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Profits of chinese saccharin producers decrease in 2011


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CSA found that profits of domestic saccharin producers decreased obviously in 2011 mainly due to high raw material cost and low selling price.

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Profits of chinese saccharin producers decrease in 2011

  1. 1. Profits of Chinese Saccharin Producers Decrease in 2011Tag: saccharin, sugar, saccharin producer, production, output, export volume, price, sweetener,profit, raw materialSummary: CSA found that profits of domestic saccharin producers decreased obviously in2011 mainly due to high raw material cost and low selling price.From Feb. 27 to March 2, 2012, China Sugar Association (CSA), commissioned by the Ministry ofIndustry and Information Technology, ran a production examination on four state-mandatedsaccharin producers, namely Henan Kaifeng Xinghua Fine Chemical Factory (Henan Kaifeng),Tianjin North Food Co., Ltd. (Tianjin North), Tianjin Changjie Chemicals Co., Ltd. (TianjinChangjie) and Shanghai Fortune Chemical Co., Ltd. (Shanghai Fortune). As disclosed in theexamination, the profits of Chinese saccharin producers decreased obviously in 2011 due to highraw material cost and low selling price, according to CCM’s April issue of Sweeteners ChinaNews.According to CSAs examination, the production plan of saccharin made by Chinese governmentwas 19,000 tonnes in 2011, among which 3,200 tonnes was planned to be sold in China, and theleft was planned to be exported. In fact, according to CSA, the actual output of saccharin was18,204.34 tonnes in 2011, which completed 95.81% of the total production plan. In 2011,domestic sales volume and export volume of saccharin were 2,872.51 tonnes and 14,361.84tonnes respectively, indicating that about 1,000 tonnes of saccharin was stocked. Whats moreimportant, CSA found that the overall profits of saccharin producers decreased obviously in 2011,and some producers even suffered loss or were on the verge of loss.Firstly, high raw material cost exerted pressure on saccharin producers profit obtaining. Phthalicanhydride is a key raw material for saccharin production, and China has mainly imported it tomeet the domestic demand. However, the average import price of phthalic anhydride mainlyshowed a rising trend in 2011 over 2010 (FIGURE1). Referred to China Customs, the averageimport price of phthalic anhydride was about USD1,032/t in 2011, up 23% over 2010, whichincreased the raw material cost of saccharin. According to a salesman of Shanghai Fortune, thecompanys cost rose sharply in 2011, and its average purchasing price of phthalic anhydrideshowed an uptrend from 2011 to now, which climbed from USD1,300/t in 2011 to USD1,800/t inMarch 2012.Unfortunately, the selling price of saccharin even fell in 2011 rather than increase with thesustained growth of phthalic anhydrides. According to CCM Internationals SweetenersDatabase, the average ex-factory price of saccharin was lower in 2011 over 2010 (FIGURE2),which further reduced domestic saccharin producers profits combined with the price increase ofphthalic anhydride during 2011. For example, the average ex-factory price of saccharin in 2011was USD6,006/t, with a year-on-year decrease of 7%, which may be driven by the intense
  2. 2. competition in Chinese sweetener industry and illegal saccharin production. On one side,competition in domestic sweetener industry has become more and more intense owing to theemergence of new players and new capacities of other sweeteners, which continuously took upsaccharins market share, leading to its price drop. On the other side, saccharin has always beenproduced illegally in China in recent years, whose sales also reduced the demand for saccharinproduced by the four manufacturers.In Q1 2012, it is estimated that saccharins profit may also decrease. For example, the averageimport price of phthalic anhydride kept on rising to USD1,632/t, while the average ex-factory priceof saccharin decreased to USD5,262/t in Feb. 2012, indicating profit of saccharin may continue todecrease in Q1 2012. Though Chinese government declared that it will enhance the supervisionof illegal saccharin production in 2012 and rectify the order of domestic saccharin market, theprice increase of raw material, the price decrease of saccharin and the intense competition insweetener industry will remain in the future, so saccharins profit is likely to decrease in 2012.Source: Sweeteners China News 1204 of Sweeteners China News 1204:Ganzhou Julong passes acceptance inspection of medicinal stevia productionChina imports 235,932 tonnes of sucrose in Jan.-Feb. 2012Export value of Chinese stevia sweetener sees decrease in 2011Huaxing invests in xilitol project in HarbinAngel Yeast to construct 3,000t/d beet processing lineSugarcane planting area may reach 67,000 ha. in Hainan ProvinceProfits of Chinese saccharin producers decrease in 2011Chinas aspartame output stabilizes in 2011Inadequate sucrose supply may increase demand for sweeteners in ChinaZhongdu Sugar starts to build a HFCS project with capacity of 1 million t/aOperating profit of Shandong Longlive decreases by 7.12% in 2011Xinjiang Hengfeng may withdraw from XOS marketA stevia sweetener project to settle in Shuangfeng Economic DevelopmentZoneProfit of QHT decreases in 2011……
  3. 3. If you are interested in CCM International’s March issue of Sweeteners China News, please donot hesitate to contact us by +86-20-37616606, or email us at China, April 6, 2012)Sweeteners China News is a monthly newsletter published by CCM International Limited. Basedon China market, CCM offers timely update and close follow up of China’s various kind ofsweeteners market dynamics, analyze the market data and trends, Major columns include marketdynamic, company dynamic, raw material supply, price update, import & export analysis,Consumption Trend & Competitiveness.About CCMCCM is dedicated to market research in China, Asia-Pacific Rim and global market. With a staff ofmore 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 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: