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Corn Products China News is a monthly publication detalis market information on corn precessing industry like corn, corn sweeteners, corn starch, biofuel, xanthan gum, lactic acid, citric acid etc. For more info, please contact Joy at emarket2@cnchemicals.com
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Corn Products China News
GUARANTEED EXCLUSIVE ANALYSIS
Vol. 2 Issue 04 , 2009
Copyright © CCM International Limited
Corn Products China News
Vol. 2 Issue 4, April 20, 2009
Corn Products China News 0904
Contact us for details of the
researches in year 2009 from
CCM.
- Sucralose;
- Aspartame;
Export analysis of products
related to food ingredients from
CCM:
- The Future of Enzyme in China;
- The Survey of I+G Markets in
China;
- Production and Market of MSG in
China;
- The Future of Starch in China;
- The Future of Polyols in Asia
Pacific Rim;
- The Survey of Maltitol in Asia
Pacific;
- Production and Market of Xylitol in
China;
- The Survey of Sorbitol in Asia
Pacific;
Coming reports related to food
ingredients from CCM:
-Glucose Production & Market in
China.
-Production & Market of Cornstarch
in China;
-The Survey of Saccharin in China;
-The Future of High Intensity
Sweeteners in China;
-The Future of White Biotechnology
in China;
Major reports related to food
ingredients from CCM: Supply and Demand ....................................................................... 1
Overview of China’s mannitol production ......................................................1
China’s corn-based ethanol output to decrease in 2009.............................2
Vitamin C export maintains growth in early 2009..........................................5
China’s crystalline fructose developing slowly.............................................7
Price Update ..................................................................................... 8
FOB corn price changes in Dalian Port from May 2008 to April 2009......8
Ex-factory prices of corn products in April 2009 ..........................................9
Lysine price rose slightly in late March ...........................................................9
Domestic citric acid price rises slightly ........................................................ 11
Market & Company Dynamic...................................................... 13
Anhui BBCA’s strategy in 2009 ........................................................................13
Dacheng Group expanding industrial ethanol capacity ............................14
Shandong Fufeng shifts to high-end MSG....................................................15
CPCC to build 100,000t/a fuel ethanol plant in Jiangxi..............................16
Henan Piaoan to build 10,000t/a pharmaceutical PLA plant ....................18
Tianjin Green integrates PHA production and research ...........................19
Heilongjiang Longfeng suspends construction of production lines .....19
Competitiveness............................................................................ 20
DDGS price pushed up by soybean meal price...........................................20
Corn supply .................................................................................... 22
Corn price maintains uptrend in late Mar......................................................22
Corn Products Use Monitoring.................................................. 23
Overview of China’s D-sodium erythorbate production............................23
News in Brief .................................................................................. 25
Changchun to build 50,000t/a xylitol plant ...................................................25
BBCA may use corn cob to produce citric acid ..........................................25
DSM to build its fourth premix plant in China..............................................25
Zhengzhou Tuoyang building 80,000t/a crystalline fructose plant.........26
Bayer cooperated with Sichuan University ..................................................26
CCM Newsletter Corn Products China News
Headlines of Corn Products China News 0904
China’s mannitol capacity has experienced
remarkable uptrend these years.
China’s corn-based ethanol output is likely to drop
17% this year.
Both of China’s vitamin C export volume and price
had increased in the first two months.
China’s crystalline fructose production technology
has been developed slowly these years.
Domestic lysine price rose slightly in late March,
indicating a bleak prospect.
Domestic citric acid price has been slightly rising
since middle February 2009.
Anhui BBCA will upgrade production technology and
build its own logistic company to lower production
and logistics cost in 2009.
Dacheng Group is expanding industrial ethanol
capacity.
Shandong Fufeng launched new brand MSG to
replace previous brands, targeting high-end market.
CPCC is to build a 100,000t/a cassava-based fuel
ethanol plant in Jiangxi province.
A 10,000t/a pharmaceutical corn-based PLA plant
being built by Henan Piaoan will be launched in H1
of 2011.
Tianjin Green is building a 10,000t/a PHA production
line.
Heilongjiang Longfeng suspended the construction
of its starch sugar and malt dextrin lines, due to
demand decrease and corn price rise.
Domestic DDGS price has risen since middle March.
Domestic corn price rose continuously in late March.
A balance between supply and demand has
appeared in D-sodium erythorbate in China these
years.
Welcome to the April issue of Corn Products China News,
specially published by CCM International.
Under the current state of the world’s economy, Chinese government
has taken action to stimulate domestic demand. Statistics from National
Bureau of Statistics of China shows national GDP in Q1 2009 has
reached USD962.6 billion, up 6.1% year on year, while the CPI has
decreased 0.6%, and the industrial products ex-factory price down
4.6%.
Attributed to the governmental purchase policy, domestic corn price has
remarkably risen. Domestic corn processors had to raise the corn
purchase price to ensure corn supply.
Driven by the growing corn price, the prices of cornstarch, starch sugar,
vitamin C, citric acid, lysine price, etc. have risen to some extent in Q1
2009.
Nevertheless, due to the global sluggish demand, most corn products
exports have decreased since Q4 2008, driving most enterprises to shift
to domestic market.
Enterprises like Anhui-based BBCA Group have to lower production cost
and improve products quality by updating production process, but some
like Heilongjiang Longfeng have suspended the construction of new
plants or production lines.
Changchun-based Dacheng Group and Henan Piaoan Group are
exceptional, even further expanding their capacity of certain corn
products.
Main companies mentioned in this issue
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Supply and Demand
Overview of China’s mannitol production
As one of the largest mannitol
producers in the world now, China holds
around 1/4 of world’s mannitol capacity.
Its mannitol capacity totaled 22,000t/a in
2008, estimated to reach 26,000 t/a in
2009.
Domestic mannitol capacity increased
from 8,000t/a in 2000 to nearly
22,000t/a in 2008, up 175% within eight
years.
There are only four mannitol producers
in China (FIGURE 1), including Hebei
Huaxu Pharmaceutical Co., Ltd. (Huaxu
Pharmaceutical, Hebei), Qingdao Bright
Moon Seaweed Group Co., Ltd.
(Qingdao Seaweed, Shandong),
Yucheng Lujian Biological Technology
Co., Ltd. (Yucheng Lujian, Shandong)
and Nanning Chemical &
Pharmaceutical Co., Ltd. (Nanning
Pharmaceutical, Guangxi).
