Corn products china news 2011

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Based on China’s market, CCM reports the latest news of China’s corn deep processing products to reveal the driving force of the event and deeply analyzes the influence of the event on domestic and international corn deep processing industry.

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Corn products china news 2011

  1. 1. Corn Products China NewsCorn Products Vol.4 Issue 1, 2011 Copyright © CCM International Limited
  2. 2. Corn Products China News Vol. 4 Issue 1. 2011 Publication date: 20 January, 2011 CONTENTSNews in Brief1 Baolingbao Biology considers transferring raw material price increasing risk through hedge service1 Corn Starch in Tieling City firstly exported to oversea1 Anhui BBCA obtains value added tax refunding Welcome to the January issue of Corn1 Chinese CPI in 2010 rises by 3.3%1 The 6th China (Shanghai) International Starch & Starch Derivatives Exhibition 2011 to Products China News, specially published be hold by CCM International.Supply and Demand Stepping into 2011, prices of most corn products2 China to impose VC export quota in 2011? stably run at a relative high level, caused by stablyImport and Export Analysis high corn price. However, it still has exception. Price 3 Chinese corn products Imp. & Exp. analysis in November 2010 of cornstarch has decreased in Jan. 2011 all overPrice Update the country, and VC price still undergoes a low level6 Ex-factory prices of corn products in Dec. 2010 at the same time. In this issue, CCM has tried to6 FOB corn price in Dalian Port from Feb. 2010 ~ Jan. 2011 predict that Chinese government is likely to impose7 Domestic citric acid price keeps uptrend export quota on VC industry. In addition, another 8 Chinas cornstarch price decreases trade friction between the US and China happened at the end of 2010, that is, China decides to run anMarket & Company Dynamic9 DDGS from the US faces anti-dumping investigation in China anti-dumping investigation into DDGS originated 10 Quantum High-Tech succeeds in getting listed from the US.11 Meihua Groups dream of listing comes true13 Shanxi Huarong initiates 60,000t/a citric acid In 2011, Chinese corn products industry will be full14 Alliance for Chinas amino acid industry established of opportunities. Two companies (Quantum High-15 Xiwang Food to expand refined corn oil capacity tech and Meihua Group) succeed in getting listed to expand their businesses, and a new company Competitiveness (Shanxi Huarong) marches into citric acid industry.15 Sucrose price or to keep uptrend in near futureCorn Supply By the way, it would be honored to tell you that 201116 Analysis into Chinas corn market in 2011 is the 10-year Anniversary of CCM, and CCM will New Technology & New Products & R&D continue to provide you more professional, timely,17 New energy-efficient fermentation biotechnology promoted accurate and complete news to you. Main companies mentioned in this issue
  3. 3. Corn Products China News Vol. 4 Issue 1. 2011 Corn Products China News at a glance News in Brief There is a possibility for Chinese government to imposeVC export quota on VC in 2011. Baolingbao Biology considers transferring raw material price increasing risk through In November 2010, performance of Chinese cornproducts’ imports still witnessed downtrend, and import hedge service Ovolume decreased by 68% over October 2010. In contrast, n January 17, 2011, Baolingbao Biology Co., Ltd. announced that atthe export volume rebounded, which increased by 16%. present the company considers transferring the risk of raw material China runs anti-dumping investigation into DDGS from price increase through hedge service, but there are no specific plans orthe US. programs at present. Quantum High-Tech succeeds in getting listed in Chinas Growth Enterprises Market, which will facilitate it to raisefunds for its business expansion. Corn starch in Tieling City firstly exported Meihua Group succeeds in getting listed at the end of to oversea2010, 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. 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 Amino Acids Industry Technology Innovation and is the first time for corn starch produced in Tieling City, Liaoning Province to Strategic Alliance has been established at the end of 2010. be exported. Xiwang Food plans to expand its refined corn oil capacity to 350,000t/a from 200,000t/a. Domestic citric acid price still maintains uptrend at the Anhui BBCA obtains value added tax beginning of 2011. refunding Domestic cornstarch price decreases in January 2011. Sucrose price in China is increasing at present, and may 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 maintain at high level in 2011. refunded. This value added tax will be reckoned in Non-operating income in Corn price will keep at a high level in 2011 as its 2010.undersupply situation. 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. CCM International Limited 1 www.cnchemicals.com 1
