Tieling Wanshunda Starch Co., Ltd. was exported to Singapore after being quarantined by Tieling Entry-Exit Inspection and Quarantine Bureau. This is the first time for corn starch produced in Tieling City, Liaoning Province to be exported.

Xiwang Food plans to expand its refined corn oil capacity to 350,000t/a from 200,000t/a.

Anhui BBCA obtains value added tax refunding

Domestic citric acid price still maintains uptrend at the beginning of 2011. Domestic cornstarch price decreases in January 2011. Sucrose price in China is increasing at present, and may maintain at high level in 2011. Corn price will keep at a high level in 2011 as its undersupply situation.

O

n January 11, 2011, Anhui BBCA Biochemical Co., Ltd. announced that after being examined and verified by the Ministry of Finance, the paid value added tax in 2009 of about USD3.81 million is permitted to be refunded. This value added tax will be reckoned in Non-operating income in 2010.

A new energy-efficient fermentation biotechnology is promoted by the country.

Chinese CPI in 2010 rises by 3.3%

O

n January 20, 2011, National Bureau of Statistics of China announced that the Consumer Price Index (CPI) in 2010 rose by 3.3% over that in 2009, and in December 2010, the CPI increased by 4.6% over the corresponding time of 2009 and 0.5% over last month.

The 6th China (Shanghai) International Starch & Starch Derivatives Exhibition 2011 to be hold

T

he 6th China (Shanghai) International Starch & Starch Derivatives Exhibition 2011 will be held on May 26-28, 2011, in Shanghai Everbright Convention & Exhibition Center.

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Vol. 4 Issue 1. 2011

Corn Products China News

Supply and Demand China to impose VC export quota in 2011?

I

FIGURE1: Domestic VC price in China, 2009-2010 1 6 ,000 1 4 ,000 1 2 ,000 Unit: USD/t

1 0,000 8 ,000 6 ,000 4 ,000 2 ,000 Ja n

On the other hand, VC price has situated at a low level at present, hurting most VC manufacturers in China. Although VC price has rebounded a little since October 2010 aided by the production suspension of some major VC producers, like Shijiazhuang Pharmaceutical Group Co., Ltd., (Shijiazhuang Pharmaceutical) it still stays at a low level at present. On Jan. 11th 2011, the average VC price in China was about USD6,798/t, while it was USD11,730/t in corresponding period of 2010. (FIGURE1) Besides, despite its export volume increased significantly in 2010, average export price went down over 2009, caused by the increased output of Chinese VC. (FIGURE2) On the basis of the above situation, it is urgent to regulate this industry and export

CCM International Limited

Ma r

A pr

Ma y

Ju n

Ju l

2 009

Aug

Sep

Oct

Nov

Dec

2 01 0

Source: CCM International FIGURE2: Export price and volume of Chinese VC, 2009-2010 1 4 ,000

1 2 ,000

1 2 ,000

1 0,000

1 0,000 Unit: tonne

Let's first understand current situation of Chinese VC industry. On one hand, total capacity of Chinese VC product definitely exceeds the global demand. China's top five large VC companies' capacity (124,000t/a in 2010) has accounted for about 90% of global VC capacity. And some expansion projects are still being under construction right now. It is estimated that total capacity of VC in China will climb to 200,000t/a in 2012. The terrible overcapacity situation has caused serious resource waste and cutthroat competition in domestic market, which hinders healthy development of this industry.

Feb

8 ,000

8 ,000 6 ,000 6 ,000 4 ,000

4 ,000

Unit: USD/t

n August 2010, when domestic price of Vitamin C (VC) slumped to its lowest level, it was reported that National Development and Reform Commission (NDRC) would impose VC export quota at the end of 2010 for the healthy development of this industry. However, until now, the measure has not come out yet, and some experts consider the measure will be published and carried out in 2011, while others don't think so. Hereinafter, analysis will be made into this question: Will Chinese government impose VC export quota in 2011?

2 ,000

2 ,000 -

Ja n Feb Ma r A pr Ma y Ju n Ju l A u g Sep Oct Nov Dec Ex por t v olu m e 2 009

Ex por t v olu m e 2 01 0

Ex por t pr ice 2 009

Ex pot pr ice 2 01 0

Source: CCM International quota measure sounds a suitable way. Export quota measure means the annual export volume will be controlled by the government, and each qualified exporter, including manufacturers and traders, will be assigned an annual specific quota of the top limit export volume, and this top limit volume will be decided by capacity and previous export volume of each manufacturer. The measure can bring the following advantages.

First, the measure can eliminate some small manufacturers and turn around current overcapacity situation to some extent. Normally, the small manufacturers are unqualified to get export quota, especially those with inefficient technology and high pollution. Thus, these manufacturers will be driven back from the international market, and it is likely for them to get out of this industry. Second, it can ease current cut-throat

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Corn Products China News

Therefore, it's predicted that it is quite probable for China to impose export quota on VC in 2011. The government should enhance the supervision on the implementation of this measure, if not, the measure would lose its role.

competition, and enhance Chinese VC pricing power. Currently, the export price is cut down by foreign buyers as there are lots of exporters for them to choose. And in order to seize more market share, many exporters lower their quotations. If the measure is carried out, the major exporters can make alliance to strengthen the pricing power. Besides, it also can avoid anti-dumping investigation.

Import and Export Analysis Chinese corn products Imp. & Exp. analysis in November 2010 1. Imp. & Exp. value analysis (TABLE1 ) 1.1 Thanks to the surge of import volume, the import value of furfural increased by 42,532% in November 2010 over October 2010, although its import price decreased to USD547/t, compared with USD39,800/t in October 2010. In fact, China totally imported about 310 tonnes furfural from Iran this November, while the number was zero in previous months. And the imported furfural almost flowed to Xiamen City, Fujian Province.