FIGURE 1: China’s four mannitol producers and their current capacity
10,000
6,000
1,200
3,000
0
2,000
4,000
6,000
8,000
10,000
12,000
Hebei Huaxu QingdaoSeaw eed
Yucheng Lujian NanningPharmaceutical
(Uni
t: to
nne)
Source: CCM International
Except Yucheng Lujian, which only
have produced mannitol since 2007, the
other three have been engaged in
mannitol production for more than 8
years
Nanning Pharmaceutical, a state owned
enterprise before, is China’s first
company that adopts the synthetic
technology based on glucose to
produce mannitol, which was developed
by Nanning Chemical Industry
Research & Design institute jointly with
Jiangnan University. The company built
a 1,200t/a mannitol production line in
2000.
Before 2000, the output was relatively
low, as domestic producers mainly
extracted mannitol from seaweed, and
with high production cost, low
production efficiency and high pollution
(Corn Products China News 0811, page
14). Qingdao Seaweed was the largest
one at that time with a capacity of
10,000t/a. Since 2000, more producers
have started to adopt the newly
developed synthetic technology, largely
raising the output.
As domestic output and global demand
increases, the export volume has been
increasing these years (FIGURE 2). In
2008, China exported approximately
4,500 tonnes of mannitol, 23% of the
total output.
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FIGURE 2: China’s mannitol export and export price, 2004 ~2008
0
1,000
2,000
3,000
4,000
5,000
2004 2005 2006 2007 2008
(Uni
t: to
nne)
0
500
1,000
1,500
2,000
2,500
3,000
(Uni
t: U
SD
/t)
Export volume Export price
Source: China Customs
China consumes around 10,000 tonnes
of mannitol every year at present,
according to Mr. Li, the director of China
Starch Industry Association. In particular,
90% is applied in pharmaceuticals, as
the raw material to produce mannitol
injection.
Though mannitol has already been
applied in functional food as sweetener,
like diabetic food and hypertensive food,
its consumption in food industry
significantly falls behind sorbitol in
China, attributed to high price which hit
around USD2,400/t, almost twice higher
than crystalline sorbitol price.
According to Mr. Li, the current
production technology adopted in the
first three enterprises has been updated
to the fourth generation, while Nanning
Pharmaceutical is still adopting the first
generation now.
As current mannitol supply nearly
equals the demand, it will be unwise for
new entrants to participate in the
mannitol production.
Nanning Pharmaceutical is exceptional.
It expands its mannitol capacity from
1,200t/a to 5,000t/a by building a new
line to be launched in August 2009,
according to Mr. Tan, a staff from the
company. The production technology
adopted will be supplied by
ROQUETTE.
In April 2008, ROQUETTE (China) Co.,
Ltd. (headquartered in Lianyungang city,
Jiangsu province) bought 60% stake of
Nanning Pharmaceutical. ROQUETTE
plans to expand the mannitol capacity in
Nanning Pharmaceutical to 5,000t/a,
and build a 3,000t/a crystalline sorbitol
production line.
According to Mr. Ge, the marketing
executive of Nanning Pharmaceutical,
Nanning city is now the third sales
center for ROQUETTE in China after
Shanghai and Beijing. Some of
products have been transferred from
Lianyungang to Nanning. Before the
acquisition, ROQUETTE (China) can
only supply food grade sorbitol, but it
will have pharmaceutical grade sorbitol
and mannitol after the lines launched.
China’s corn-based ethanol output to decrease in 2009
After a near zero-growth in 2008, the
output of corn-based ethanol is
anticipated to decrease in 2009,
impacted by the restrictions of national
policies, the competition from
competing products, and the slack
demand downstream.
The soaring output of corn-based
ethanol has hastened the increase of
total ethanol capacity in China before
2008, driven by the promotion of
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fuel-ethanol and rapid development of
white wine industry. However, the
output of corn-based ethanol
experienced downturn in 2008, which
will be likely to continue this year
(FIGURE 3).
FIGURE 3: China’s ethanol and corn-based ethanol output from 2004 to 2009 (Unit: ‘000 tonnes)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2004 2005 2006 2007 2008 2009
(Uni
t: '0
00 to
nnes
)
-40%
-20%
0%
20%
40%
60%
80%
100%
Ethanol Corn-based ethanol Grow th rate
Note: 1) The 2009 figures are forecasted by CCM International.
2) Growth rate curve only shows the change of corn-based ethanol capacity.
Source: China Alcoholic Drinks Industry Association
With the increasing output of corn,
China’s corn-based ethanol output
reached around 5,100,000 tonnes in
2008, a record high. Meanwhile, the
total ethanol output also reached the
highest 7,270,000 tonnes with total
capacity of 11,500,000 tonnes, notably
exceeding its demand (estimated at
around 6,500,000 tonnes).
Besides, the abolishment of rebate tax
on ethanol by the Chinese Ministry of
Finance on September 15th 2006
resulted in decrease in export in past
two years (See FIGURE 4), estimated
to push down ethanol (particularly
corn-based ethanol) output this year.
FIGURE 4: Export volume of China’s ethanol from 2003 to 2009
73,335
776,588
88,552 80,063127,009
220,867
61,175
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
2003 2004 2005 2006 2007 2008 2009
(Uni
t: to
nne)
Note: The figures of 2009 are forecasted by CCM International.
Source: China Customs
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To balance the supply and demand,
lower pollution discharge, save energy,
and stabilize the corn price, Chinese
government has enacted a series of
policies to restrict the production of
corn-based ethanol in recent years.
New fuel ethanol production lines based
on grain including corn has been
banned since the end of 2006, and
Chinese National Development and
Reform Commission (NDRC) issued a
policy to eliminate a targeted
1,600,000t/a backward ethanol capacity
by 2010 (Re. Corn Products China
News 0810, page 2.).
In addition, three corn purchase
program had been embarked on in
Northeast China and Inner Mongolia to
stabilize the corn price in 2008 (Re.
Corn Products China News 0812, page
17.), which raises the production cost
for corn-based ethanol. Therefore,
some producers had to turn to other
feedstock like cassava, bagasse, sorgo,
etc.
Under anticipated downtrend in ethanol
output, the corn-based ethanol output
will fall this year, since the output of
cassava-based ethanol and
bagasse-based will gradually increase,
for growing yield and lower cost of
cassava and bagasse (FIGURE 5).
FIGURE 5: Edible ethanol output by different feedstock, 2007 ~2009
3,4603,7063,692
1,3081,590
1,250
550436258
0
1,000
2,000
3,000
4,000
2007 2008 2009
(Uni
t: '0
00 to
nnes
)
Corn-based Cassava-based bagasse-based
Note: The figures of 2009 are forecasted by CCM International.
Source: Nanning Bulk Commodities Exchange
Current global financial crisis results in
gloomy demand for corn-based ethanol
in its downstream, especially in
chemical industry, and the impact is
likely to further be deepened. For
instance, Jiangsu province, a big
ethanol consumer in chemical industry,
consumed only 560,000 tonnes ethanol
in 2008, down 40% over the previous
year.