  4. 4. Corn Products China News Vol. 4 Issue 1. 2011Supply and Demand China to impose VC export quota in 2011? I n August 2010, when domestic price of Vitamin C (VC) slumped to its lowest level, it was reported that National FIGURE1: Domestic VC price in China, 2009-2010 1 6 ,000 Development and Reform Commission 1 4 ,000 ( N D R C ) w o u l d i m p o s e V C e x p o r t quota at the end of 2010 for the healthy 1 2 ,000 development of this industry. However, 1 0,000 Unit: USD/t until now, the measure has not come 8 ,000 out yet, and some experts consider the measure will be published and carried 6 ,000 out in 2011, while others dont think so. 4 ,000 Hereinafter, analysis will be made into 2 ,000 this question: Will Chinese government impose VC export quota in 2011? - Ja n Feb Ma r A pr Ma y Ju n Ju l Aug Sep Oct Nov Dec Lets first understand current situation of Chinese VC industry. On one hand, total 2 009 2 01 0 capacity of Chinese VC product definitely exceeds the global demand. Chinas Source: CCM International top five large VC companies capacity FIGURE2: Export price and volume of Chinese VC, 2009-2010 (124,000t/a in 2010) has accounted for about 90% of global VC capacity. 1 4 ,000 1 2 ,000 And some expansion projects are still being under construction right now. It 1 2 ,000 1 0,000 is estimated that total capacity of VC in China will climb to 200,000t/a in 2012. 1 0,000 8 ,000 The terrible overcapacity situation has Unit: USD/t Unit: tonne 8 ,000 caused serious resource waste and cut- 6 ,000 throat competition in domestic market, 6 ,000 which hinders healthy development of 4 ,000 this industry. 4 ,000 2 ,000 2 ,000 On the other hand, VC price has situated at a low level at present, hurting most - - VC manufacturers in China. Although Ja n Feb Ma r A pr Ma y Ju n Ju l A u g Sep Oct Nov Dec VC price has rebounded a little since October 2010 aided by the production Ex por t v olu m e 2 009 Ex por t v olu m e 2 01 0 suspension of some major VC producers, like Shijiazhuang Pharmaceutical Group Ex por t pr ice 2 009 Ex pot pr ice 2 01 0 Co., Ltd., (Shijiazhuang Pharmaceutical) Source: CCM International it still stays at a low level at present. On quota measure sounds a suitable way. First, the measure can eliminate some Jan. 11th 2011, the average VC price in Export quota measure means the annual small manufacturers and turn around China was about USD6,798/t, while it export volume will be controlled by the current overcapacity situation to some was USD11,730/t in corresponding period government, and each qualified exporter, extent. Normally, the small manufacturers of 2010. (FIGURE1) Besides, despite its including manufacturers and traders, will are unqualified to get export quota, export volume increased significantly in be assigned an annual specific quota of especially those with inefficient 2010, average export price went down the top limit export volume, and this top technology and high pollution. Thus, over 2009, caused by the increased output limit volume will be decided by capacity these manufacturers will be driven back of Chinese VC. (FIGURE2) and previous export volume of each from the international market, and it is manufacturer. The measure can bring the likely for them to get out of this industry. On the basis of the above situation, it is following advantages. urgent to regulate this industry and export Second, it can ease current cut-throat CCM International Limited 2 www.cnchemicals.com
  5. 5. Corn Products China News Vol. 4 Issue 1. 2011 competition, and enhance Chinese VC pricing power. Currently, Therefore, its predicted that it is quite probable for China to the export price is cut down by foreign buyers as there are lots of impose export quota on VC in 2011. The government should exporters for them to choose. And in order to seize more market enhance the supervision on the implementation of this measure, share, many exporters lower their quotations. If the measure is if not, the measure would lose its role. 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 Monthly Export Monthly Products value, USD growth rate value, USD growth rate Corn 17,423,036 -70% 2,459,110 85% Cornstarch 874,210 -25% 11,433,831 -20% Citric acid 413,550 114% 66,158,728 39% Citrate 169,746 -43% 10,718,069 38% Glucose and glucose syrup 98,831 -47% 26,322,742 25% (Fructose content <20%) Glucose and syrup 534,176 -13% 732,785 80% (50%>fructose content ≥20%) Fructose and fructose syrup 622,114 -5% 6,606,504 4% (Fructose content >50%) 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 140,920 428% 13,323,827 -7% tetrahydrofurfuryl alcohol Lysine 7,710 -93% 4,416,869 198% Lysine ester and salt 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% Total 20,788,987 -67% 201,362,559 17% Source: China Customs CCM International Limited 3 www.cnchemicals.com