1.2 Owing to the increased export volume of glucose and syrup (50%>fructose content ≥20%), its export value increased by 80% in November 2010 over October 2010. Philippines increased its import volume of the product from China significantly, amounting to 916 tonnes, while it was just 22 tonnes in October 2010. Besides, Papua New Guinea imported 179 tonnes of this product in November 2010, with the lowest price of USD468/t, compared with the highest price of USD2,406/t to Germany. Moreover, because Vietnam, the largest export destination with the relatively high price of USD2,050/t last month, didn’t import the product in November 2010. The export price reduced by 60%. TABLE1: Imp. & Exp. value of Chinese corn products, November 2010 Import value, USD 17,423,036

Monthly growth rate -70%

Export value, USD 2,459,110

Monthly growth rate 85%

Cornstarch

874,210

-25%

11,433,831

-20%

Citric acid

413,550

114%

66,158,728

39%

Citrate

Products Corn

169,746

-43%

10,718,069

38%

Glucose and glucose syrup (Fructose content <20%)

98,831

-47%

26,322,742

25%

Glucose and syrup (50%>fructose content ≥20%)

534,176

-13%

732,785

80%

Fructose and fructose syrup (Fructose content >50%)

622,114

-5%

6,606,504

4%

Mannitol

50,523

35%

1,136,223

34%

Xylitol

10,306

-96%

3,209,948

-9%

Sorbitol

37,089

-7%

4,771,691

15%

Furfural

169,674

42,532%

7,622,128

29%

Furfuryl alcohol and tetrahydrofurfuryl alcohol

140,920

428%

13,323,827

-7%

7,710

-93%

4,416,869

198%

156,701

-83%

12,943,560

-9%

Glutamic acid(GA)

8,275

88%

2,366,670

138%

Sodium glutamate

50,723

46%

25,046,846

0%

Inositol

21,403

28%

2,093,028

-25%

20,788,987

-67%

201,362,559

17%

Lysine Lysine ester and salt

Total

Source: China Customs

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2. Imp. & Exp. volume analysis (TABLE2 ) 2.1 The major reason for the increase in import volume of mannitol in November 2010 is that China increased the import volume of this product from France this month over last month. The import volume of mannitol in November 2010 is 8 tonnes compared with just 2 tonnes last month. About 8 tonnes of mannitol imported went to Shanghai City. 2.2 Probably caused by the approaching of cold weather and the increasing demand for meat, many countries in Europe increased their import volume of lysine from China in November 2010. Take Poland, Netherlands, and Ukraine for example, they imported 565 tonnes, 248 tonnes, and 109 tonnes lysine from China separately, while these three countries' import volume from China was zero last month. Besides, Belgium also almost doubled its import volume of lysine from China in November 2010, amounting to 720 tonnes. 2.3 Export performance of Glutamic acid (GA) was also good in November 2010. Vietnam, the US, and Italy increased their import volume of GA from China, amounting to 1,420 tonnes, 20 tonnes, and 5 tonnes, rising by 203%, 1,200%, and 2,400% separately. TABLE2: Imp. & Exp. volume of Chinese corn products, November 2010 Products Corn

Import volume, tonne 78,555

Monthly growth rate -69%

Export volume, tonne 8,546

Monthly growth rate 77%

1,248

-17%

25,749

-20%

Cornstarch

129

43%

68,674

36%

Citrate

Citric acid

41

-21%

10,845

43%

Glucose and glucose syrup (Fructose content <20%)

84

-23%

54,769

24%

1,987

-12%

1,182

346%

264

39%

12,124

-1%

10

208%

617

30%

1

-99%

1,165

-10%

Glucose and syrup (50%>fructose content â&#x2030;Ľ20%) Fructose and fructose syrup (Fructose content >50%) Mannitol Xylitol Sorbitol

37

95%

8,440

15%

Furfural

310

3,100,650%

3,657

24%

16

142%

5,084

-16%

Furfuryl alcohol and tetrahydrofurfuryl alcohol Lysine

0.16

-95%

2,564

201%

7

-99%

7,409

-20%

Glutamic acid(GA)

0.36

8%

1,670

142%

Sodium glutamate

20

0%

17,068

-2%

Lysine ester and salt

Inositol Total

0.38

28%

201

-28%

82,710

-68%

229,763

16%

Source: China Customs

3. Imp. & Exp. price analysis (TABLE3) 3.1 Thanks to the price surge of citric acid from Germany and Austria, the average import price of citric acid increased by 50% in November 2010. Import price of citric acid from Germany and Austria was USD2,346/t and USD4,002/t in November 2010, while it was USD2,061/t and USD1,678/t in October 2010 respectively. Besides, Germany was the largest import origin of Chinese citric acid in November 2010, and Austria was the third largest. 3.2 In November 2010, China began to import Fructose and fructose syrup (Fructose content >50%) from Israel and Pakistan, with import volume of about 40 tonnes for each respectively. And the import price from these two countries ( USD1,185/t and USD850/t respectively) was much lower than that of other countries. Moreover, the import price from the largest import origin, South Korea, decreased to USD1,578/t in November 2010 from USD2,238/t in October 2010. Therefore, the import price of the product reduced by 32% in November 2010.

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Corn Products China News

TABLE3: Imp. & Exp. price of Chinese corn products, November 2010 Products

Import price, USD/t

Monthly growth rate

Export price, USD/t

Monthly growth rate

Corn

222

-4%

288

5%

Cornstarch

700

-9%

444

0%

Citric acid

3,217

50%

963

3%

Citrate

4,132

-28%

988

-3%

Glucose and glucose syrup (Fructose content <20%)

1,174

-31%

481

0%

269

0%

620

-60%

Fructose and fructose syrup (Fructose content >50%)

2,358

-32%

545

5%

Mannitol

5,028

-56%

1,842

3%

Xylitol

7,928

215%

2,756

0%

Sorbitol

1,002

-52%

565

0%

Furfural

547

-99%

2,085

4%

8,904

118%

2,621

11%

Lysine

49,742

54%

1,723

-1%

Lysine ester and salt

22,873

1,175%

1,747

13%

Glutamic acid(GA)

23,050

74%

1,417

-1%

Sodium glutamate

2,517

46%

1,467

1%

55,737

-0.15%

10,421

5%

Glucose and syrup (50%>fructose content â&#x2030;Ľ20%)

Furfuryl alcohol and tetrahydrofurfuryl alcohol

Inositol

Source: China Customs

4. Export destinations analysis (TABLE4) 4.1 The major reason for decreased export proportion of top five and top ten destinations of corn starch is that the largest export destination, Indonesia, decreased its import volume markedly in November 2010 to 9,926 tonnes, while it was 20,087 tonnes in October 2010. 4.2 In November 2010, India, Japan, and Brazil decreased their import volume of mannitol from China, which amounted to 144 tonnes, 61 tonnes and 19 tonnes, while the import volume in October 2010 was 167 tonnes, 81 tonnes, and 48 tonnes respectively. Thus, the export proportion of top five and top ten destinations of mannitol in November 2010 declined.