The statistics of National Bureau of
Statistics of China shows that China had
produced only 950,000 tonnes ethanol
in domestic key producers in first two
months of this year, down 3.09% over
the same period last year, implying a
possible drop in corn-based ethanol
output throughout 2009.
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Vitamin C export maintains growth in early 2009
In the first two months of 2009, both of China’s vitamin C export volume and price have increased (FIGURE 6).
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FIGURE 6: China’s vitamin C export volume and price change, Aug. 2008~Feb. 2009
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09
(Uni
t: to
nne)
8,000
8,500
9,000
9,500
10,000
10,500
11,000
(Uni
t: U
SD
/t)
Export volume Export price
Source: China Customs
In February 2009, China exported more
than 7,400 tonnes vitamin C, up 45%
over November 2008, the largest
monthly export volume since November
last year. Insiders predicted the vitamin
C export volume in the following months
will recover to the level in July or August
2008.
Besides, export price has kept rising
since last November. The vitamin C
export price in February 2009 was
USD10,409/t, 16% higher than the price
last November. The current price was
only USD57/t lower than the peak
export price in 2008.
This rising export volume was mainly
attributed to the rigid demand worldwide,
while the price growth was a result of
Chinese government’s policy to restrict
output.
On one hand, the global demand for
vitamin C has been less than the
prevalent financial crisis, as vitamin C is
mainly used in pharmaceutical and food
industry (FIGURE 7), the basic
necessity for people’s living.
FIGURE 7: Vitamin C consumption structure in the world (left) and China (right) in 2008
Source: K8008.com
Pharmaceuticalindustry, 90%
Food additive andothers, 10%
Food additive, 35% Pharmaceuticalindustry, 55%
Feedstuff,Cosmetics etc.
10%
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The world’s growing demand for vitamin
C with an AGR of about 3% (FIGURE 8)
has continued to maintain its influence
on China’s vitamin C export. As the
world’s largest vitamin C producer and
exporter, China has played a key role in
determining the vitamin price around
the world. China now has nearly 70% of
the world’s total capacity and exports
around 80% of its output. In 2008,
China exported 85,227 tonnes of
vitamin C (Corn Products China News
0903, page 3).
FIGURE 8: World’s demand for vitamin C, 2004 to 2010 est.
100
110
120
130
140
2004 2005 2006 2007 2008 2009est 2010est
(Uni
t: '0
00 to
nnes
)
Source: Frost & Sullivan
On the other hand, Chinese
government has been restricting
domestic vitamin C capacity and
curbing price fall since late 2008. Export
License Control System concerning
vitamin C has been released to restrict
domestic vitamin C expansion.
According to this system, domestic
vitamin C producers with output less
than 10,000t/a will not be allowed to
export. Then, the competition among
domestic vitamin C producers will be
relaxed to some extent, with export
price staying at relatively high. In the
past few years, domestic vitamin C
export price has been suppressed to a
low level due to the intense inner
competition (FIGURE 9).
FIGURE 9: China’s vitamin C export volume and price change, 2004~2008
0
20,000
40,000
60,000
80,000
100,000
2004 2005 2006 2007 2008
(Uni
t: to
nne)
0
2,000
4,000
6,000
8,000
10,000
(Uni
t: U
SD
/t)
Export volume Export price
Source: China Customs
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Additionally, the rising raw material cost
and environmental protection cost has
also pushed up the price to some
extent.
Attributed to the rising vitamin C export
volume and price, domestic producers’
profit will increase in the Q1 2009. Take
Northeast Pharmaceutical Group Co.,
Ltd. for example, the net profit in Q1
was predicted to be USD17.6 million, up
around 320% over the same period last
year.
As predicted, vitamin C export volume
will further increase in the future months,
coupled with the export price rise.
Actually, the average vitamin C export
price in 2009 has been expected to be
no less than USD10,000/t.
China’s crystalline fructose developing slowly
Though China now becomes one of the
few countries that can produce
crystalline fructose, its technology has
developed slowly these years, with a
certain amount of crystalline fructose
has to be imported from other countries
like USA (ADM) and Denmark
(Dannisco) every year.
And the demand in pharmaceutical
industry will increase faster than food
industry in the future.
There are only two enterprises,
Shandong Xiwang Sugar Industry Co.,
Ltd. (Xiwang Sugar, located in Binzhou
city) and Hebei Huaxu Pharmaceutical
Co., Ltd. (Hebei Huaxu, located in
Shijiazhuang city) that can successfully
carry out crystalline fructose industrial
production with total capacity around
60,000t/a.
Xiwang Sugar is China’s first company
that carries out the industrial production
of crystalline fructose. At present,
Xiwang Sugar is also the largest
crystalline fructose producer in China
with a capacity of 50,000t/a, whose
product is mainly used in food industry.
Hebei Huaxu is another crystalline
fructose producer with a capacity of
5,000t/a at present, whose product is
mainly used in pharmaceutical industry
as the raw material to produce fructose
injection.
Guangdong Baofuli Rime Fructose Co.,
Ltd. (located in Zhanjiang, Guangdong)
has developed its food grade crystalline
fructose production technology and built
a production line with a capacity of
1,000t/a in 2007. However, it can not
produce normal crystalline fructose in
this line until now, although it has
succeeded in laboratry research before.
Besides these companies, Anhui BBCA
Group Co., Ltd. has succeeded in
developing the production technology of
crystalline fructose for injection in March
2009, despite industrial production
uncompleted yet. Additionally,
Southwest University (located in
Chongqing city) has also developed its
crystalline fructose production
technology, although which has not
been applied in industrial production.
There are many reasons for the lowly
developed fructose production
technology.
The high requirements of the crystalline
production technology have restricted
China’s development of crystalline
fructose. As the isomer of glucose,
fructose needs proper molecular-sieves
to get rid of glucose. High fructose
syrup is usually the raw material to
produce crystalline fructose. Additionally,
the requirements for actual production
process will be stricter than the lab trial.
The high price of crystalline fructose
has restricted its application. As
estimated, the production cost is around
USD1,000/t, almost twice of that of F55
(around USD482/t). And many food
enterprises would choose F55 rather
than crystalline fructose to produce
common products.
Imported crystalline fructose has
exerted pressure to domestic product.
The import of crystalline fructose has
been increasing these years (FIGURE
10). The imported product has some
advantages like better appearance and
stability, which has relatively higher
competitiveness than the domestic.
Coupled with the traditional
consumption conception, people would
prefer the imported, although its price
may be a little higher than the domestic.
Pharmaceutical application of
crystalline fructose may be largely
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improved in the future. Replacing the
glucose injection, the fructose injection
can be applied to the treatment of
diabetics and those people with hepatic
disease. As the number of these people
increases, the demand for fructose
injection will increase in the future.
Meanwhile, it will take a long time for it
to be widely used in food industry.
