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CCM Data & Primary Intelligence

Production, Market and Manufacturing Cost of Sugar Alcohols in China The First Edition

Researched & Prepared by:

Guangzhou CCM Information Science & Technology Co., Ltd. Guangzhou, P. R. China

June 2010

Copyright by Guangzhou CCM Information Science & Technology Co., Ltd. (P. R. China) Any publication, distribution or copying of the content in this report is prohibited. Website: http://www.cnchemicals.com Tel:+86-20-37616606 Fax:+86-20-37616968 Email: econtact@cnchemicals.com

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CCM Data & Primary Intelligence Description: Great changes of China’s sugar alcohol market takes place in recent years. Currently, China’s manufacturers of sugar alcohols who are suffering from high production cost gain nearly no profit due to rising cost of raw materials. As the price of main sugar alcohols’ raw materials, corncob and cornstarch, has been soaring recently, especially the former, reaching USD109.81/t in May 2010 from USD46.85/t in 2008. Sugar alcohols are usually used in food, pharmaceutical and daily-care products; about 70% of sugar alcohols are used in production of Vitamin C, toothpaste, brand & cake, candy, sugar-free chewing gum and parental solutions in 2009. There is a consumption uptrend of sugar alcohols in food products, especially healthcare foods. The market share by volume of sugar alcohols in food field grows from about 18% to 22%. With the improving living standard in China, more and more people choose functional food that is processed by sugar alcohols, like sugar-free chewing gums, cakes & candies with low calories, etc. Therefore, the future of sugar alcohols is bright and infinite for that’s an inevitable choice. Besides the situation mentioned above, what other changes took place during 2005 to 2009? What is the development trend of sugar alcohols’ production and consumption in China? Based on these questions, CCM will tell you the details in this report.

- Strong point This report provides readers with a handbook service, comprising of comprehensive & detailed & systematic data on each side of sugar alcohol market in China, including: Benchmarking of nine leading sugar alcohol manufacturers in China, and analysis of manufacturers in aspects of products, production technology, sales & clients, manufacturing cost, financial statement analysis, etc; Production, by capacity, output and price, divided by different sugar alcohols, in each manufacturers, change trend in the last 4-5 years and future 5 years; Trade situation, by export volume and import volume, divided by different sugar alcohols, in each manufacturers, change trend in the last 4-5 years and future 5 years; Manufacturers: latest capacity and output, raw material, price, manufacturing cost, etc; Consumption: detailed and systematic data on every consumption segments of the sugar alcohol market, and forecast the consumption situation of sugar alcohol in the next five years in China; - What is covered? Production situation of sugar alcohols: sorbitol, xylitol, maltitol, mannitol and erythritol are included in the analysis of output, capacity, prices, and values of sugar alcohol industry;

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CCM Data & Primary Intelligence Manufacturers: major active manufacturers of sugar alcohols in China are introduced by latest capacity, output and raw material last year. Profiles of sugar alcohol manufacturers are available in this report; Consumption and end use segments: the consumption structure is illustrated and the end use segments include Vitamin C, food, daily health products, pharmaceuticals and others; Import and export analysis introducing trade situation in China; Technology and supply of raw material source in different sugar alcohols are introduced concisely; Benchmarking: site-visiting with nine leading companies in sugar alcohol industry in China. - Credibility Scientific methodologies and varieties of data sources are adopted to ensure the credibility. Major steps adopted to formulize this report: Desk research; Telephone interviews with manufacturers, traders, consumers and researchers of sugar alcohol industry; Questionnaires were sent to many sugar alcohol manufacturers to ask for their opinions; On-line chat tool adopted to communicate with traders/manufacturers in China; Import and Export analysis to demonstrate the trade situation and also help analyze the production and consumption situation; Site-visiting with nine leading sugar alcohol manufacturers including Shandong Futaste, Roquette China, Guangxi Khalista, etc. to analyze the situation and cost of production and their financial statement; Series of internal discussions in order to analyze the data and draw conclusions; Report generation; The data collected and compiled were sourced from: Published articles from periodicals, magazines, journals, the third database; Government statistics; Primary info obtained by tel-interviews, on-line chats, emails, questionnaires, etc; Comments from industrial experts; Import and export data from Customs; CCM’s database; Third-parties’ database; Information from the Internet; Data from various channels has been combined and cross-checked to make this report as precise and credible as possible.

Main content: No.