  6. 6. Corn Products China News Vol. 4 Issue 1. 20112. 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 comparedwith 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 increasedtheir 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 waszero 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 Import Monthly Export Monthly Products volume, tonne growth rate volume, tonne growth rate Corn 78,555 -69% 8,546 77% Cornstarch 1,248 -17% 25,749 -20% Citric acid 129 43% 68,674 36% Citrate 41 -21% 10,845 43% Glucose and glucose syrup 84 -23% 54,769 24% (Fructose content <20%) Glucose and syrup 1,987 -12% 1,182 346% (50%>fructose content ≥20%) Fructose and fructose syrup 264 39% 12,124 -1% (Fructose content >50%) Mannitol 10 208% 617 30% Xylitol 1 -99% 1,165 -10% Sorbitol 37 95% 8,440 15% Furfural 310 3,100,650% 3,657 24% Furfuryl alcohol and 16 142% 5,084 -16% tetrahydrofurfuryl alcohol Lysine 0.16 -95% 2,564 201% Lysine ester and salt 7 -99% 7,409 -20% Glutamic acid(GA) 0.36 8% 1,670 142% Sodium glutamate 20 0% 17,068 -2% Inositol 0.38 28% 201 -28% Total 82,710 -68% 229,763 16% Source: China Customs3. 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% inNovember 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, withimport 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. CCM International Limited 4 www.cnchemicals.com
  7. 7. Corn Products China News Vol. 4 Issue 1. 2011 TABLE3: Imp. & Exp. price of Chinese corn products, November 2010 Import price, Monthly Export price, Monthly Products USD/t growth rate USD/t 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 1,174 -31% 481 0% (Fructose content <20%) Glucose and syrup 269 0% 620 -60% (50%>fructose content ≥20%) Fructose and fructose syrup 2,358 -32% 545 5% (Fructose content >50%) 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% Furfuryl alcohol and 8,904 118% 2,621 11% tetrahydrofurfuryl alcohol 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% Inositol 55,737 -0.15% 10,421 5% Source: China Customs TABLE4: Export proportion of top 5 and top 10 destinations of Chinese 4 . E x p o r t d e s t i n a t i o n s a n a l y s i s corn products by volume, October ~ November 2010 (TABLE4) Nov -10 Oct -10 Products 4.1 The major reason for decreased export Top five Top ten Top five Top ten proportion of top five and top ten destinations Corn 100% 100% 100% 100% of corn starch is that the largest export Cornstarch 89% 97% 95% 99% destination, Indonesia, decreased its import volume markedly in November 2010 to 9,926 Citric acid 33% 49% 30% 48% tonnes, while it was 20,087 tonnes in October Citrate 38% 59% 41% 64% 2010. Glucose and glucose syrup 61% 77% 54% 77% (Fructose content <20%) 4.2 In November 2010, India, Japan, and Brazil Glucose and syrup 97% 100% 84% 100% decreased their import volume of mannitol from (50%>fructose content ≥20%) China, which amounted to 144 tonnes, 61 tonnes Fructose and fructose syrup 92% 99% 96% 99% (Fructose content >50%) and 19 tonnes, while the import volume in October 2010 was 167 tonnes, 81 tonnes, and 48 Mannitol 72% 87% 81% 93% tonnes respectively. Thus, the export proportion Xylitol 86% 96% 86% 98% of top five and top ten destinations of mannitol Sorbitol 64% 80% 65% 86% in November 2010 declined. Furfural 97% 100% 97% 100% Furfuryl alcohol and 76% 89% 78% 92% tetrahydrofurfuryl alcohol Lysine 76% 90% 91% 100% 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 CustomsCCM International Limited 5 www.cnchemicals.com
  8. 8. Corn Products China News Vol. 4 Issue 1. 2011Price Update Ex-factory prices of corn products in Jan. 2011 Price in January 2011 Price in December 2010 Products (USD/t) (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%) 618 4,100 600 4,000 Crystal Isomaltitol 4,297 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 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 330 320 310 3 00 Unit, USD/t 290 280 27 0 260 250 26- 19- 2 0- 2 0- 21- 2 0- 1 8- 2 0- 2 0- 19- 17- 2 0- Feb Ma r A pr Ma y Ju n Ju l Aug Sep Oct Nov Dec Ja n Cor n 267 27 8 282 290 292 288 297 294 299 314 311 310 Source: CCM International CCM International Limited 6 www.cnchemicals.com
  9. 9. Corn Products China News Vol. 4 Issue 1. 2011 Domestic citric acid price keeps uptrendE ntering the new year 2011, domestic citric acid price witnesses uptrend,majorly aided by the price increase of its FIGURE3: Average price of monohydrate citric acid in China, 2010 ~ Jan. 2011 1 2 00raw material and auxiliary material. In 1 000January 2011, the price of monohydratecitric acid averagely reached USD980/ 800 Unit: USD/tt all over the country, increasing by 2.8% 6 00over that at the end of 2010. (FIGURE3) 4 00Domestic quotation of monohydrate 2 00citric acid in Anhui BBCA BiochemicalCo., Ltd. (Anhui BBCA), Chinas leading 0citric acid enterprise, was USD1,118/ Ja n - Feb- Ma r - A pr - Ma y - Ju n - Ju l- A u g - Sep- Oc t - Nov - Dec - Ja n - 10 10 10 10 10 10 10 10 10 10 10 10 11t on Jan. 13th 2011, and the companyhas stopped its domestic quotation for Source: CCM Internationalanhydrous citric acid. An insider from the FIGURE4: Average price of sulphuric acid in China, 2010 ~ Jan. 2011company disclosed that all the anhydrouscitric acid was for export, thus no product 140can be supplied to domestic market. He 120also expresses that the price increase 1 00was mainly caused by the upgoing raw Unit: USD/tmaterial price. 