And in this situation, Xiwang Sugar has
been adjusting product structure. In
2009, Xiwang Sugar will transform its
crystalline fructose workshops
according to China’s GMP standard to
produce pharmaceutical grade products
for expansion.
FIGURE 10: Changes of China’s crystalline fructose import from 2005 to 2008
0
1,000
2,000
3,000
4,000
5,000
2005 2006 2007 2008
(Uni
t: to
nne)
0
200
400
600
800
1,000
1,200
(Uni
t: U
SD
/t)
Import volume Import price
Source: China Customs
Price Update
FOB corn price change in Dalian Port from May 2008 to April 2009
210
220
230
240
250
260
270
(Uni
t: U
SD
/t)
Corn price 239 245 252 248 249 241 230 215 216 222 240 239
30-May 26-Jun 28-Jul 27-Aug 27-Sep 28-Oct 26-Nov 26-Dec 20-Jan 19-Feb 18-Mar 13-Apr
Source: CCM International
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Ex-factory prices of corn products in April 2009
Price in April 2009 Price in March 2009 Products
(USD/t) (RMB/t) (USD/t) (RMB/t)
Corn starch (North China) 286 1,950 278 1,900
Corn starch (South China) 346 2,360 336 2,300
Ethanol (Industrial grade) 615 4,200 585 4,000
Ethanol (Food grade) 630 4,300 643 4,400
80% Maltose syrup 296 2,020 292 2,000
70% Sorbitol 512 3,500 570 3,900
Monohydrate citric acid 857 5,850 848 5,800
Oxidized starch 586 4,000 556 3,800
68% Xylitol (Liquid) 761 5,200 702 4,800
HFCS (Fructose: 42%) 337 2,300 351 2,400
HFCS (Fructose: 55%) 461 3,150 512 3,500
Crystal Isomaltitol 3,221 22,000 3,070 21,000
Malt dextrin 395 2,700 387 2,650
75% Maltitol (Liquid ) 666 4,550 658 4,500
Anhydrous glucose (Food grade) 600 4,100 629 4,300
Glucose Monohydrate 395 2,700 387 2,650
Itaconic acid 1,757 12,000 1,681 11,500
98.5% lysine 1,611 11,000 1,550 10,600
Source: CCM International
Lysine price rose slightly in late March
Because of the increasing production
cost, domestic lysine price rose slightly
in late March 2009, indicating a bleak
prospect.
This rise of lysine price started from 29th
March 2009. On 5th April 2009,
domestic average lysine (98.5% content)
ex-factory price was USD1,608/t, which
rose nearly 5% over the price on 24th
March (around USD1,535/t). Meanwhile,
lysine with 65% content also rose
around 8% (FIGURE 11).
The ex-factory price of lysine with
98.5% content quoted by Changchun
Dacheng Group Co., Ltd has been
raised to USD1,652/t on 27th March,
and that of 65% content has been
raised to USD906/t.
Lysine producers had to raise the price
under the pressure of increasing raw
material cost. Take Jilin province for
example, the cornstarch price has
raised nearly USD25/t on average
attributed to the rising corn price, which
has largely increased lysine production
cost. Lysine producers had to raise the
price, although the demand has not
remarkably increased since late 2008.
The lysine stock volume has decreased
to some extent recently. Since the
Chinese Festival, the operating rate of
lysine production has maintained low
due to the poor demand in feed industry,
and after 3 months’ consumption, the
stock volume has decreased gradually.
Insiders revealed some lysine
producers have raised the export price
as the export volume has increased
slowly, which may influence the
domestic price.
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FIGURE 11: Domestic lysine price change from late Mar. to middle Apr. 2009
600
800
1,000
1,200
1,400
1,600
1,800
23-Mar 26-Mar 29-Mar 1-Apr 4-Apr 7-Apr 10-Apr 13-Apr 16-Apr
(Uni
t: U
SD
/t)
98.5% Lysine 65% Lysine
Source: CCM International
However, lysine price has not been
expected to increase remarkably in the
near future due to the poor demand,
which will mainly depend on the
recovery of domestic feed industry and
export volume in the future.
The slowly recovered feed industry will
not push up the lysine price remarkably.
Hit by the increasing number of
unemployment and the clenbuterol
incident, the demand for poultry
products has decreased which pulled
the demand for feedstuff down. Take
pork for example, pork price has still
been hovering under USD4.4/kg since
the second half of 2008 (FIGURE 12).
FIGURE 12: Pork price change from early Feb. to middle Apr. 2009 in Beijing and Qingdao city
3.00
3.20
3.40
3.60
3.80
4.00
4.20
4.40
6-Feb 16-Feb 26-Feb 8-Mar 18-Mar 28-Mar 7-Apr 17-Apr
(Uni
t: U
SD
/kg)
Beijing Qingdao
Source: CCM International
The export volume plays a key role in
influencing China’s lysine price, as
China is now the largest lysine producer
and exporter in the world, highly
depending on export.
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Domestic lysine export has also
dropped since last November (FIGURE
13), hit by the global financial crisis. In
the first two months of 2009, China
exported 532 tonnes of lysine, lower
than that in November 2008.
Figure 13: Lysine export from October 2008 to February 2009
0
100
200
300
400
500
600
700
800
Oct-08 Nov-08 Dec-08 Jan-09 Feb-09
(Uni
t: to
nne)
0
500
1,000
1,500
2,000
2,500
(Uni
t: U
SD
/t)
Export volume Export price
Source: China Customs
Domestic citric acid price rises slightly
Citric acid price has been rising slightly
since middle Feb. 2009, driven by price
rise of raw material and the coming sale
rush season of citric acid. And the citric
acid price will go on rising in May 2009.
In middle April, domestic ex-factory
price and export price of monohydrate
citric acid reach USD857/t and
USD893/t, up 1% and 1.7% over March
2009 (FIGURE 14,15). Citric acid price
quoted by Anhui BBCA Biochemical Co.,
Ltd were USD907/t and 922USD/t
respectively in middle march and April.
FIGURE 14: Domestic ex-factory price of monohydrate citric acid from Aug. 2008 to Apr. 2009
0
400
800
1,200
1,600
Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09
(Uni
t: U
SD/t)
Source: CCM International
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FIGURE 15: Export price of monohydrate citric acid from Aug. 2008 to Apr. 2009
0
400
800
1,200
1,600
Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09
(Uni
t: U
SD/t)
Source: China Customs
The citric acid price had once dropped
since last October, affected by global
financial crisis, but its price has
rebounded since early March.
This rise of citric acid price is mainly
attributed to the following reasons.
Firstly, corn price has been relatively
high recently. The current price of corn
stays at around USD230/t, higher than
the first three months in 2009 (about
USD220/t on average).