Content Executive summary

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Page 1

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CCM Data & Primary Intelligence Methodology & sources

3

I

Overview of sugar alcohol industry in China

5

I-1

Major sugar alcohols and their properties

5

I-2

Sugar alcohol industry in China

5

I-3

Policies on sugar alcohol industry in China since 2005

6

II

Overview of sugar alcohol industry in the world

8

II-1

Supply situation of sugar alcohols in the world

8

II-2

Demand situation of sugar alcohols in the world

9

III

Production of major sugar alcohols in China, 2005-2009

10

III-1

Overview of sugar alcohols' production

10

III-2

Output/capacity volume in the past five years

11

III-3

Major producer’s information

17

III-4

Newly-built plants' information

22

III-5

Analysis of production distribution in China

23

IV

Raw material analysis

25

IV-1

Major raw materials’ output volume in the past five years

25

IV-1.1

Cornstarch

25

IV-1.2

Corncob

26

IV-1.3

Glucose

26

IV-1.4

Xylose

27

IV-2

The share of major Raw materials in sugar alcohol industry

28

IV-3

Planting area of corn in China

30

IV-4

Relevant policy

32

V

Technology

33

V-1

Sorbitol

34

V-1.1

Production technology of sorbitol in China

34

V-1.2

Technology innovations

35

V-1.3

Introduction to key patents

36

V-2

Xylitol

36

V-2.1

Production technology of xylitol in China

36

V-2.2

Technology innovations

38

V-2.3

Introduction to key patents

41

V-3

Maltitol

42

V-3.1

Production technology of maltitol in China

42

V-4

Mannitol

43

V-4.1

Production technology of mannitol from kelp in China

44

V-4.2

Production technology of mannitol by synthetic method in China

45

V-4.3

Technology innovations

46

V-4.4

Introduction to key patents

47

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CCM Data & Primary Intelligence V-5

Erythritol

48

V-5.1

Production technology of erythritol in China

48

V-5.2

Technology innovations

49

V-5.3

Introduction to key patents

50

VI

Price analysis, 2005-2009 (including sorbitol, xylitol, maltitol, mannitiol, erythritol)

51

VI-1

Price change in the past five years and latest price dynamics

51

VI-2

Influencing factors for price change

53

VI-3

Forecast on price

55

VII

Market analysis of sugar alcohols in China (including sorbitol, xylitol, maltitol,

58

VII-1

Market size of different types of sugar alcohols

58

VII-2

Market size by volume and growth rate analysis in the past five years

59

VIII

Consumption pattern of Chinese sugar alcohols, 2005-2009

64

VIII-1

Overview of sugar alcohols’ consumption pattern

64

VIII-2

Brief introduction to end-use segments

65

VIII-2.1

Vitamin C

65

VIII-2.2

Toothpaste

67

VIII-2.3

Food

70

VIII-2.3.1

Sugar-free chewing gum

70

VIII-2.3.2

Candy

72

VIII-2.3.3

Baking food

74

VIII-2.4

Parenteral solution

77

VIII-2.5

Others

79

IX

Import & export analysis of sugar alcohols, 2005-2009 (including sorbitol, xylitol,

80

IX-1

Export and import analysis of sorbitol in 2005-Mar. 2010

80

IX-1.1

Export situation of price, volume and value

80

IX-1.2

Export situation of destinations

84

IX-1.3

Export situation of exporters

90

IX-1.4

Export situation of producers

91

IX-1.5

Import situation of price, volume and value

92

IX-1.6

Import origins of sorbitol in China

95

IX-1.7

Import situation of importers

98

IX-2

Export and import analysis of xylitol in 2005-Mar. 2010

100

IX-2.1

Export situation of price, volume and value

100

IX-2.2

Export situation of destinations

104

IX-2.3

Export situation of exporters

110

IX-2.4

Export situation of producers

111

IX-2.5

Import situation

112

IX-3

Export and import analysis of maltitol in 2005-Mar. 2010

112

IX-3.1

Export situation of price, volume and value

112

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CCM Data & Primary Intelligence IX-3.2

Export situation of destinations

116

IX-3.3

Export situation of exporters

118

IX-3.4

Export situation of producers

119

IX-3.5

Import situation

120

X

Forecast on sugar alcohols' development in China, 2010-2014

121

X-1

Key factors influencing sugar alcohols' development

121

X-2

Forecast on sugar alcohol industry

124

X-2.1

Forecast on capacity & output of sugar alcohols

124

X-2.2

Forecast on import and export of sugar alcohols

131

X-2.3

Forecast on consumption of sugar alcohols

135

XI

Conclusion and recommendation

143

XI-1

Conclusion

143

XI-2

Suggestion & recommendation

143

XII

Benchmarking analysis of leading players

145

XII-1

Shandong Yucheng Lvjian Biological Technology Co., Ltd. (Yucheng Lvjian)