TABLE4: Export proportion of top 5 and top 10 destinations of Chinese corn products by volume, October ~ November 2010 Nov -10

Products Corn

Oct -10

Top five

Top ten

Top five

Top ten

100%

100%

100%

100%

Cornstarch

89%

97%

95%

99%

Citric acid

33%

49%

30%

48%

Citrate

38%

59%

41%

64%

61%

77%

54%

77%

97%

100%

84%

100%

Fructose and fructose syrup (Fructose content >50%)

92%

99%

96%

99%

Mannitol

72%

87%

81%

93%

Xylitol

86%

96%

86%

98%

Sorbitol

64%

80%

65%

86%

Furfural

97%

100%

97%

100%

Furfuryl alcohol and tetrahydrofurfuryl alcohol

76%

89%

78%

92%

Lysine

76%

90%

91%

100%

Glucose and glucose syrup (Fructose content <20%) Glucose and syrup (50%>fructose content â&#x2030;Ľ20%)

Lysine ester and salt

58%

76%

60%

77%

Glutamic acid(GA)

99%

100%

99%

100%

Sodium glutamate

57%

77%

55%

74%

Inositol

56%

78%

57%

80%

Source: China Customs

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Corn Products China News

Price Update Ex-factory prices of corn products in Jan. 2011 Price in January 2011

Products

(USD/t)

Price in December 2010

(RMB/t)

(USD/t)

(RMB/t)

Corn starch (North China)

440

2,920

450

3,000

Corn starch (South China)

490

3,250

503

3,350

Ethanol (Industrial grade)

837

5,550

818

5,450

Ethanol (Food grade)

1,000

6,633

980

6,533

80% Maltose syrup

473

3,140

488

3,250

70% Sorbitol

660

4,378

690

4,600

Monohydrate citric acid

980

6,497

953

6,350

Oxidized starch(Food grade)

995

6,600

983

6,550

68% Xylitol (Liquid)

838

5,560

834

5,560

HFCS (Fructose: 42%)

475

3,150

465

3,100

HFCS (Fructose: 55%)

4,100

600

4,000

4,297

618

28,500

4,502

30,000

Maltodextrin

568

3,765

556

3,705

75% Maltitol (Liquid )

658

4,365

660

4,400

Anhydrous glucose (Food grade)

761

5,050

752

5,010

Glucose Monohydrate

550

3,650

540

3,600

Crystal Isomaltitol

Itaconic acid

2,200

14,593

2,200

14,661

98.5% lysine

2,156

14,300

2,236

14,900

Source: CCM International

FOB corn price in Dalian Port from Feb. 2010 ~ Jan. 2011 330 320

Unit, USD/t

310 3 00 290 280 27 0 260 250

Cor n

26Feb

19Ma r

2 0A pr

2 0Ma y

21Ju n

2 0Ju l

1 8Aug

2 0Sep

2 0Oct

19Nov

17Dec

2 0Ja n

267

27 8

282

290

292

288

297

294

299

314

311

310

Source: CCM International

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Corn Products China News

Domestic citric acid price keeps uptrend

E

It's well known that Chinese corn price has kept increasing in 2010, which exerts cost pressure on corn deep-processing manufacturers and drives up price of most corn deep-processing products. Although in Jan. 2011 corn price stops surging, it still runs at high level. On Jan. 13th 2011, corn price in Weifang City, Shandong Province maintained at USD309/t. As the major auxiliary material of citric acid, sulphuric acid's price also has impacted on citric acid price. In 2010, sulphuric acid price has also surged significantly, like most commodities in China, which is caused by domestic

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1 000

Unit: USD/t

800 6 00 4 00 2 00 0 Ja n - Feb- Ma r - A pr - Ma y - Ju n 10 10 10 10 10 10

Ju l- A u g - Sep10 10 10

Oc t - Nov - Dec - Ja n 10 10 10 11

Source: CCM International FIGURE4: Average price of sulphuric acid in China, 2010 ~ Jan. 2011 140 120 1 00 80 60 40 20 0 Ja n 10

Feb - Ma r - A pr - Ma y - Ju n 10 10 10 10 10

Ju l - A u g - Sep10 10 10

Oc t 10

Nov - Dec 10 10

Ja n 11

Source: CCM International FIGURE5: Export price and volume of Chinese citric acid, Jan. ~ Nov. 2010 9 0 ,0 0 0

980

8 0 ,0 0 0

960

7 0 ,0 0 0

940 920

6 0 ,0 0 0

9 00

5 0 ,0 0 0

880

4 0 ,0 0 0

860

3 0 ,0 0 0

840

2 0 ,0 0 0

820

1 0 ,0 0 0

800

-

Unit: USD/t

At the s ame t ime , We i f ang E ns i g n Industry Co., Ltd. (Weifang Ensign) quoted its anhydrous citric acid and monohydrate citric acid at USD1,193/ t and 1,088/t for domestic market respectively. Besides, another smaller citric acid manufacturer, namely HuangShi XingHua Biochemical Co., Ltd., made quotations for anhydrous citric acid and monohydrate citric acid at USD1,186/t and USD1,065/t respectively. Sales managers from both these two companies also express that the price ascending is supported by the high price of corn and sulphuric acid.

1 2 00

Unit: USD/t

Domestic quotation of monohydrate citric acid in Anhui BBCA Biochemical Co., Ltd. (Anhui BBCA), China's leading citric acid enterprise, was USD1,118/ t on Jan. 13th 2011, and the company has stopped its domestic quotation for anhydrous citric acid. An insider from the company disclosed that all the anhydrous citric acid was for export, thus no product can be supplied to domestic market. He also expresses that the price increase was mainly caused by the upgoing raw material price.

FIGURE3: Average price of monohydrate citric acid in China, 2010 ~ Jan. 2011

Unit: tonne

ntering the new year 2011, domestic citric acid price witnesses uptrend, majorly aided by the price increase of its raw material and auxiliary material. In January 2011, the price of monohydrate citric acid averagely reached USD980/ t all over the country, increasing by 2.8% over that at the end of 2010. (FIGURE3)

7 80 Ja n - Feb- Ma r - A pr - Ma y - Ju n - Ju l- A u g - Sep- Oct - Nov 10 10 10 10 10 10 10 10 10 10 10 Ex por t v olu m e

A v er a g e ex por t pr ice

Source: CCM International RMB appreciation is one of the factors for inflation. Sulphuric acid price jumped export price increase of citric acid. to USD100/t in Jan. 2011, while it was USD52/t at the corresponding period of However, some experts also concerns that last year. (FIGURE4) if export volume of citric acid reduces in 2011 for some anti-dumping issues, By the way, citric acid also achieved sound domestic citric acid price will decrease, export performance in Nov. 2010, with as about 73% of Chinese citric acid is for both export volume and price increase. exports. (FIGURE5) Some experts considered that

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Corn Products China News

China's cornstarch price decreases arching into 2011, domestic price of cornstarch witnesses downtrend all over the country. (TABLE5) Take Changchun City, Weifang City, and Guangzhou City for example, average cornstarch price in these three cities reduced to USD453/ t, USD471/t and USD491/t in Jan. 2011, down 4.4%, 1.6% and 1.9% separately over last month. (FIGURE6) The following reasons can explain the decrease of cornstarch price.

FIGURE6: Cornstarch price in Changchun, Guangzhou and Weifang City, Oct. 2010 ~ Jan. 2011 6 00 550 5 00 USD/t

M

450 4 00 350

Firstly, market demand for cornstarch is decreasing. During October and November 2010, lots of cornstarch consuming companies rushed to purchase cornstarch to increase their stoc k in ord e r t o g u arant e e t he ir production before Chinese Spring Festival, so the cornstarch price was pushed uptrend at that time. However, after that, demand from most of the downstream manufacturers reduced. Thus, cornstarch companies have to lower their quotations. Secondly, small manufacturers decrease their prices in order to increase their sales volume and reduce their stock. Attracted by the comparatively high profit margin since H2 2010 (an executive officer from COFCO disclosed that the profit margin of corn starch in Sept. 2010 reached USD15/t. ), many small manufacturers rushed into cornstarch production at that time, which increased cornstarch supply in China. Besides, many small manufacturers cut their prices, for current low transaction rate and their high stock. Thirdly, the product quality of small manufacturers is inferior, thus, their prices are much lower than that of large

3 00 1Oct

8Oct

15Oct

29Oct

5Nov

12Nov

Gu a n g zh ou

19Nov

26Nov

3Dec

1 0Dec

Ch a n g ch u n

17Dec

24Dec

31Dec

7Ja n

14Ja n

Weifa n g

Source: CCM International TABLE5: Cornstarch price in some cities, Dec. 2010 ~ Jan. 2011 City

Province

Shanghai

Shanghai

Dec. 17th 2010, USD/t 506

Jan. 17th 2011 USD/t 498

Change rate -1.5%

Suzhou

Jiangsu

511

485

-5.0%

Fuzhou

Fujian

511

488

-4.4%

Nanchang

Jiangxi

509

491

-3.6%

Wuhan

Hubei

511

491

-3.8%

Chengdu

Sichuan

511

491

-3.8%

Shenyang

Liaoning

461

438

-5.0%

Qinghuangdao

Hebei

471

446

-5.4%

Source: CCM International manufacturers, which also has impact on the price decrease of cornstarch. Someone may think the supply increase of corn in the market since Oct. 2010 would be also a factor for cornstarch price decrease, however, it might not be the key reason as CCM estimated. Although newly harvested corn has been marketed, its price still stays at a high level, for example, corn price in Weifang City in Jan. 2011 was USD308/t, the same as that in Dec. 2010.

It's believed that cornstarch price will rebound after Chinese Spring Festival. On one hand, the downstream manufacturers have to replenish their stock after the festival, and the demand for cornstarch will increase. On the other hand, owing to the high price of corn, the small cornstarch manufacturers have no much profit against current low price, and some of them even suffer loss.

Future of Modified Starch in Asia Pacific Export summary data of Citric acid in China in 2009 Production, Market and Manufacturing Cost of Sugar Alcohols in China

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Market & Company Dynamic DDGS from the US faces anti-dumping investigation in China

O

5 00,000

6 00

4 5 0,000

550 5 00

4 00,000

450 3 5 0,000

4 00

3 00,000

350

2 5 0,000

3 00

2 00,000

250 2 00

1 5 0,000

150 1 00,000

1 00

5 0,000

50 -

Ja n

Feb

Im por t v olu m e 2 009

This investigation can date back to Nov. 16th 2010, when Anhui BBCA Biochemical Co., Ltd., Jilin Fuel Alcohol Co., Ltd., Fukang Alcohol Co., Ltd., Jilin New Tianlong Wine Co., Ltd. and other large domestic DDGS manufacturers submitted the application to MCPRC, re g a r d i n g r u n n i n g a n t i - d u m p i n g investigation into DDGS from the US. And the ministry has decided to carry out the investigation, as DDGS output of the applicants accounts for more than 50% of natioanl total. And it's believed that the imported DDGS hurts domestic industry. Since 2006, the import volume of DDGS has kept increasing significantly, with 621 tonnes, 2,153 tonnes, 6,741 tonnes, and 652,166 tonnes in 2006, 2007, 2008 and 2009 separately. Moreover, the number climbed to the peak of 2.9 million tonnes during January and November in 2010. (FIGURE7) Such a large import volume has accounted for about 91% in total output of DDGS in China.

CCM International Limited

Unit: USD/t

According to the note published by MCPRC, the investigation period is from July 1st 2009 to June 30th 2010, and the industry injury investigation period is from Jan. 1st 2007 to June 30th 2010. Normally, the investigation may be finished on Dec. 28th 2011.

FIGURE7: Import volume and price of DDGS, 2009-2010

Unit: tonne

n Dec. 28th 2010, Ministry of Commerce of the People's Republic of China (MCPRC) published a note that China decides to run an antidumping investigation into Distillers dried grains with solubles (DDGS) originated from the US since Dec. 28th 2010. It's believed that this move may help domestic DDGS industry to some extent.

Ma r

A pr

Ma y

Ju n

Im por t v olu m e 2 01 0

Ju l

Aug

Sep

Oct

Im por t pr ice 2 009

Nov

Dec

Im por t pr ice 2 01 0

Note: The import volume in January, February, March, and April in 2009 was 2,872 tonnes, 40 tonnes, 1,061 tonnes, and 758 tonnes respectively. Source: China Customs Besides, with superior quality, DDGS from the US is more popular in domestic market despite its high price. Price of imported DDGS in Guangdong Province was USD306/t on Dec. 31st 2010, while ex-factory price of the product in Shandong Province was USD226/t. And an insider from a DDGS trading company said that the color of domestic DDGS looks not so good as imported one, and its protein content may be insufficient sometimes. However, given the price differential becomes wider, many feed manufacturers may have a stronger willingness to domestic products. Thus, if China does levy anti-dumping duty on imported DDGS from the US, domestic DDGS may get its opportunity with much lower price. "It's hard to estimate the impact on the industry for now, because it depends on the rate

9

of anti-dumping duty to be imposed. But it is sure that the import volume of DDGS will reduce if anti-dumping duty is levied," said the insider. Some experts view that domestic DDGS manufacturers can grab more profit as the product's price will be upraised after the anti-dumping duty is levied. It's predicted that domestic supply of DDGS can't satisfy its demand in 2011, and China needs to import the product. (Corn Products China News 1012, P3) Thus, aided by the undersupply situation and anti-dumping duty, market price of DDGS may be pushed up. However, the undersupply situation may make Chinese government not levy the anti-dumping duty finally, or the duty may be not so high, as the government must guarantee the healthy development of feed industry.

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Quantum High-Tech succeeds in getting listed

D

Quantum High-Tech expects to raise USD25 million to expand the capacity of FOS and GOS by 10,000t/a and 2,000t/ a respectively. As long as the funds are available, their construction will be started, and construction period for both these two production lines is 2 years. Eying the strong prospect of FOS and GOS industries, coupled with current full capacity operation of these two products, the company expects to grab more market shares and earn fatter profit through this expansion.