Secondly, the price of sulphuric acid, a
acidulant for citric acid production, has
been gradually rising since early April
2009, as sulphuric acid enters rush
season, pushing up the raw material
cost for citric acid. Sulphuric acid price
was about USD30/t in early March 2009,
while that of vitriol hit USD40/t on April
15, 2009, up 33%.
Thirdly, citric acid consumption by
beverage industry is growing as the
summer approaches. The rush season
of citric acid is generally from May to
October, because downstream demand
will largely increase for hot weather in
this period. As one kind of food additive,
citric acid is widely used in beverage
industry.
Fourthly, Ministry of Commerce
Administration has executed Export
License Administration on domestic
citric acid exporters since 2009, aiming
to avoid pernicious price competition.
Statistics form China customs revealed
China exported 589,506 tonnes citric
acid in 2008 (FIGURE 16), accounting
for nearly 80% of the total. However, as
domestic large citric acid producers
received the anti-dumping sanction from
EU in September 2008, China
government has taken more measures
to standardize the export price.
According to Mr. Zhou, an export
manager of Yixing Union Biochemical
Co., Ltd. (one of the largest citric acid
producers in China), citric acid price will
continuously rise in the coming months,
for growing demand driven by corn price
rise and approaching summer
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FIGURE 16: Export volume of citric acid in 2008
0
20,000
40,000
60,000
80,000
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
(Uni
t: to
nne)
Source: China Customs
Market & Company Dynamic
Anhui BBCA’s strategy in 2009
Anhui BBCA Biochemical Co., Ltd.
(Anhui BBCA, China’s leading
biochemical enterprise) plans to update
production technology and build a
logistic company in 2009 to reduce
production and logistics cost and resist
the global financial crisis.
The sectors involved include citric acid,
lysine, fuel ethanol, epoxy ethane and
thermoelectricity generation etc, with
investment totaling USD29 million. The
technology update will not only reduce
production cost but also improve the
product quality.
As estimated, after this technology
update, the cost to produce 1 tonne
lysine will be reduced by 16.7%, and the
coal saved in fuel ethanol production
will be 15,000 tonnes annually.
Besides, the utilization rate of corn will
reach as high as 97%. Corn has been
always the main raw material for Anhui
BBCA to produce fuel ethanol, citric acid,
lysine, and other products.
And another USD1.5 million has been
invested to reduce logistics cost. Anhui
BBCA is going to build a logistic
company (Bengbu COFCO Biochemical
Cargo Express Co., Ltd.) in Bengbu,
Anhui.
As the export by Anhui BBCA has
reached approximately 100,000t/a
these years, the establishment of this
company will significantly lower its
logistics cost.
At present, the new company has been
legally registered and the construction
will start soon, to be launched this year.
Another reason for the company to build
this logistic company is its always high
logistics cost. It is estimated that 70%
of its corn is transported from
northeastern China, while only 30% is
purchased locally.
Actually, to cut the production cost,
Anhui BBCA is planning to use corn
cobs to place corn in citric acid
production. A related technology aiming
to lower production cost has been
developed by Anhui BBCA
Fermentation Engineering Research
Co., Ltd. (BBCA Fermentation), a
subsidiary of Anhui BBCA Group.
The currently adopted technology (with
corn as raw material) was developed by
BBCA Fermentation as well.
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The company will not construct new
production lines or plants this year. The
main goal set in 2009 is to improve
product quality and reduce production
cost, according to Mr. Yu, a staff of
Anhui BBCA.
As for marketing plan in 2009, Anhui
BBCA will shift more focus to domestic
market. Hit by economic recession and
the anti-dumping sanction launched by
EU and USA, the company’s export of
citric acid and lysine has remarkably
dropped. To offset the declining export,
the company will focus on domestic
market in 2009.
Mr. Yu reveals Anhui BBCA will further
improve its citric acid quality and
strengthen its competitiveness at home.
The sales of lysine will mainly depend
on the recovery of domestic feeding
industry.
On the other hand, to curb the fall in
citric acid export, the company has
decided to raise export price to avoid
anti-dumping sanction, although which
may influence the market share.
Anhui BBCA’s annual report 2008
revealed its business income in 2008
was USD702 million, up 14.93% over
2007, and net profit was USD7.9 million,
up 110.7%. Particularly, all the net profit
was achieved from the first three
quarters of 2008.
In the first three quarters of 2008, the
total net profit totaled USD14.6 million,
while it lost USD6.7million in the fourth
quarter, due to the declining export of
citric acid, lysine and the decreased fuel
ethanol subsidy from government.
As reported, Anhui BBCA has been
applying for COFCO’s guarantee for
loan of USD117 million to increase its
circulating capital, while who will be the
lender remains unrevealed at present.
Dacheng Group expanding industrial ethanol capacity
Changchun-based Dacheng Industrial
Group Co., Ltd. (Dacheng Group) is
building a 1,000,000t/a corn-based
industrial ethanol production line in
Changchun city, Jilin province, which
will be launched by the end of 2009.
Meanwhile, it is planning to build
another 1,000,000t/a corn-based
industrial ethanol plant in Zhengzhou,
Henan.
The first phase of its Changchun-based
plant with a capacity of 400,000t/a was
launched in October 2008, which is also
the world’s largest corn-based industrial
ethanol production line. Constructed
from November 2008, the second
phase of 600,000t/a will be launched in
late 2009.
The company’s industrial ethanol mainly
includes glycol, propanediol, butanediol
and sorbitol etc., which are widely applied
in chemical industry to produce
unsaturated resins, polyesters,
engineering plastics, etc.
According to Mr. Qi, the technology
manager of the plant, Dacheng Group has
updated the production process to further
lower production cost. Accordingly, the
corn consumed has been reduced by 15%.
Besides, the company has been trying to
use other raw materials such as corn
straws to replace corn in producing
industrial ethanol.
To further expand its corn-based industrial
ethanol capacity, Dacheng Group has
been planning to build another plant with a
capacity of 1,000,000t/a in Zhengzhou city,
Henan province, cooperating with
Changchun Hongxiang New Energy Co.,
Ltd. At present, some infrastructure
construction of the new plant has been
completed and is being assessed by the
Environmental Protection Bureau of
Henan province.
The new plant will adopt the relatively
mature production technology of Dacheng
Group. Some of the raw material will be
supplied by Changchun (Dacheng Group),
while some will be purchased from local
enterprises. The products will be marketed
by Dacheng Group.
Changchun city is China’s largest car
production base, and the demand for
unsaturated resins is high, which provides
a large market for the company’s industrial
ethanol. In early February, Changchun
government held a conference about the
unsaturated resin, to propagandize
Dacheng Group’s industrial ethanol and
attract investors to build unsaturated resin
plant in Changchun city.
At present, Dacheng Group is the only
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enterprise that has successfully
developed the corn-based industrial
ethanol production technology in China.