80 60At the s ame t ime , We i f ang E ns i g n 40Industry Co., Ltd. (Weifang Ensign) 20quoted its anhydrous citric acid and 0monohydrate citric acid at USD1,193/ Ja n - Feb - Ma r - A pr - Ma y - Ju n - Ju l - A u g - Sep- Oc t - Nov - Dec - Ja n - 10 10 10 10 10 10 10 10 10 10 10 10 11t and 1,088/t for domestic market respectively. Besides, another smaller Source: CCM Internationalcitric acid manufacturer, namelyHuangShi XingHua Biochemical Co., FIGURE5: Export price and volume of Chinese citric acid, Jan. ~ Nov. 2010Ltd., made quotations for anhydrous citric acid and monohydrate citric acid at 9 0 ,0 0 0 980 8 0 ,0 0 0 960USD1,186/t and USD1,065/t respectively. 940Sales managers from both these two 7 0 ,0 0 0 920companies also express that the price 6 0 ,0 0 0 Unit: USD/t Unit: tonne 9 00ascending is supported by the high price 5 0 ,0 0 0 880of corn and sulphuric acid. 4 0 ,0 0 0 860 3 0 ,0 0 0 840Its well known that Chinese corn price 2 0 ,0 0 0 820has kept increasing in 2010, which exerts 1 0 ,0 0 0 800cost pressure on corn deep-processing - 7 80manufacturers and drives up price of Ja n - Feb- Ma r - A pr - Ma y - Ju n - Ju l- A u g - Sep- Oct - Nov -most corn deep-processing products. 10 10 10 10 10 10 10 10 10 10 10Although in Jan. 2011 corn price stops Ex por t v olu m e A v er a g e ex por t pr icesurging, it still runs at high level. OnJan. 13th 2011, corn price in Weifang Source: CCM InternationalCity, Shandong Province maintained at inflation. Sulphuric acid price jumped RMB appreciation is one of the factors forUSD309/t. to USD100/t in Jan. 2011, while it was export price increase of citric acid. USD52/t at the corresponding period of As the major auxiliary material of citric last year. (FIGURE4) However, some experts also concerns that acid, sulphuric acids price also has if export volume of citric acid reduces impacted on citric acid price. In 2010, By the way, citric acid also achieved sound in 2011 for some anti-dumping issues, sulphuric acid price has also surged export performance in Nov. 2010, with domestic citric acid price will decrease,significantly, like most commodities both export volume and price increase. as about 73% of Chinese citric acid is forin China, which is caused by domestic (FIGURE5) Some experts considered that exports. CCM International Limited 7 www.cnchemicals.com
  10. 10. Corn Products China News Vol. 4 Issue 1. 2011 Chinas cornstarch price decreasesM arching into 2011, domestic price of cornstarch witnessesdowntrend all over the country. FIGURE6: Cornstarch price in Changchun, Guangzhou and Weifang City, Oct. 2010 ~ Jan. 2011(TABLE5) Take Changchun City, 6 00Weifang City, and Guangzhou City for example, average cornstarch price in 550these three cities reduced to USD453/t, USD471/t and USD491/t in Jan. 5 002011, down 4.4%, 1.6% and 1.9% USD/t 450separately over last month. (FIGURE6)The following reasons can explain the 4 00decrease of cornstarch price. 350Firstly, market demand for cornstarchis decreasing. During October and 3 00 1- 8- 15- 22- 29- 5- 12- 19- 26- 3- 1 0- 17- 24- 31- 7- 14-November 2010, lots of cornstarch Oct Oct Oct Oct Oct Nov Nov Nov Nov Dec Dec Dec Dec Dec Ja n Ja nconsuming companies rushed topurchase cornstarch to increase their Gu a n g zh ou Ch a n g ch u n Weifa n gstoc k in ord e r t o g u arant e e t he irproduction before Chinese Spring Source: CCM InternationalFestival, so the cornstarch price was TABLE5: Cornstarch price in some cities, Dec. 2010 ~ Jan. 2011pushed uptrend at that time. However, Dec. 17th 2010, Jan. 17th 2011 City Province Change rate USD/t USD/tafter that, demand from most of the Shanghai Shanghai 506 498 -1.5%downstream manufacturers reduced. Suzhou Jiangsu 511 485 -5.0%Thus, cornstarch companies have tolower their quotations. Fuzhou Fujian 511 488 -4.4% Nanchang Jiangxi 509 491 -3.6%Secondly, small manufacturers decrease Wuhan Hubei 511 491 -3.8%their prices in order to increase Chengdu Sichuan 511 491 -3.8%their sales volume and reduce their Shenyang Liaoning 461 438 -5.0%stock. Attracted by the comparativelyhigh profit margin since H2 2010 Qinghuangdao Hebei 471 446 -5.4%(an executive officer from COFCO Source: CCM Internationaldisclosed that the profit margin of manufacturers, which also has impact Its believed that cornstarch pricecorn starch in Sept. 2010 reached on the price decrease of cornstarch. will rebound after Chinese SpringUSD15/t. ), many small manufacturers Festival. On one hand, the downstreamrushed into cornstarch production at Someone may think the supply increase manufacturers have to replenishthat time, which increased cornstarch of corn in the market since Oct. 2010 their stock after the festival, and thesupply in China. Besides, many small would be also a factor for cornstarch demand for cornstarch will increase.manufacturers cut their prices, for price decrease, however, it might not On the other hand, owing to the highcurrent low transaction rate and their be the key reason as CCM estimated. price of corn, the small cornstarchhigh stock. Although newly harvested corn has been manufacturers have no much profit marketed, its price still stays at a high against current low price, and some ofThirdly, the product quality of small level, for example, corn price in Weifang them even suffer loss.manufacturers is inferior, thus, their City in Jan. 2011 was USD308/t, the prices are much lower than that of large same as that in Dec. 2010. Future of Modified Starch in Asia Pacific CCM’s Market Reports Export summary data of Citric acid in China in Announcement 2009 For more details, please contact CCM at Production, Market and Manufacturing Cost of econtact@cnchemicals.com Sugar Alcohols in ChinaCCM International Limited 8 www.cnchemicals.com
  11. 11. Corn Products China News Vol. 4 Issue 1. 2011Market & Company Dynamic DDGS from the US faces anti-dumping investigation in China O n Dec. 28th 2010, Ministry of Commerce of the Peoples Republic of China (MCPRC) published a note FIGURE7: Import volume and price of DDGS, 2009-2010 5 00,000 6 00 that China decides to run an anti- 4 5 0,000 550 dumping investigation into Distillers 5 00 dried grains with solubles (DDGS) 4 00,000 450 originated from the US since Dec. 28th 3 5 0,000 2010. Its believed that this move may 4 00 3 00,000 help domestic DDGS industry to some 350 Unit: USD/t Unit: tonne extent. 2 5 0,000 3 00 2 00,000 250 According to the note published by 2 00 1 5 0,000 MCPRC, the investigation period is 150 from July 1st 2009 to June 30th 2010, 1 00,000 1 00 and the industry injury investigation 5 0,000 50 period is from Jan. 1st 2007 to June - - 30th 2010. Normally, the investigation Ja n Feb Ma r A pr Ma y Ju n Ju l Aug Sep Oct Nov Dec may be finished on Dec. 28th 2011. Im por t v olu m e 2 009 Im por t v olu m e 2 01 0 Im por t pr ice 2 009 Im por t pr ice 2 01 0 This investigation can date back to Nov. 16th 2010, when Anhui BBCA Note: The import volume in January, February, March, and April in 2009 was Biochemical Co., Ltd., Jilin Fuel Alcohol 2,872 tonnes, 40 tonnes, 1,061 tonnes, and 758 tonnes respectively. Co., Ltd., Fukang Alcohol Co., Ltd., Jilin Source: China Customs New Tianlong Wine Co., Ltd. and other Besides, with superior quality, DDGS of anti-dumping duty to be imposed. large domestic DDGS manufacturers from the US is more popular in But it is sure that the import volume of submitted the application to MCPRC, domestic market despite its high price. DDGS will reduce if anti-dumping duty 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 Price of imported DDGS in Guangdong is levied," said the insider. investigation into DDGS from the US. Province was USD306/t on Dec. 31st And the ministry has decided to carry 2010, while ex-factory price of the Some experts view that domestic DDGS out the investigation, as DDGS output product in Shandong Province was manufacturers can grab more profit of the applicants accounts for more USD226/t. And an insider from a as the products price will be upraised than 50% of natioanl total. And its DDGS trading company said that the after the anti-dumping duty is levied. believed that the imported DDGS hurts color of domestic DDGS looks not so Its predicted that domestic supply of domestic industry. good as imported one, and its protein DDGS cant satisfy its demand in 2011, content may be insufficient sometimes. and China needs to import the product. Since 2006, the import volume of (Corn Products China News 1012, DDGS has kept increasing significantly, However, given the price differential P3) Thus, aided by the undersupply with 621 tonnes, 2,153 tonnes, 6,741 becomes wider, many feed situation and anti-dumping duty, tonnes, and 652,166 tonnes in 2006, manufacturers may have a stronger market price of DDGS may be pushed 2007, 2008 and 2009 separately. willingness to domestic products. up. However, the undersupply situation Moreover, the number climbed to Thus, if China does levy anti-dumping may make Chinese government not the peak of 2.9 million tonnes during duty on imported DDGS from the US, levy the anti-dumping duty finally, or January and November in 2010. domestic DDGS may get its opportunity the duty may be not so high, as the (FIGURE7) Such a large import volume with much lower price. "Its hard to government must guarantee the healthy has accounted for about 91% in total estimate the impact on the industry for development of feed industry. output of DDGS in China. now, because it depends on the rate CCM International Limited 9 www.cnchemicals.com
  12. 12. Corn Products China News Vol. 4 Issue 1. 2011 Quantum High-Tech succeeds in getting listedD ec. 22nd 2010 is the first day for J i a n g m e n Q u a n t u m H i g h - T e c h Biochemical Engineering Co., Ltd. FIGURE8: Production situation of FOS in Quantum High-Tech, 2007 ~ H1 2010 1 0 ,0 0 0 1 4 0%(Quantum High-Tech) to get listed in 9 ,0 0 0Chinas Growth Enterprises Market 1 2 0% 8 ,0 0 0in Shenzhen Stock Exchange. By this 1 00% 7 ,0 0 0move, the company plans to raise funds Unit: tonne 6 ,0 0 0 80%to expand its fructooligosaccharide 5 ,0 0 0(FOS) and galactooligosaccharide (GOS) 4 ,0 0 0 6 0%businesses. 