FIGURE8: Production situation of FOS in Quantum High-Tech, 2007 ~ H1 2010

9 ,0 0 0

Quantum High-Tech, the largest FOS

CCM International Limited

1 2 0%

8 ,0 0 0 7 ,0 0 0

1 00%

6 ,0 0 0 5 ,0 0 0

80%

4 ,0 0 0

6 0%

3 ,0 0 0

4 0%

2 ,0 0 0

2 0%

1 ,0 0 0 -

0% 2 007

2 008

Ca pa cit y

2 009

Ou t pu t

H1 2 0 1 0

Ca pa cit y Ut iliza t ion

Note: The FOS capacity in H1 2010 is 5,000 tonnes per half year, then after the technology upgrading, the capacity of FOS in the whole year of 2010 increased to 11,000 tonnes per year. Output in the above mentioned figure is calculated by that of low purity FOS, and the high purity FOS has converted into low purity FOS. Source: Prospectus of Quantum High-Tech FIGURE9: Sales volume of FOS in China, 2007 ~ 2014

According to its prospectus, Quantum High-Tech has expanded its FOS capacity for twice since 2007 (FIGURE8), and its capacity utilization can always reach around 100%, indicating current capacity can't satisfy the market demand.

1 2 0 ,0 0 0

9 0% 80%

1 0 0 ,0 0 0 7 0% 8 0 ,0 0 0

Unit: tonne

Chinese FOS industry will witness rapid growth in next few years thanks to the fast development of health-care products and infant formula industry. According to a report from Beijing Leadership Management Consulting Co., Ltd. (Leadership), a strategic management consultation company in China, 60% FOS was predicted to be used in health-care food and milk powder, and 30% in infant formula in 2010. Besides, accompany with higher and higher public's living standard and the tendency of aging population in China, more and more prebiotics are needed. (FOS is a kind of prebiotics.) It's estimated that the sales volume of FOS in China can reach 100,000 tonnes in 2014 while it was 16,000 tonnes in 2009. (FIGURE9) Thus, Quantum High-Tech believes it can earn more profit through expanding the capacity.

1 4 0%

1 0 ,0 0 0

Unit: tonne

ec. 22nd 2010 is the first day for Jiangmen Quantum High-Tech Biochemical Engineering Co., Ltd. (Quantum High-Tech) to get listed in China's Growth Enterprises Market in Shenzhen Stock Exchange. By this move, the company plans to raise funds to expand its fructooligosaccharide (FOS) and galactooligosaccharide (GOS) businesses.

6 0% 5 0%

6 0 ,0 0 0 4 0% 4 0 ,0 0 0

3 0% 2 0%

2 0 ,0 0 0 1 0% -

0% 2 006

2 007

2 008

2 009

2 01 0 (Est .)

Sa les v olu m e

2 01 1 (Est .)

2 01 2 (Est .)

2 01 3 (Est .)

2 01 4 (Est .)

Gr ow t h r a t e

Note: The markedly lower growth rate in 2009 is caused by the â&#x20AC;&#x153;melamine scandalâ&#x20AC;? in 2008. Source: Prospectus of Quantum High-Tech manufacturer in China, enjoys advantages in these two products. Its FOS products' purity ranges from 50% to 95% with powder and liquid status, while few other companies can produce FOS with the whole purity range. Besides, in 2009, the market share of Quantum HighTech in Chinese FOS reached about 44%. Quantum Hign-Tech's sales volume of for

10

low purity FOS can reach 4,000 tonnes per year, while that of its biggest competitor, namely Yunnan Jiansheng Bio-technology Co., Ltd., is only 2,500 tonnes per year. Besides, Quantum High-Tech has a large and stable client to support its good performance, namely Perfect (China) Co., Ltd. (Perfect China), which focuses on

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health-care food and skin care products. In H1 2010, the turnover from Perfect China accounted for 43% in total turnover of Quantum High-Tech. And accompany with the increased demand for FOS, the company will keep striving to find more large clients and manage well its customer relationship to grab more market share. It is worth noting that as FOS supply increases, its price has started to decline since 2008. In H1 2010, the average price of low purity and high purity FOS was USD1,059/t and USD2,329/t, compared with USD1,224/ t and USD5,010/t respectively in 2008. Besides, in high purity FOS field, Quantum High-Tech loads relatively high pressure. Meiji Corp and OFAFTI Corp are the main exporters of Chinese imported high purity FOS, which are the major large competitors for Quantum High-Tech. Besides, Baolingbao Biology Co., Ltd. (Baolingbao) plans to launch its high purity FOS production line with capacity of 10,000t/a at the end of Jan. 2011, which may become another major competitor for the company in high purity market of FOS. Currently, China's high purity FOS is mainly depended on imports.

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Industrial Biotechnologies China News Monthly Newsletter with insightful analysis on

Bio-Fuel Bio-Product Bio-Chemical Bio-Material

As for the product of GOS, it also has good prospect. It is estimated that GOS demand in China will climb to 6,000 tonnes ~ 10,000 tonnes in next 2 ~ 3 years, while current capacity of domestic GOS is smaller than 2,500t/ a and sales volume of domestic manufacturers was only 1,500 tonnes in 2009, thus, great market potential exists in this field. By the way, Quantum High-Tech will enter health-care products industry and as reported, the company will try to merge other prebiotics manufacturers to expand its business scale.

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Meihua Group's dream of listing comes true

O

and the rest will be held by Wuzhou Group (2.19%) and the shareholders of public share of Wuzhou Minovo. (8.54%)

n Dec. 24th 2010, China Securities Regulatory Commission (CSRC) published its approval that Wuzhou Minovo Co., Ltd. (Wuzhou Minovo) merges Meihua Biotechnology Group Co., Ltd (Meihua Group) through issuing additional shares of 900 million, which signifies Meihua Group succeeds in Backdoor listing.

Actually, Wuzhou Minovo, a listed company in Shanghai Stock Exchange, was engaged in producing electric equipments before merging, and the company performed not well in 2007 and 2008 with meager profit. So it expects to increase its profit and develop better by dint of the transition from electric equipments industry to fermentation and amino acid industry which enjoy great prospect as the company believed.