The loose policy environment has
provided an opportunity for the
company to expand its industrial ethanol
business. Chinese government has
been restricting the development of fuel
ethanol, but no definite policy restricting
the development of industrial ethanol.
Dacheng Group may further expand
industrial ethanol capacity in the near
future.
Additionally, Changchun government
has been supporting Dacheng Group to
develop its corn deep processing
business. And under the help from local
government, Changchun Dacheng may
further extend its industrial ethanol
business to unsaturated resin and even
finished products like fiberglass
reinforced polyester, which will be
helpful to form a complete industrial
chain in Dacheng Group.
FIGURE 17: Current four main industrial chains in Dacheng Group
Source: CCM International
Shandong Fufeng shifts to high-end MSG
Shandong Fufeng Group Co., Ltd.
(Shandong Fufeng, headquartered in
Linyi, Shandong) launched its new
brand MSG (monosodium glutamic)
‘U-Xian’ in early April 2009, expected to
replace its previous brands of ‘Furui’
and ‘Xuemei’ and improve its
competitiveness at home.
This new brand MSG is packed in small
bag, more expensive than the old
brands and targeting high-end market.
This new brand MSG was successfully
developed in early January 2009 by
Shandong Fufeng. Since late March,
the company has been advertising on
CCTV for this new product, which is
Cornstarch
Starch sugar
Modified starch
Starch sugar
Starch sugar
Malt dextrin
Crystalline glucose
Malt syrup
Reducing syrup
Amino acid
Glutamic acid
Lysine
Threonine
Industrial ethanol
Glycol
Propanediol
Butanediol
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also the first brand for Shandong
Fufeng to advertise on CCTV since its
foundation in 1996. Additionally, the
company attended the FIC 2009, held in
Shanghai in late March to introduce this
new brand.
90% of its ‘U-Xian’ brand MSG will be
consumed on domestic market, while
there is also a small quantity exported.
As an old MSG producer, Shandong
Fufeng has completed its sales network
across China, and depending on which,
the new brand MSG will conveniently
permeate domestic MSG market.
The new brand will totally replace the
previous brands, with the company’s
MSG capacity expected to expand.
Shandong Fufeng now has MSG (Furui
and Xuemei brands) capacity of
280,000t/a and glutamic acid capacity
of 350,000t/a.
According to Mr. Xu, a sales manager of
Shandong Fufeng, it has been planning
to develop high grade MSG since
middle 2008, as the low-end MSG
market has been saturated these years,
while the supply of high grade MSG has
fallen behind demand (Corn Products
China News 0903, page 1).
Many MSG producers have been
adjusting product structure and
developing high grade MSG to improve
competitiveness.
For example, Qingdao QEA Investment
Group, a leading MSG producer in
Shandong province, has launched a
high-grade MSG plant and chicken
powder to replace ordinary MSG
products in Inner Mongolia (Corn
Products China News 0902, page 11).
Shandong Fufeng’s annual report of
2008 revealed, the company’s net profit
in 2008 was USD43 million, up 553%
over 2007. Mr. Gong, the manager of
finance department, discloses the profit
increase is mainly attributed to its plant
in Inner Mongolia, the main xanthan
gum plant of Shandong Fufeng. The
production cost of MSG and xanthan
gum has been largely reduced since the
launch of this plant in 2007.
According to Mr. Gong, Shandong
Fufeng will further expand its xanthan
gum capacity to 300,000t/a in Inner
Mongolia plant in late 2009 and the total
xanthan gum capacity in Shandong
Fufeng will reach 420,000t/a by then,
which may establish itself as the largest
xanthan gum producer in China.
Shandong Fufeng, established in 1996,
is a big corn processing enterprise in
China with corn processing capacity
exceeding 1,200,000t/a, running five
subsidiaries and a research center. Its
main products include MSG, Glutamic
acid, xanthan gum (with a capacity of
320,000t/a at present) and liquid
glucose (with a capacity of 100,000t/a at
present) etc. Its sales networks have
covered China and more than 40
countries.
CPCC to build 100,000t/a fuel ethanol plant in Jiangxi
China Petroleum & Chemical Co., Ltd.
(CPCC, headquartered in Beijing) will
build a cassava-based 100,000t/a fuel
ethanol plant in Dongxiang city, Jiangxi
province, cooperating with Jiangxi
Yufan Chemical Co., Ltd. (Jiangxi
Yufan), with investment of USD70
million.
The construction of this plant was
specifically carried out by CPCC Jiangxi
Oil Products Co., Ltd. (CPCC Jiangxi), a
subsidiary of CPCC and the largest oil
product supplier in Jiangxi province.
CPCC Jiangxi has established a new
company named CPCC Jiangxi Yufan
Ethanol Co., Ltd. (CPCC Jiangxi Yufan),
cooperating with Jiangxi Yufan, and
CPCC Jiangxi holds 70% stake of the
new company, while Jiangxi Yufan owns
30%.
At present, the plant has passed the
environmental assessment by Ministry
of Environmental Protection of PRC,
and to be approved by National
Development and Reform Commission.
According to Mr. Tao, a staff from
Jiangxi Yufan, the company has
completed most of the preliminary
preparations, including construction
design and land acquisition for cassava
planting etc. Once it is approved, the
construction will be started immediately.
The construction is expected to be
completed in 15 months. After the
launch, besides fuel ethanol, it will
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produce fusel oil of 300t/a, DDGS
40,000t/a and liquid CO2 7,000t/a. The
fuel ethanol will be used to produce the
second-generation biofuel and be sold
by CPCC. CPCC Jiangxi Yufan will get
subsidy from the government.
According to a report by Dongxiang
Development and Reform Commission,
the cassava planting area will be
expanded to 23,000 hectares for this
plant. At present, cassava planted area
in Dongxiang city spans more than
4,700 hectares, which means the
cassava planting area will be increased
in around 10 surrounding cities like
Linchuan and Jinxi.
In addition, an investigation from Jiangxi
Development and Reform Commission
indicates, more than 130,000 hectares
of moorland are planted in Jiangxi
province, which are suitable for planting
cassava. After the launch of this plant,
the provincial government will
encourage local farmers to plant
cassava.
CPCC has committed to building its own
fuel ethanol plant these years. Besides
this plant, CPCC has been going to
build two other holding fuel ethanol
plants in Hubei province, including
Jingmen plant (cooperating with Hubei
Jinlongquan, CPCC owns 70% stake)
and Yichang plant (cooperating with
Hubei Daohuaxiang Liquor Co., Ltd.,
CPCC owns 70% stake).
Additionally, it will also plan to build
another plant in Honghu city, Hubei
province, cooperating with Henan
Tianguan Group (Henan Tianguan) and
Hubei Zhensheng Group.
