Inferior capacity of citric acid, msg and alcohol to be eliminated by late 2012
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Inferior capacity of citric acid, msg and alcohol to be eliminated by late 2012

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MIIT announces that enterprises with inferior capacity and high pollution and energy consumption in citric acid, MSG and alcohol industries are to be eliminated by late 2012.

MIIT announces that enterprises with inferior capacity and high pollution and energy consumption in citric acid, MSG and alcohol industries are to be eliminated by late 2012.

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Inferior capacity of citric acid, msg and alcohol to be eliminated by late 2012 Document Transcript

  • 1. Inferior capacity of citric acid, MSG and alcohol to be eliminated by late 2012Summary: MIIT announces that enterprises with inferior capacity and high pollution andenergy consumption in citric acid, MSG and alcohol industries are to be eliminated by late2012.Tags: Lysine, corn starch, furfural, starch sugar, vitamin c, corn, fuel ethanol, citric acid,monosodium glutamate, pollutionOn July 9, 2012, the Ministry of Industry and Information Technology (MIIT) announced thatenterprises with inferior capacity and high pollution & energy consumption in some industries,including citric acid, monosodium glutamate (MSG), alcohol, paper-making, iron and steel are tobe eliminated in late 2012, according to CCM International’s August issue of Corn ProductsChina News.Acccording to the announcement, all enterprises listed shall shut down their production lines bythe end of 2012, or they will be punished by Chinese government, showing the governmentsdetermination to regulate domestic highly-polluting and energy-intensive industries. For example,the government will withdraw their pollutant discharge licenses and conduct other detailedpunitive measures (Please refer to Corn Products China News 1107).As for corn deep-processing industry, a total capacity of 70,000t/a citric acid, 143,000t/a MSGand 574,000t/a alcohol, were in the list (TABLE, TABLE and TABLE). Seeing the high pollutionand excessive capacity in these three industries, in 2007, National Development and ReformCommission and State Environmental Protection Administration (currently known as the Ministryof Environmental Protection of China) co-issued Notice on the Elimination of BackwardCapacities in Papermaking, Alcohol, MSG and Citric Acid from National Development andReform Commission and State Environmental Protection Administration (the Notice) to regulatedomestic citric acid, MSG and alcohol industries.Generally, eliminating production lines with high pollution & energy consumption is helpful toimprove the competitiveness of related industries, especially MSG and citric acid, in China, whichis the largest production and export country of MSG and citric acid. Specifically speaking, theelimination will make domestic MSG and citric acid producers raise the quality and yield rates oftheir products, enhancing the competitiveness of their products and themselves.
  • 2. Besides, the elimination can relieve the over-capacity of these products to some extent. Ingeneral, the over-capacity of these products makes their producers get in cut-throat competition,resulting in decrease or low level of their market prices and finally profit decrease or even loss ofproducers. For example, due to the low market price and increasing cost of citric acid, COFCOBio-chemical (Anhui) Co., Ltd., a main citric acid producer with a capacity of 220,000t/a in China,suffered profit decrease in 2011 and H1 2012 according to its 2011 annual report and H1 2012report.Furthermore, the elimination has different effects on different scaled enterprises. Usually, smallproducers have inferior technologies, higher energy consumption & pollution than large-scaleproducers do. As a result, they have to shut down their production lines or even the wholecompany but large-scale ones dont. For example, Henan Lotus Flower Gourmet Powder Co.,Ltd. (Lotus Flower Gourmet Powder), a main MSG producer in China with a capacity of300,000t/a, has to eliminate three production lines of MSG with a total capacity of 113,000t/aaccording to the elimination list (Henan Lotus Flower Gourmet Powder Co., Ltd. and Henan LotusFlower Enzyme Engineering Co., Ltd. are subsidiary companies of Lotus Flower GourmetPowder). But an insider from Lotus Flower Gourmet Powder indicated that its capacity wouldntsharply decrease because they planned to set up new production lines of MSG with advancedfacilities and technologies after the elimination.Chinese government has reinforced the elimination of inferior capacities in recent years, asclearly stated in some policies. For instance, the Notice just indicated that production lines ofcitric acid that didnt meet national pollution discharge standard should be eliminated, but theCatalogue for the Guidance of Industrial Structure Adjustment (2011 edition) published in April2011 added that capacity of citric acid below 20,000t/a shall be eliminated.As a matter of fact, the actually eliminated inferior capacities always exceeded the target. Forexample, the target eliminating inferior capacity of alcohol in 2010 was 300,000t/a according tothe Notice while 688,000t/a capacity was actually eliminated. For another, the total eliminatedcapacity of citric acid, MSG and alcohol in 2011 and 2012 has already exceeded the eliminationtarget in the 12th Five-Year Plan (2011-2015) (the Plan). It is predicted that Chinese governmentwill continue strengthening the elimination of inferior capacities in the rest three years of thePlan.Inferior capacity of citric acid, MSG and alcohol to be eliminated by late 2012On July 9, 2012, the Ministry of Industry and Information Technology (MIIT) announced thatenterprises with inferior capacity and high pollution & energy consumption in some industries,