The merger of Wuzhou Minovo and Meihua Group can date back to Mar. 2009, and it includes two mutually conditional parts: On one hand, Wuzhou Minovo sells its most assets to Wuzhou Group, the largest shareholder of Wuzhou Minovo before, with value of USD37 million. On the other hand, Wuzhou Minovo merges Meihua Group through issuing 900 million additional shares with value of USD874 million. And after the merger, Wuzhou Minovo will be renamed as Meihua Biotechnology Group Co., Ltd. (New Meihua Group) and at the same time, Meihua group will be revoked its corporate capacity. In addition, the shareholders of Meihua Group totally own 89.27% shares of New Meihua Group,

CCM International Limited

Monosodium glutamate (MSG) industry, an important fermentation industry, is developing well at present. Its average annual growth rate of output during 2004 to 2008 reached 13.6%, and its national total output from Q1 and Q3 in 2010 reached about 1.8 million tonnes, increasing by 17.7% over the corresponding period of 2009. In addition, it's predicted that the

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expects to expand its businesses to a further step through listing. The MSG's turnover of Meihua Group was about USD574 million and USD598 million in 2008 and 2009 respectively, and its market share during the same period reached 18.1% and 14.6%. (TABLE6)

total output of MSG in 2010 may reach 2.1 million tonnes. Moreover, as the government has restrained development of corn deep-processing industry since 2007, along with the close attention paid by the government to MSG industry for its high pollution, the number of MSG manufacturers reduced from 200 to about 20, which relaxes the intense competition situation in this industry. Currently, the total output of top 12 manufacturers accounts for about 89% of the national total.

After being listed, Meihua Group plans to expand its businesses. Right now, the company has an underconstruction project. The investment of the first stage of this project (including 30,000t/a capacity of threonine, 30,000t/a capacity of lysine and 160,000t/a capacity of glucose) is USD211 million and it is planned to complete in April 2011; that in the second stage (40,000t/a threonine, 6,000t/a nucleotide, and 160,000t/a glucose) is USD151 million and it is planned to start in May 2011 and launch in May 2012. The company also has interest in inosine, vernine, tryptophan, and arginine production in the future.

In addition, some leading MSG manufacturers, which also produce glutamic acid (GA) as well, the raw material of MSG, reduce their sales volume of GA and use them to produce MSG by themselves in order to upraise their MSG market share. This move reduces MSG output of some small producers whose GA is sourced from outside. Thus, the industrial concentration becomes higher and higher.

Meihua Group is not just involved in MSG industry, but also in other amino acid products, such as threonine, corn byproducts (maize embryo), and feed. Besides, the company also produces upstream industry products, like ammonia, and it even generates electricity, which makes it enjoys cost advantage. At present, the company owns two major production bases, located in Tongliao City and Bazhou City respectively, with MSG capacity 350,000t/ a, threonine capacity 35,000t/a, feed capacity 300,000t/ a, corn byproducts capacity200,000t/a, and ammonia capacity 80,000t/a.

The high industry concentration contributes to high gross profit margin and market price for the leading companies. The sales gross profit margin of the top two manufacturers, Fufeng Group Limited and Meihua Group, reached 30% and 29% in 2009, while it was 18% and 22% in 2008 respectively. Average MSG price is about USD1,360/t currently, compared with about USD950/t and USD1,564/ t in corresponding period of 2009 and 2010. Meihua Group is a main producer in MSG industry and

TABLE6: Market situation of top 6 manufacturers in MSG industry in China, 2008 ~ 2009 NO

Turnover, million USD 2008 2009

Company

Sales volume, tonne 2008

Market share, %

2009

2008

2009

1

Fufeng Group Limited

516

676

332,871

661,425

20.1

25.9

2

Meihua Biotechnology Group Co., Ltd.

574

598

369,682

371,614

18.1

14.6

3

Linghua Group Incorporated Company

459

417

151,769

268,675

8.2

10.5

4

Shandong Qilu Monosodium Glutamate Group

264

387

144,624

182,246

12.2

7.1

5

Henan Lianhua Monosodium Glutamate Co., Ltd.

333

362

224,373

287,585

9.0

11.3

6

Xinle Monosodium Glutamate Foods Company

276

314

166,128

191,316

7.8

7.5

Note: The market share is calculated by output. Source: Meihua Group

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Shanxi Huarong initiates 60,000t/a citric acid

O

n Dec. 18th 2010, Shanxi Huarong Citric acid Chemicals Co., Ltd. (Shanxi Huarong) held a foundation stone laying ceremony of its 60,000t/a anhydrous citric acid project (PICTURE1), which signifies that the company begins to march into China’s citric acid industry.

PICTURE1: Foundation stone laying ceremony of Shanxi Huarong’s anhydrous citric acid project, 2010

Located in Dali Science Industrial Park with an area of 22 hectares, the anhydrous citric acid plant mainly produces anhydrous citric acid, compound feed and liquid carbon dioxide products, with capacity of 60,000t/a, 68,000t/a and 26,000t/a separately. Total investment for this plant is about USD75 million. An executive officer in Shanxi Huarong disclosed that the project can be put into operation at the end of 2011, and it’s estimated that the company can contribute to annual tax payment of USD8.6 million. It's reported that citric acid production technology in this company is quite advanced, which can reduce the corn consumption, energy consumption and water consumption by 13%, 35% and 60% separately per tonne citric acid production, indicating that its manufacturing cost can be as low as USD226/t. The executive officer also revealed that both domestic and international markets are the targets for the company's citric acid products. Although some countries levy anti-dumping and anti-subsidy duties on China's citric acid, Shanxi Huarong still has confidence in the international market, thanks to its huge demand for citric acid. It's reported that the global demand for citric acid is about 1.3 million tonnes, and its annual growth rate will keep at 5% ~ 7% in next few years. ''As the largest citric acid production base in the world, China's citric acid

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Source: Shanxi Huarong manufacturers may witness an opportunity by dint of the demand increase. And the quality of our anhydrous citric acid product satisfies BP93/BP98 standard and GB/T8269-1998 standard, and I believe the product will have a good performance by then.'' said by the executive officer. However, China's citric acid industry has situated in overcapacity currently, and it's not so easy for the new manufacturers to win their own place in this industry. In 2009, the total domestic capacity of citric acid was about 1,200,000t/a, and about 73% of Chinese citric acid was exported. What's worse, some countries, like the US and EU, levy anti-dumping and anti-subsidy duties on China's citric acid products, which reduces the profit of manufacturers and restrains

13

the development of China's citric acid industry. However, the manufacturers can find the ways to cope with the anti-dumping issues, such as expanding the market where no anti-dumping and anti-subsidy duties are imposed, entrepot trade, etc. In 2010, the annual growth rate of China's citric acid's export volume reached 9%, while it was 2% and 3% in 2009 and 2008 respectively. The executive officer in Shanxi Huarong didn't disclose the company's measures to cope with other's countries' anti-dumping issue at present, but he expressed the market environment may change after a year since the products in this plant is to be marketed a year later, and the company will make corresponding tactics by then.