Insiders indicated, after the launch of
these plants, CPCC will have its own
fuel ethanol plants, which will further
increase its biofuel capacity to compete
with China National Petroleum Co., Ltd.
(CNPC).
Before these plants, CPCC has no own
holding fuel ethanol plant, and just had
little share in Anhui BBCA and COFCO
Guangxi plant.
In April 2008, Chinese government
approved five provinces and areas to
build fuel ethanol plants: Hubei province,
Hebei province, Jiangxi province,
Jiangsu province and Chongqing city.
And domestic fuel ethanol giants have
started to construct fuel ethanol plants
with intense competition.
At present, there are three main fuel
ethanol giants in China: COFCO, CNPC
and CPCC.
Apart from Henan Tianguan, COFCO
owns 100% stake of three other main
fuel ethanol enterprises, Anhui BBCA,
Heilongjiang Huarun and Guangxi
Beihai plant, and owns 20% stake of
Jilin Fuel Alcohol Co., Ltd. (Jilin Alcohol).
Meanwhile, CNPC owns 80% stake of
Jilin Alcohol and 55% of Henan
Tianguan.
TABLE 1: Three domestic fuel ethanol giants and their subsidiaries
Fuel ethanol plants Stockholder Raw material Current capacity Location
Anhui BBCA COFCO corn 440,000t/a Bengbu city, Anhui province
Heilongjiang Huarun COFCO corn 250,000t/a Zhaodong city, Heilongjiang province
COFCO Guangxi COFCO cassava 200,000t/a Beihai city, Guangxi province
Jilin Alcohol CNPC corn 400,000t/a Jilin city, Jilin province
Henan Tianguan CNPC wheat 500,000t/a Nanyang city, Henan province
Source: CCM International
Jiangxi Yufan, established in 1998, is a
private enterprise with 5 subsidiary
companies at present, whose business
includes modified cassava starch, paper
making auxiliaries, adhesives, real
estate, etc. Jiangxi Yufan now has
modified cassava starch capacity of
60,000t/a and the cassava processing
capacity has reached 100,000t/a. The
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company has its own cassava planting area over 670 hectares at present.
Henan Piaoan to build 10,000t/a pharmaceutical PLA plant
Henan Piaoan Group Co., Ltd. (Henan
Piaoan, headquartered in Xinxiang,
Henan, one of the largest hygiene
disposable material producers in China)
will build a 10,000t/a corn-based
pharmaceutical PLA plant in Xinxiang
city, with investment of USD43.6 million,
which will be launched in the first half of
2011.
At present, this PLA plant has been
approved by National Development and
Reform Commission and the
construction of some workshops has
been completed in Piaoan Industrial
Zone in Xinxiang city. The main
manufacturing equipments will be
purchased from Hitachi, which will be
delivered in March 2011. Henan Piaoan
has signed the purchase agreement
with Hitachi recently.
The PLA production technology was
developed by Henan Piaoan,
cooperating with Shanghai-based
Donghua University, and they have
successfully carried out some pilot
productions in laboratory. Adopting this
technology, cornstarch is converted into
lactic acid by fermentation, and then
lactic acid will be polymerized into PLA.
Besides PLA material, Henan Piaoan
will produce surgical sutures and
man-made bone screws etc. with PLA
as raw material. As reported, the
company has been planning to develop
more PLA-based pharmaceutical
bioceramic products and expand PLA
capacity to 150,000t/a before 2014.
These PLA-based pharmaceutical
products can be spontaneously
degraded into carbon dioxide and water
in human body as the wound heals.
There is no cornstarch plant or
production line in Henan Piaoan and the
raw material of cornstarch will be
bought from other cornstarch
producers.
According to Ms. Zhao, the marketing
manager of Henan Piaoan, the PLA and
related products in this plant will be
mainly sold on domestic market. Henan
Piaoan is a large and old
pharmaceutical hygiene disposable
material producer in China, who has
taken up nearly 48% of domestic market
these years, which will set a foundation
for its PLA sale.
At present, most pharmaceutical PLA
related products consumed in China are
imported from other countries. Only a
few domestic PLA enterprises can
produce pharmaceutical PLA products
(mainly including pharmaceutical films,
surgical sutures and absorbable
man-made bone screws), and their
capacity are usually less than 100t/a.
Among them, Sichuan Dikang
Pharmaceutical Co., Ltd.
(headquartered in Chengdu, Sichuan) is
the largest producer that can produce
300,000 bone screws, 1,000,000 pieces
of pharmaceutical films and 5,000,000
surgical sutures annually.
PLA production technology has been
being researched for many years in
China, while only a few enterprises can
carry out industrial PLA production,
which was mainly caused by the high
production cost (high price of production
equipments) and some of its product
performance. Although there are some
enterprises building their PLA plants
with capacity exceeding10,000t/a, the
construction progress is relatively slow.
PLA has been firstly developed to
replace petroleum-based plastic
products like shopping bags and
dishwares in China, while which has not
been largely popularized for its
relatively higher price and lower
performances compared to the
petroleum-based products.
At present, Zhejiang Hisun Biomaterials
Co., Ltd. (located in Taizhou city) is the
largest PLA producer, who has
succeeded in PLA industrial production,
with a 5,000t/a PLA production line at
present. Its PLA is mainly used as the
raw material to produce degradable
shopping bags and dishwares etc.
Piaoan Group, established in 1989, is a
leading Chinese private manufacturer of
pharmaceutical hygiene disposable
material with registered capital of
USD30 million, who has five
subsidiaries and one joint venture now.
Its businesses include nonwoven,
gauze, cotton, pharmaceutical
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instruments, biomaterials, and pharmaceutical macromolecule products.
Tianjin Green integrates PHA production and research
Tianjin Green Biosciences Co., Ltd.
(Tianjin Green), a Sino-foreign funded
enterprise primarily engaged in
production and R&D of
Polyhydroxyalkanoates (PHA), aims to
supply application technology of PHA in
China by October 2009, apart from
products. At present, Tianjin Green is
promoting the integration of production
and R&D of PHA.
Tianjin Green is building 10,000t/a PHA
production line, which will be launched
in October 2009. Tianjin Green started
to set up this new production project in
April, 2008.
Presently, Tianjin Green plans to
process 70% of its PHA into granular
polymer material, 20% into
biodegradable lunch boxes and 10%
into polymer fiber.
PHA is a very good biodegradable
material, which can be made into fiber,
polyester film and foam for wide
application in car manufacture,
biopharmaceuticals and electron.
Actually, corn starch or cassava starch
can be as the raw material of PHA. PHA
based on corn starch could be
degraded in water or soil after three to
six months, delivering high
environmental-friendly performance.
But the price of cassava starch is so
higher than corn starch that Tianjin
Green will choose corn starch as the
raw material of PHA.