3 ,0 0 0 4 0%Quantum High-Tech expects to raise 2 ,0 0 0 2 0%USD25 million to expand the capacity of 1 ,0 0 0FOS and GOS by 10,000t/a and 2,000t/ - 0%a respectively. As long as the funds are 2 007 2 008 2 009 H1 2 0 1 0available, their construction will bestarted, and construction period for both Ca pa cit y Ou t pu t Ca pa cit y Ut iliza t ionthese two production lines is 2 years. Note: The FOS capacity in H1 2010 is 5,000 tonnes per half year, then after theEying the strong prospect of FOS and technology upgrading, the capacity of FOS in the whole year of 2010 increased to 11,000GOS industries, coupled with current fullcapacity operation of these two products, tonnes per year.the company expects to grab more market Output in the above mentioned figure is calculated by that of low purity FOS, and the shares and earn fatter profit through this high purity FOS has converted into low purity FOS.expansion. Source: Prospectus of Quantum High-TechAccording to its prospectus, Quantum FIGURE9: Sales volume of FOS in China, 2007 ~ 2014High-Tech has expanded its FOS capacity 1 2 0 ,0 0 0 9 0%for twice since 2007 (FIGURE8), andits capacity utilization can always reach 80% 1 0 0 ,0 0 0around 100%, indicating current capacity 7 0%cant satisfy the market demand. 8 0 ,0 0 0 6 0% Unit: tonne 5 0%Chinese FOS industry will witness rapid 6 0 ,0 0 0growth in next few years thanks to the 4 0%fast development of health-care products 4 0 ,0 0 0 3 0%and infant formula industry. According 2 0%to a report from Beijing Leadership 2 0 ,0 0 0 1 0%Management Consulting Co., Ltd.(Leadership), a strategic management - 0% 2 006 2 007 2 008 2 009 2 01 0 2 01 1 2 01 2 2 01 3 2 01 4consultation company in China, 60% FOS (Est .) (Est .) (Est .) (Est .) (Est .)was predicted to be used in health-care Sa les v olu m e Gr ow t h r a t efood and milk powder, and 30% in infantformula in 2010. Besides, accompany with Note: The markedly lower growth rate in 2009 is caused by the “melamine scandal” inhigher and higher publics living standard 2008.and the tendency of aging population Source: Prospectus of Quantum High-Techin China, more and more prebiotics areneeded. (FOS is a kind of prebiotics.) Its manufacturer in China, enjoys advantages low purity FOS can reach 4,000 tonnes perestimated that the sales volume of FOS in these two products. Its FOS products year, while that of its biggest competitor,in China can reach 100,000 tonnes in purity ranges from 50% to 95% with namely Yunnan Jiansheng Bio-technology 2014 while it was 16,000 tonnes in 2009. powder and liquid status, while few other Co., Ltd., is only 2,500 tonnes per year.(FIGURE9) Thus, Quantum High-Tech companies can produce FOS with thebelieves it can earn more profit through whole purity range. Besides, in 2009, Besides, Quantum High-Tech has a large expanding the capacity. the market share of Quantum High- and stable client to support its good Tech in Chinese FOS reached about 44%. performance, namely Perfect (China) Co.,Quantum High-Tech, the largest FOS Quantum Hign-Techs sales volume of for Ltd. (Perfect China), which focuses on CCM International Limited 10 www.cnchemicals.com
  13. 13. Corn Products China News Vol. 4 Issue 1. 2011health-care food and skin care products. In H1 2010, the turnover from Perfect China accounted for 43% in totalturnover of Quantum High-Tech. And accompany with the increased demand for FOS, the company will keepstriving to find more large clients and manage well itscustomer relationship to grab more market share. Make Fast InformedIt is worth noting that as FOS supply increases, itsprice has started to decline since 2008. In H1 2010, the Business Decisions withaverage price of low purity and high purity FOS was IndustrialUSD1,059/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 Biotechnologies China NewsCorp 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 FOSproduction line with capacity of 10,000t/a at the end of Monthly Newsletter with insightful analysis onJan. 2011, which may become another major competitor for the company in high purity market of FOS. Currently, Bio-FuelChinas high purity FOS is mainly depended on imports. Bio-ProductAs for the product of GOS, it also has good prospect. It Bio-Chemicalis estimated that GOS demand in China will climb to6,000 tonnes ~ 10,000 tonnes in next 2 ~ 3 years, while Bio-Materialcurrent capacity of domestic GOS is smaller than 2,500t/a and sales volume of domestic manufacturers was only1,500 tonnes in 2009, thus, great market potential exists in this field.By the way, Quantum High-Tech will enter health-care For more details, please contact CCM atproducts industry and as reported, the company will try econtact@cnchemicals.comto merge other prebiotics manufacturers to expand its business scale. Meihua Groups dream of listing comes trueO 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 and the rest will be held by Wuzhou Group (2.19%) and the shareholders of public share of Wuzhou Minovo. (8.54%)(Meihua Group) through issuing additional shares of 900 million, Actually, Wuzhou Minovo, a listed company in Shanghai Stock which signifies Meihua Group succeeds in Backdoor listing. Exchange, was engaged in producing electric equipments before merging, and the company performed not well in 2007 and 2008The merger of Wuzhou Minovo and Meihua Group can date back with meager profit. So it expects to increase its profit and develop to Mar. 2009, and it includes two mutually conditional parts: On better by dint of the transition from electric equipments industry one hand, Wuzhou Minovo sells its most assets to Wuzhou Group, to fermentation and amino acid industry which enjoy great the largest shareholder of Wuzhou