145

XII-1.1

Product information

145

XII-1.2

Estimation on manufacturing cost of crystalline xylitol

145

XII-1.3

Estimation on manufacturing cost of crystalline maltitol

147

XII-2

O’Laughlin Industries Co., Ltd. (Tianjin O’Laughlin)

150

XII-2.1

Product information

150

XII-2.2

Estimation on manufacturing cost of crystalline xylitol

150

XII-3

Zhejiang Huakang Pharmaceutical Co., Ltd. (Zhejiang Huakang)

153

XII-3.1

Product information

153

XII-3.2

Estimation on manufacturing cost of crystalline xylitol

153

XII-3.3

Estimation on manufacturing cost of crystalline maltitol

155

XII-4

Shandong Longlive Bio-technology Co., Ltd. (Shandong Longlive)

158

XII-4.1

Product information

158

XII-4.2

Estimation on manufacturing cost of crystalline xylitol

158

XII-5

Roquette China Pharmaceutical Co., Ltd. (Roquette China)

161

XII-5.1

Product information

161

XII-5.2

Estimation on manufacturing cost of syrup sorbitol

161

XII-5.3

Estimation on manufacturing cost of crystalline maltitol

163

XII-6

Shandong Futaste Pharmaceutical Co., Ltd. (Shandong Futaste)

166

XII-6.1

Product information

166

XII-6.2

Estimation on manufacturing cost of crystalline xylitol

166

XII-7

Shandong Luzhou Bio-Chem Technology Co., Ltd. (Luzhou Group)

169

XII-7.1

Product information

169

XII-7.2

Estimation on manufacturing cost of crystalline maltitol

169

XII-8

Shandong Tianli Pharmaceutical Co., Ltd. (Shandong Tianli)

172

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CCM Data & Primary Intelligence XII-8.1

Product information

172

XII-8.2

Estimation on manufacturing cost of syrup sorbitol

172

XII-9

Guangxi Khalista (Liuzhou) Chemical Industries Ltd. (Guangxi Khalista)

175

XII-9.1

Product information

175

XII-9.2

Estimation on manufacturing cost

175

XII-9.3

Estimation on manufacturing cost of crystalline maltitol

177

XII-10

Financial statement analysis

180

XII-10.1

Yucheng Lvjian

180

XII-10.2

Tianjin O’Laughin

183

XII-10.3

Zhejiang Huakang

186

XII-10.4

Shandong Longlive

189

XII-10.5

Roquette China

192

XII-10.6

Shandong Futaste

195

XII-10.7

Luzhou Group

198

XII-10.8

Shandong Tianli

201

XII-10.9

Guangxi Khalista

204

XII-10.10

Comparison of financial state in different companies in 2009

207

XIII

Profile

208

XIII-1

Jilin Changchun Dacheng Industrial Group Company Ltd.

208

… XIII-20

0 Shandong Binzhou Sanyuan Biotechnology Co., Ltd.

237

Executive summary: Sugar alcohols produced in China mainly include sorbitol, xylitol, maltitol, mannitol and erythritol.China is one of the largest sugar alcohol producers in the world, with total output of xx tonnes in 2009, accounting for xx of global output, rising slightly compared with that of 2008. However, global financial crisis and less developed market for sugar alcohol held back the growth; some producers even suspended or stopped production. Currently there are about xx major active producers in China according to the market situation in May 2010. Raw¬ material In sugar alcohol’s production, there are mainly three raw materials, namely cornstarch, corncob and xylose. To be specific, most producers choose the first two as raw materials; some with advanced technology prefer solid glucose instead of cornstarch. Solid glucose often comes from starch producers. There are two kinds of raw materials for xylitol production: xylose and cornstarch. As to cornstarch, China as the second largest cornstarch producer in the world has abounded resources of corn with output of xx tonnes in 2009 next to the US. In addition, China is the second largest corn production country following the US in the world. Total output of glucose reaches to xx in