  • 3. including citric acid, monosodium glutamate (MSG), alcohol, paper-making, iron and steel are tobe eliminated in late 2012.Acccording to the announcement, all enterprises listed shall shut down their production lines bythe end of 2012, or they will be punished by Chinese government, showing the governmentsdetermination to regulate domestic highly-polluting and energy-intensive industries. For example,the government will withdraw their pollutant discharge licenses and conduct other detailedpunitive measures (Please refer to Corn Products China News 1107).As for corn deep-processing industry, a total capacity of 70,000t/a citric acid, 143,000t/a MSGand 574,000t/a alcohol, were in the list (TABLE, TABLE and TABLE). Seeing the high pollutionand excessive capacity in these three industries, in 2007, National Development and ReformCommission and State Environmental Protection Administration (currently known as the Ministryof Environmental Protection of China) co-issued Notice on the Elimination of BackwardCapacities in Papermaking, Alcohol, MSG and Citric Acid from National Development andReform Commission and State Environmental Protection Administration (the Notice) to regulatedomestic citric acid, MSG and alcohol industries.Generally, eliminating production lines with high pollution & energy consumption is helpful toimprove the competitiveness of related industries, especially MSG and citric acid, in China, whichis the largest production and export country of MSG and citric acid. Specifically speaking, theelimination will make domestic MSG and citric acid producers raise the quality and yield rates oftheir products, enhancing the competitiveness of their products and themselves.Besides, the elimination can relieve the over-capacity of these products to some extent. Ingeneral, the over-capacity of these products makes their producers get in cut-throat competition,resulting in decrease or low level of their market prices and finally profit decrease or even loss ofproducers. For example, due to the low market price and increasing cost of citric acid, COFCOBio-chemical (Anhui) Co., Ltd., a main citric acid producer with a capacity of 220,000t/a in China,suffered profit decrease in 2011 and H1 2012 according to its 2011 annual report and H1 2012report.Furthermore, the elimination has different effects on different scaled enterprises. Usually, smallproducers have inferior technologies, higher energy consumption & pollution than large-scaleproducers do. As a result, they have to shut down their production lines or even the wholecompany but large-scale ones dont. For example, Henan Lotus Flower Gourmet Powder Co.,Ltd. (Lotus Flower Gourmet Powder), a main MSG producer in China with a capacity of
  • 4. 300,000t/a, has to eliminate three production lines of MSG with a total capacity of 113,000t/aaccording to the elimination list (Henan Lotus Flower Gourmet Powder Co., Ltd. and Henan LotusFlower Enzyme Engineering Co., Ltd. are subsidiary companies of Lotus Flower GourmetPowder). But an insider from Lotus Flower Gourmet Powder indicated that its capacity wouldntsharply decrease because they planned to set up new production lines of MSG with advancedfacilities and technologies after the elimination.Chinese government has reinforced the elimination of inferior capacities in recent years, asclearly stated in some policies. For instance, the Notice just indicated that production lines ofcitric acid that didnt meet national pollution discharge standard should be eliminated, but theCatalogue for the Guidance of Industrial Structure Adjustment (2011 edition) published in April2011 added that capacity of citric acid below 20,000t/a shall be eliminated.As a matter of fact, the actually eliminated inferior capacities always exceeded the target. Forexample, the target eliminating inferior capacity of alcohol in 2010 was 300,000t/a according tothe Notice while 688,000t/a capacity was actually eliminated. For another, the total eliminatedcapacity of citric acid, MSG and alcohol in 2011 and 2012 has already exceeded the eliminationtarget in the 12th Five-Year Plan (2011-2015) (the Plan). It is predicted that Chinese governmentwill continue strengthening the elimination of inferior capacities in the rest three years of the Plan.Source: Corn Product China News 1208http://www.cnchemicals.com/Newsletter/NewsletterDetail_6.htmlMain content of Corn Product China News 1208:Domestic VC suffers from anti-monopoly sue from the USBrazil reaches price commitment with Chinese citric acid and citrate exportersChinese corn products Imp. & Exp. analysis in June 2012Domestic market price of corn oil keeps stable in Aug. 2012Chinas market prices of four key amino acids increase or keep stable in Aug. 2012Baolingbao enjoys uptrend in its performance in H1 2012Two new subsidiary companies to make Meihua Group more competitiveShengquan Group launches 20,000t/a cellulose ethanol production line in Mid-AugustDomestic corn starch sees depressed presentation in H1 2012
  • 5. Inferior capacity of citric acid, MSG and alcohol to be eliminated by late 2012Chinas import volume of corn surges by about 67 times in H1 2012Domestic market price of DDGS sees uptrend in Aug. 2012……Corn Products China News, a monthly publication issued by CCM International on 20th of everymonth, reveals the driving force of news stories and deeply analyzes the influence of trends anddynamics on domestic and international corn deep processing industry.For more information about Corn Product China News, please contact us atecontact@cnchemicals.com.About CCMCCM is dedicated to market research in China, Asia-Pacific Rim and global market. With a staffof more than 150 dedicated highly-educated professionals. CCM offers Market Data, Analysis,Reports, Newsletters, Buyer-Trader Information, Import/Export Analysis all through its newproprietary product ValoTracer.For more information, please visit http://www.cnchemicals.com.CCM International Ltd.Guangzhou CCM Information Science & Technology Co., Ltd.17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou510070, ChinaTel: 86-20-37616606Email: econtact@cnchemicals.comSource: http://www.cnchemicals.com/PressRoom/PressRoom.html