Minovo before, with value prospect as the company believed.of USD37 million. On the other hand, Wuzhou Minovo merges Meihua Group through issuing 900 million additional shares Monosodium glutamate (MSG) industry, an importantwith value of USD874 million. And after the merger, Wuzhou fermentation industry, is developing well at present. Its averageMinovo will be renamed as Meihua Biotechnology Group Co., Ltd. annual growth rate of output during 2004 to 2008 reached(New Meihua Group) and at the same time, Meihua group will be 13.6%, and its national total output from Q1 and Q3 in 2010revoked its corporate capacity. In addition, the shareholders of reached about 1.8 million tonnes, increasing by 17.7% over theMeihua Group totally own 89.27% shares of New Meihua Group, corresponding period of 2009. In addition, its predicted that the CCM International Limited 11 www.cnchemicals.com
  14. 14. Corn Products China News Vol. 4 Issue 1. 2011 total output of MSG in 2010 may reach 2.1 million tonnes. expects to expand its businesses to a further step through listing. The MSGs turnover of Meihua Group was about Moreover, as the government has restrained development USD574 million and USD598 million in 2008 and 2009 of corn deep-processing industry since 2007, along respectively, and its market share during the same period with the close attention paid by the government to MSG reached 18.1% and 14.6%. (TABLE6) industry for its high pollution, the number of MSG manufacturers reduced from 200 to about 20, which After being listed, Meihua Group plans to expand its relaxes the intense competition situation in this industry. businesses. Right now, the company has an under- Currently, the total output of top 12 manufacturers construction project. The investment of the first stage of accounts for about 89% of the national total. this project (including 30,000t/a capacity of threonine, 30,000t/a capacity of lysine and 160,000t/a capacity of In addition, some leading MSG manufacturers, which glucose) is USD211 million and it is planned to complete in also produce glutamic acid (GA) as well, the raw material April 2011; that in the second stage (40,000t/a threonine, of MSG, reduce their sales volume of GA and use them to 6,000t/a nucleotide, and 160,000t/a glucose) is USD151 produce MSG by themselves in order to upraise their MSG million and it is planned to start in May 2011 and launch market share. This move reduces MSG output of some in May 2012. The company also has interest in inosine, small producers whose GA is sourced from outside. Thus, vernine, tryptophan, and arginine production in the future. the industrial concentration becomes higher and higher. Meihua Group is not just involved in MSG industry, but The high industry concentration contributes to high gross also in other amino acid products, such as threonine, profit margin and market price for the leading companies. corn byproducts (maize embryo), and feed. Besides, the The sales gross profit margin of the top two manufacturers, company also produces upstream industry products, like Fufeng Group Limited and Meihua Group, reached 30% ammonia, and it even generates electricity, which makes and 29% in 2009, while it was 18% and 22% in 2008 it enjoys cost advantage. At present, the company owns respectively. Average MSG price is about USD1,360/t two major production bases, located in Tongliao City and currently, compared with about USD950/t and USD1,564/ Bazhou City respectively, with MSG capacity 350,000t/ t in corresponding period of 2009 and 2010. a, threonine capacity 35,000t/a, feed capacity 300,000t/ a, corn byproducts capacity200,000t/a, and ammonia Meihua Group is a main producer in MSG industry and capacity 80,000t/a. TABLE6: Market situation of top 6 manufacturers in MSG industry in China, 2008 ~ 2009 Turnover, Sales volume, tonne Market share, % NO Company million USD 2008 2009 2008 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 CCM’s Coming Market Survey of High Intensity Sweeteners in Asia Reports Announcement Pacific For more details, please contact CCM at Future of Oligosaccharide Market in China econtact@cnchemicals.comCCM International Limited 12 www.cnchemicals.com
  15. 15. Corn Products China News Vol. 4 Issue 1. 2011 Shanxi Huarong initiates 60,000t/a citric acidO n Dec. 18th 2010, Shanxi Huarong Citric acid Chemicals Co., Ltd. (Shanxi Huarong) held a foundation stone laying PICTURE1: Foundation stone laying ceremony of Shanxi Huarong’s anhydrous citric acid project, 2010ceremony of its 60,000t/a anhydrous citric acid project (PICTURE1), which signifies that the company begins to march into China’s citric acid industry.Located in Dali Science Industrial Parkwith an area of 22 hectares, the anhydrouscitric acid plant mainly producesanhydrous citric acid, compound feedand 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’sestimated that the company can contributeto annual tax payment of USD8.6 million.Its reported that citric acid productiontechnology in this company is quite advanced, which can reduce the cornconsumption, energy consumption and Source: Shanxi Huarongwater consumption by 13%, 35% and 60% manufacturers may