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Alliance for China's amino acid industry established

A

mino Acids Industry Technology Innovation and Strategic Alliance (the Alliance) was established at the end of 2010, initiated by China Fermentation Industry Association (CFIA). (PICTURE2) And it's believed that the Alliance can bring positive effect on China's amino acid industry. So far, there are 65 members in the Alliance, which is involved in the manufacture, trade, and research of amino acids and some leading companies also join in the Alliance, like Baolingbao Biology Co., Ltd. Actually, only the members in CFIA can join in the Alliance, disclosed by an executive officer in CFIA. So if a company wants to become a member of the Alliance, it has to accede to CFIA firstly. Then it should submit an application to the Alliance, and after being approved by the Alliance, the company can become a member of it. The executive officer also said that the applicant has to be involved in amino acid industry, and foreign company is not restrained. The Alliance is to facilitate healthy, fast and strong development for China's amino acid industry. Now although there are over hundreds of large amino acid manufacturers in China, whose annual production value totally can reach USD6.76 billion, and their tax payment also can reach USD0.75 billion per year, the innovation capability of them is poor, especially in the aspect of new technology's R&D, energy saving, environmental protection, etc. Thus, CFIA and relative government departments try to ameliorate this

PICTURE2: Establishment ceremony of Amino Acids Industry Technology Innovation and Strategic Alliance, 2010

Source: China Fermentation Industry Association situation through establishing the Alliance. The Alliance will be engaged in the following work to play its role in 2011. Firstly, to promote technical cooperation and make breakthrough in core technologies. The Alliance will focus on some research of advanced manufacturing technology, like clean and energy-saving production, biomanufacturing, chromatographic separation, membrane filtration technologies. It will also define some standards for this industry and pay close attention to the industrialization of some new technologies and high value-added products, such as D-amino acid, β-amino acid, nonprotein amino acid, small peptide, etc.

Thirdly, to establish a training system for members in order to cultivate talented people in amino acid industry. Fourthly, to build up a pre-warning mechanism of amino acid industry risk and ally members to cope with industry risks. And the Alliance will also enhance communication between members, like high profile visit.

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Secondly, to co-share the new technology and information amongst members in the Alliance, and strengthen cooperation with some research institutes, like college and scientific research institution. The Alliance shall fund to support the R & D by research institutes or leading manufacturers, and the new research achievements will be co-shared amongst members.

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Xiwang Food to expand refined corn oil capacity

O

n Jan. 5th 2011, Hunan Ginde Development Co., Ltd. (Hunan Ginde) published a note that its board meeting approved a proposal about expanding 150,000t/a refined corn oil capacity of Xiwang Food Co., Ltd. (Xiwang Food), which is the whollyowned subsidiary of Hunan Ginde now. But this project still needs the final confirmation in the first interim general meeting of stockholders in 2011. "This project is almost confirmed because the company needs more capacity to satisfy the market demand in future." said by Miss Huang, executive officer in Hunan Ginde.

On Dec. 28th 2010, Department of Public Offering Supervision in China Securities Regulatory Commission approved Hunan Ginde to purchase the stock ownership of Xiwang Food. Xiwang Group is the largest shareholder of Hunan Ginde, and it also possesses Xiwang Food, thus, Xiwang Group's corn oil business can finally go public by this way, as Hunan Ginde's corn oil business has gone public. Actually, corn oil market has strong prospect in the future, and current total capacity in China can't satisfy its potential demand. During 2000 to 2009, the compound annual growth rate of corn oil's output reached over 13%, much higher than average growth rate of 5.6% for other vegetable oils. But according to the data from Food and Agriculture Organization,

TABLE7: Performance of Xiwang Food, 2008~H1 2010 Sales volume, tonne Corn oil in bulk

small-package corn oil

Turnover, million USD

Net profit, million USD

2008

75,800

4,400

140

6

2009

64,600

17,900

148

11

H1 2010

29,100

17,300

74

6

Source: CCM International the output of corn oil in China just accounted for 1% in total output of major vegetable oils in 2009, while the number was 10% in the US. If the proportion can reach 4% in China, the annual demand for corn oil will jump to 1 million tonnes, which exceeds the current capacity much. Therefore, Chinese corn oil manufacturers are taking efforts to expand their market share and increase brand awareness in order to grab more profit. Xiwang Food is the most active one. The latest move is that Xiwang Food donated about USD52,790 and corn oil valuing USD45,249 to some impoverished children with congenital heart disease on Dec. 23rd 2010, and by this move, corn oil and Xiwang Brand spread more widely. The company also plans to increase its promotion funds to USD38 million in 2011 from USD15 million in 2010. Aided by such a series of efforts, Xiwang Food has created outstanding achievement in 2010, with net profit of USD6 million in the first half of 2010. (TABLE7)

Food believe that it is high time to expand its corn oil capacity. For now, the company is the largest corn oil manufacturers in China with capacity of refined corn oil and small-package corn oil of about 200,000t/a and 150,000t/a respectively. And after the expansion project is completed, Xiwang Food will own 350,000t/ a refined corn oil capacity. And it's believed that Xiwang Food will also expand the capacity of its smallpackage corn oil, since small packaged oil, the major product of the company, enjoys high profit margin and strong market potential. Besides, the company expects to achieve 100,000 tonnes and 150,000 tonnes sales volume for its smallpackage corn oil respectively in 2011 and 2012. It believes its brand "Xiwang" can exceed Arawana and Fortune to become the top 1 brand in Chinese corn oil market in 2011. And some institutes estimate Xiwang Food's profit can reach USD27 million and USD38 million in 2011 and 2012 respectively.

The great market potential and increased sales volume make Xiwang

Competitiveness Sucrose price or to keep uptrend in near future

A

verage sucrose price went uptrend to USD1,086/t on Jan. 13th 2011 from USD1,056/t on Nov. 25th 2010. (FIGURE10) The quotation of sucrose in Nanning City, Wuhan City and Ningbo City was about USD1,054/t, USD1,088/t, and USD1,085/t separately. It's predicted that it will maintain this uptrend in near future and stay at a high level in 2011, aided by the following factors.

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Fast development of its downstream industries increased its demand. It's estimated that the output of biscuit, cake and beverage have increased by about 38%, 40% and 26% separately in 2010 over 2009, thus the demand for sucrose may increase by 10% correspondingly. Owing to the drought in Guangxi in 2010, the most important sucrose production base in China, the sugar content in sugarcane in Guangxi was low, which also affects the output of sucrose. In previous year, 10 tonnes sugarcane can produce 1 tonne sucrose, but in 2010/2011, it needs 12 tonnes sugarcane. The total output in the last two months in 2010 all over the country was only 2.94 million tonnes, which is lower than 3.09 million tonnes in the corresponding period of 2009.

FIGURE10: Sucrose price in China, Nov. 2010 ~ Jan. 2011 1 ,1 4 0 1 ,1 2 0 1 ,1 00 Unit:USD/t

During November 2010 and April 2011 (2010/2011), supply and demand gap of sucrose in China may reach 2 million tonnes, which will drive up its price. According to the data published on Jan. 7th 2011 by China Sugar Association (CSA), the total output of sucrose in 2010/2011 is estimated to reach 12 million tonnes, while the sales volume is predicted to be 14 million tonnes.