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CCM Data & Primary Intelligence 2009. As to xylose, China also ranks first in xylose production in the world with total output of xx tonnes in 2009. Consumption situation¬ In China, sugar alcohols are mainly used in products like food, daily-care products and pharmaceuticals. About xx of sugar alcohols in China are consumed in food, oral health products and medicines in 2009. In particular, Vitamin C, oral health products, bread & cake, candy and parental solution are main downstream sections of sugar alcohols. Currently, about xx of total sugar alcohols’ consumption is used for Vc, and xx for food as sweeteners. The consumption volume of sugar alcohols in China sees a slight increase in 2009 compared with that the previous year by only xx tonnes. Production¬ technology Currently, there are mainly two methods to produce sugar alcohols in China: traditional chemical method with glucose hydrotreating and biotechnological method through fermentation with corncob as raw material. Traditional method with glucose to be hydrotreated at the presence of catalyst to produce sugar alcohols can easily help realize industrial production of large scale. Bioproduction method is only used in xylitol, mannitol and erythritol’s production, including microbial fermentation and enzyme process. Bioproduction is still immature for other sugar alcohols in China. Import¬ & export More and more global buyers intend to import sugar alcohols from China in recent years for lower price and better quality, export volume of sugar alcohols has witnessed an uptrend. In 2009, China imported only xx tonnes sugar alcohols, while xx tonnes sugar alcohols are exported, which slightly decreases compared with that of 2008 due to the impact of global financial crisis. The US, Europe and Southeast Asia are the major exporting destinations.

Character of CCM' Report: The aim of this report is to provide powerful assistance to the strategy group and the management team in making correct decision as how to penetrate the ever-increasing China market and how to catch the maximum commercial opportunities. The report is formulated independently by CCM’s professional market researchers, based on the first-hand and primary data which are analyzed by scientific methodology, confirmed with both manufacturers/end users/traders and legal authorities, and presented in a logic way.

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III-3 Major producer’s information 9

Sorbitol

According to CCM’s investigation, 27 enterprises produce or ever produced sorbitol in China. By the end of May 2010, -

6 producers stopped;

-

2 producers are idle;

-

19 producers are active.

At present, there are 2 types of sorbitol in China, 70% syrup sorbitol and crystalline sorbitol. Because transportation cost of syrup sorbitol is high and it’s easily freezing in winter, the production of 50% syrup sorbitol has stopped recently. About 15 producers use cornstarch, a major raw material of sorbitol production. For others, 2 producers use sorbitol syrup and the other 2 use glucose and tapioca.

9

Mannitol

Currently, there are 8 active mannitol producers in China, among which 7 adopt chemical synthesis method with glucose, only one producer still adopt the traditional method. Hebei Huaxu Pharmaceutical Co., Ltd. is the top producer of mannitol in China with capacity of 15,000 t/a, whose output reaches 12,000 tonnes in 2009. Jiangsu Lianyungang Zhongda Seaweed Industrial Co., Ltd. (Lianyungang Zhongda) is the only producer adopting traditional method with an annual capacity of 800 tonnes in 2009. More and more companies choose synthesis method. The output of mannitol produced by traditional method will be less and less till it is completely replaced by synthetic method with glucose. Some companies stopped mannitol production for insufficient capital to pass GMP certification, and mannitol production is strictly limits by national requirements. These companies include Qingdao Gather Great Ocean Seaweed Industry Co., Ltd., Lianyungang Huarui Chemical Co., Ltd., Jiuyang Alga Industry Bio-engineering Co., Ltd. and so on. Only 8 active producers have gained GMP certificate. Lianyungang Zhongda and Shandong Lianmeng are claimed to pass GMP certification in August 2007. Henan Jincheng doesn’t pass GMP certification, and it can only supply mannitol to these food consumers or for export.


Table III-3.4 List of China’s mannitol producers, 2010 No.

Producer

Raw

Capacity,

Output, 2009

material

2010 (t/a)

(t)

Status

Price (USD/t) Food grade: 2,932 3,500

1

600

Shandong Qingdao Bright Moon Seaweed Industry

grade:

Co., Ltd.

Active

Glucose

Hebei Huaxu Pharmaceutical Co., Ltd.

Active

Glucose

Ltd.

Active

Glucose

4

Shandong Jiejing Group Corporation

Active

5

Yucheng Lvjian Biological Technology Co., Ltd.

6

Shandong Lianmeng Chemical Group Co., Ltd.

2

Medicine

2,493 15,000

12,000

1,833

3,000

2,400

2,933

Glucose

3,500

2,000

2,493

Active

Fructose

5,000

3,000

2,493

Active

Glucose

10,000

8,000

1,620

800

800

3,666

Co., Ltd.

Active

Glucose

Yantai Xinwang Seaweed Industry Co., Ltd.

Active

Starch

2000

550

2,053

Guangxi Nanning Chemical & Pharmaceutical Co., 3

Jiangsu Lianyungang Zhongda Seaweed Industrial 7 8

Source: CCM International


Production, Market and Manufacturing Cost of Sugar Alcohols in China