witness an opportunity the development of Chinas citric acidseparately per tonne citric acid production, by dint of the demand increase. And industry.indicating that its manufacturing cost can the quality of our anhydrous citric acid be as low as USD226/t. product satisfies BP93/BP98 standard and However, the manufacturers can find the GB/T8269-1998 standard, and I believe ways to cope with the anti-dumping issues, The executive officer also revealed that the product will have a good performance such as expanding the market where no both domestic and international markets by then. said by the executive officer. anti-dumping and anti-subsidy duties are are the targets for the companys citric imposed, entrepot trade, etc. In 2010, theacid products. Although some countries However, Chinas citric acid industry has annual growth rate of Chinas citric acidslevy anti-dumping and anti-subsidy duties situated in overcapacity currently, and export volume reached 9%, while it was 2% on Chinas citric acid, Shanxi Huarong still its not so easy for the new manufacturers and 3% in 2009 and 2008 respectively.has confidence in the international market, to win their own place in this industry.thanks to its huge demand for citric acid. In 2009, the total domestic capacity of The executive officer in Shanxi Huarong Its reported that the global demand for citric acid was about 1,200,000t/a, and didnt disclose the companys measures tocitric acid is about 1.3 million tonnes, and about 73% of Chinese citric acid was cope with others countries anti-dumping its annual growth rate will keep at 5% ~ 7% exported. Whats worse, some countries, issue at present, but he expressed the in next few years. like the US and EU, levy anti-dumping market environment may change after a a n d a n t i - s u b s i d y d u t i e s o n C h i n a s year since the products in this plant is toAs the largest citric acid production citric acid products, which reduces the be marketed a year later, and the companybase in the world, Chinas citric acid profit of manufacturers and restrains will make corresponding tactics by then. CCM International Limited 13 www.cnchemicals.com
  16. 16. Corn Products China News Vol. 4 Issue 1. 2011 Alliance for Chinas amino acid industry established A mino Acids Industry Technology Innovation and Strategic Alliance (the Alliance) was established at PICTURE2: Establishment ceremony of Amino Acids Industry Technology Innovation and Strategic Alliance, 2010 the end of 2010, initiated by China Fermentation Industry Association (CFIA). (PICTURE2) And its believed that the Alliance can bring positive effect on Chinas 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 Source: China Fermentation Industry Association being approved by the Alliance, the situation through establishing the S e c o n d l y , t o c o - s h a r e t h e n e w company can become a member of it. Alliance. The Alliance will be engaged technology and information amongst The executive officer also said that the in the following work to play its role in members in the Alliance, and applicant has to be involved in amino 2011. strengthen cooperation with some acid industry, and foreign company is research institutes, like college and not restrained. Firstly, to promote technical scientific research institution. The cooperation and make breakthrough Alliance shall fund to support the R The Alliance is to facilitate healthy, in core technologies. The Alliance will & D by research institutes or leading fast and strong development for focus on some research of advanced manufacturers, and the new research Chinas amino acid industry. Now manufacturing technology, like clean a c h i e v e m e n t s w i l l b e c o - s h a r e d although there are over hundreds and energy-saving production, bio- amongst members. of large amino acid manufacturers manufacturing, chromatographic in China, whose annual production separation, membrane filtration Thirdly, to establish a training system value totally can reach USD6.76 technologies. It will also define some for members in order to cultivate billion, and their tax payment also standards for this industry and pay talented people in amino acid industry. can reach USD0.75 billion per year, close attention to the industrialization the innovation capability of them is of some new technologies and Fourthly, to build up a pre-warning poor, especially in the aspect of new high value-added products, such mechanism of amino acid industry technologys R&D, energy saving, a s D - a m i n o a c i d , β - a m i n o a c i d , risk and ally members to cope with environmental protection, etc. nonprotein amino acid, small peptide, industry risks. And the Alliance will etc. also enhance communication between Thus, CFIA and relative government members, like high profile visit. departments try to ameliorate this CCM’s Market Reports Production, Market & Benchmarking of Announcement Xanthan Gum in China For more details, please contact CCM at The Survey of Sorbitol in Asia Pacific econtact@cnchemicals.com Production and Market of Xylitol in ChinaCCM International Limited 14 www.cnchemicals.com

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