1 ,08 0 1 ,06 0 1 ,04 0 1 ,02 0 1 ,000 1Nov

8Nov

15Nov

22Nov

29Nov

6Dec

13Dec

2 0Dec

27 Dec

3Ja n

1 0Ja n

Source: CCM International Besides, the freezing weather in Guangxi Province recently also has negative impact on sugarcane's output in the next production period. Until Jan. 9th 2011, the affected area of sugarcane in Guangxi totally reached 130,000 hectares, which makes the public worry about its output in the future, thus driving up its price. However, there is still good news to hold down the price. It is predicted that India will export about 1 million tonnes sucrose during Nov. 2010 to Oct. 2011, and become a net exporter of sucrose during this period, thanks to the sugarcane harvest in this country. And global output of sucrose during Nov. 2010 and Oct. 2011 is

predicted to reach 170 million tonnes, up 7.3% over the corresponding time of 2009-2010 and its global consumption will just increase by 2% to 167 million tonnes, so sucrose has a slight surplus in the world, which can hold down its international price. In general, sucrose price in China may still run at a high level in 2011, and it will drive up the prices of its substitutes, like high fructose corn syrup (HFCS), and Glucose Monohydrate, whose average prices in Jan. 2011 reached USD475/ t (Content: 42%) and USD550/t respectively, up 2.1% and 1.8% over Dec. 2010.

Corn Supply Analysis into China's corn market in 2011

I

t's well known that corn price in China has kept ascending in 2010, which was USD283/t on Jan. 1st 2010 in Shandong Province, while it climbed to USD308/t on Dec. 31st 2010. Entering 2011, the price of corn, key raw material of corn products, will be still the spotlight. Thus it's necessary to predict how corn market will go in 2011. As CCM predicted, corn price may maintain current high level due to its undersupply situation. The demand for corn in 2011 will keep increasing. Feed industry, the largest consuming sector of corn, is developing well and fast, and it needs more corn in 2011. It's estimated that over 160 million tonnes corn were consumed by feed industry, increasing by 7% over 2009. If calculated by this development rate, feed industry will consume over 1.7 million tonnes corn in 2011. Corn consumption in corn deep-processing industry also will increase in 2011. China's food industry has rebounded from financial crisis and melamine scandal occurred in 2008, so the demand for some corn products, like starch, starch sugar, sugar alcohol, has also increased in 2010, and it will keep this increasing trend in 2011. Actually in 2010, the corn consumption in deep-processing industry was estimated at about 43 million tonnes, up 8% over 2009. In 2011, it may

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reach 46 million tonnes if calculated by this development rate. China needs to replenish the national corn stock. In order to increase corn supply and stabilize its price, China began to auction national temporarily reserved corn in April 2010, and the total transaction volume until Dec. 28th 2010 reached 14.5 million tonnes in 2010. Besides, total transaction volume in national trans-province auction in 2010 reached 10.7 million tonnes. What's more, a quantity of corn in national temporary reserves auctioned has sourced from national reserve since June 11th 2010. It's reported that the national corn reserves remains not too much, and it needs to be replenished in 2011 in order to guarantee the national food security. However, rich harvest in 2010 is good news to drive down the price. It's predicted that corn yield in 2010 may reach 158~168 million tonnes, increasing by 2% ~ 8% over last year. But, it still can not satisfy the demand in 2011. Hence, the government is predicted to take the following measures to stabilize corn price. First, the possibility of the government to implement the national corn temporary reserve policy in 2011 is slim. The purpose of the government to implement this policy in last two years was to protect the interest of farms as corn price at that time was too low, and since corn price in 2011 is obviously high and farms' interest can be guaranteed, it has little necessity to adopt this policy. Second, the development of corn deep-processing industry will still be restrained in 2011. Chinese government takes healthy development of feed industry as a priority; thus, take current undersupply situation into account, corn consumption in corn deep processing industry will be limited. Third, China will increase the import volume of corn in 2011. Until November, the total import volume of corn in 2010 has already reached about 1.6 million tonnes, and it's estimated that the number in 2011 may exceed it. Besides, the government will also release some policies to stabilize corn price, such as encouraging corn planting, reducing the cost in the whole supply chain. And although China's money and credit policy in 2011 is "Prudent", rather than "Moderately loose" in 2010, the credit for agricultural products is not so tight in order to ensure agricultural products supply.

New Technology & New Products & R&D New energy-efficient fermentation biotechnology promoted

A

and energy consumption are saved.

new energy-efficient fermentation biotechnology is listed in "List of energy-saving technology promoted by the Nation (the List)", published by National Development and Reform Commission (NDRC) at the end of Nov. 2010. The List includes 30 new energy saving technologies involving in 11 industries, such as chemical, biotechnology, etc.

The second part is to use compressed air to mix material fluid in fermentation, instead of mechanical mixer. A draft tube will be set in the fermentation tank, and the compressed air will enter the tank from bottom. By dint of the pressure of compressed air, the fermentation liquor in the draft tube will be pushed to flow from lower to upper, and after the liquor reaches the top of the tube, it will flow to the bottom in the space between the tube and tank, and then keeps being pushed up again. This cycle can make the liquor be mixed perfectly, and saves energy, besides, it also can lower down the possibility of infecting bacteria.

The new fermentation biotechnology can reduce 20% of energy consumption, and is cost-effective for the manufacturers. It includes two major parts. The first part is new air compression of refrigeration technology. In the refrigeration procedure of fermentation, the new technology is to use compressed air as refrigerant. When the compressed air released, its temperature around will decrease to 110 centigrade degree from 180 centigrade degree. And at the mean time, quantities of heat will be released when compressing air, and this heat can be used to dry the fungus dreg, instead of using steam. Thus, water

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Take 800 steres fermentation tank for example, this new fermentation biotechnology can save 170 steres water per day, and steam consumption can reduce to 292 tonnes from 320 tonnes per tank, and power consumption also can reduce to 19,391kwh from 29,593kwh per tank, and the

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Vol. 4 Issue 1. 2011

Corn Products China News

energy consumption to 0.8 tce from 1 tce in one tonne product. Moreover, it not only helps the manufacturers reduce their manufacturing cost, but also win some preferential treatment from the government.

refrigerating time can reduce to 3.5 hours from 18 hours. Thus, if this new fermentation biotechnology can be applied in 60% of the fermentation industry, it can save energy of 1.2 million tce (ton of standard coal equivalent) each year. It's predicted that the total energy consumption in fermentation industry all over the country can reach 25 million tce, and the energy consumption in the fermentation procedure will account for 40% of the total. And this new fermentation biotechnology can reduce the

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Since this new technology is being greatly promoted by the government, if manufacturers adopt it, they may enjoy more preferentials from the government, like tax preference.

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Corn Products China News

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Corn Products China News 2011.pdf  

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