Mr. Lv, general manager in Tianjin
Green, thinks it hard to open up the
biodegradable plastic market by only
producing PHA raw material. So, Tianjin
Green will develop advanced
production technologies and try to
improve PHA performance to open up
the market.
Currently, in China, only Tianjin Green is
engaged in PHA material and finished
product, while the other producers
merely produce PHA material. If
downstream companies intend to turn to
PHA, they will have to change their
process, which requires a new solution.
It will be better for the suppliers of raw
material to supply technology solution
for the downstream.
Since no professional PHA technology
supplier exists in China, Tianjin Green
has to research follow-up products
application by itself. According to Mr. Lv,
Tianjin Green has cooperated with six
enterprises at home and abroad for
researching follow-up products
application, which will greatly promote
application of PHA in some fields.
Tianjin Green will apply for the patent
for the newly developed technology for
PHA.
According to Mr. Lv, Tianjin Green can
efficiently lower investment risk and
cost by integrating production and
research. Meanwhile, many
biodegradable material producers are
fully confident to cooperate with Tianjin
Green.
It is believed that integration of
production and R&D is an inevitable
trend for enterprise to grow strong in
China.
Tianjin Green, founded in October 2003,
is located in Tianjin
Economic-Technological Development
Area, Tianjin city.
Heilongjiang Longfeng suspends construction of production lines
Heilongjiang Longfeng Corn
Development Co., Ltd. (Heilongjiang
Longfeng, headquartered in Suihua,
Heilongjiang) suspended the
construction of its 200,000t/a starch
sugar and 100,000t/a malt dextrin
production lines, considering the weak
demand.
The company has been planning to
construct the starch sugar and malt
dextrin production lines since December
2008 with investment of USD8 million,
which will be started in early April 2009
and launched by the end of 2009. The
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starch sugar will include maltose syrup
and maltose.
Since last September, the demand for
corn starch, starch sugar and feedstuff
has dropped, while the corn price has
risen gradually, leading to deficit in the
company.
It has to suspend the construction of
these two production lines, likely to
resume them once the market turns
better.
The corn products price has rebounded
slightly since this February, but no
significant profit increase has been
achieved in the company, according to
Mr. Liu. The price rebound does not
imply the uptrend in demand and the
corn processing enterprises have to
raise their product price due to the rising
corn price.
In late 2008, considering the low corn
price at that time, Heilongjiang Longfeng
had decided to further expand its
maltose syrup and malt dextrin capacity.
However, hit by the global financial crisis,
the demand for these products has
declined and the company postponed
the construction to April 2009.
The demand for starch sugar and malt
dextrin has kept shrinking in food
industry, although the price has risen a
little since late February. Although food
is a basic need, people’s buying power
has declined due to the financial crisis.
Especially in dairy industry, due to a
series of safety incidents, the demand
for dairy products has dramatically
declined, and as two main additives, the
demand for starch sugar and malt
dextrin, has thus declined.
In addition, Chinese government has
issued the new Food Safety Act (to
come into effect from 1st June 2009),
which reduce the output.
The demand for feedstuff has not
recovered since the melamine scandal,
big obstacle to corn processing
enterprises.
Under the pressure of declining demand
and rising production cost, many
domestic enterprises have postponed
their expansion.
As the leading malt dextrin producer in
Heilongjiang, Heilongjiang Longfeng
mainly produces food grade maltose
syrup, malt dextrin, feedstuff, etc. The
company has 600,000t/a corn starch,
150,000t/a maltose syrup and 60,000t/a
malt dextrin production lines currently. Its
sales networks mainly cover northeast
China, Korea, Japan, Russia, etc.
Competitiveness
DDGS price pushed up by soybean meal price
Domestic Dried Distillers Grains with
Solubles (DDGS) price has risen since
middle March 2009, attributed to the
significant soybean meal price soar,
rising corn price and growing DDGS
export.
DDGS price rise varies between
provinces (FIGURE 18). In Heilongjiang,
the price hit USD234/t on 11th April 2009
from USD197/t on 6th March, up 19%,
and Shandong saw 10% growth during
corresponding period. Price growth has
also appeared in other provinces like
Guangdong and Hubei.
This increase in DDGS price was mainly
attributed to the following reasons.
Soybean meal price rise has pushed up
DDGS price. Domestic soybean meal
price has remarkably risen since middle
March (FUGURE 19). As two main raw
materials of feedstuff, the demand for
DDGS has increased, driven by the high
price of soybean meal
CCM Newsletter Corn Products China News
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FIGURE 18: DDGS price changes in Shandong, Henan and Heilongjiang from early Mar. to middle Apr. 2009
190
200
210
220
230
240
250
3-Mar 8-Mar 13-Mar 18-Mar 23-Mar 28-Mar 2-Apr 7-Apr 12-Apr 17-Apr
(Uni
t: U
SD
/t)
Shandong Henan Heilongjiang
Source: Feed trade. com.cn
FIGURE 19: Soybean meal price changes in Shandong, Henan and Heilongjiang from early Mar. to middle Apr. 2009
410
420
430
440
450
460
470
480
490
500
3-Mar 8-Mar 13-Mar 18-Mar 23-Mar 28-Mar 2-Apr 7-Apr 12-Apr 17-Apr
(Uni
t: U
SD
/t)
Shandong Henan Heilongjiang
Source: Feed trade. com.cn
The Federal Reserve has bought large
quantities of treasury bonds recently,
and some merchants take the chance to
raise the international soybean price by
speculation. In recent months, driven by
the rising home-made soybean price
(mainly caused by the governmental
purchase policy), both soybean oil and
soybean meal price have risen.
Domestic soybean processing
enterprises mainly use imported GM
soybean as raw material at present.
The rising corn price has increased the
production cost of DDGS, stimulating
the processing enterprises to raise
DDGS price. At present, in northeastern
China, the corn purchase price in some
corn processing enterprises like
Changchun Dacheng Group, has
reached USD227/t, USD7/t higher than
the government purchase price.
Farmers’ corn stock became small as
the governmental purchase ends, and
the enterprises had to offer a higher
price than the governmental purchase
price to ensure corn supply.
DDGS export volume has increased in
recent months, which supported
domestic DDGS price to rise. In
February 2009, China exported 12,325
tonnes of DDGS, up 35.8% over
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CCM Newsletter Corn Products China News
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January. Meanwhile, the imported
DDGS volume was only 40 tonnes. The
high export and low import has reduced
the DDGS supply on domestic market,
pushing up the price.
Additionally, domestic demand for
DDGS has increased to some extent in
aquaculture industry. As the weather
turned warmer, the demand for fish food
started to increase. And the demand for
DDGS and soybean meal has
increased.
However, insiders predicted, DDGS
may not rise dramatically in the near
future, and may keep relatively stable or
drop down to some extent.
On one hand, domestic large demand
for DDGS has not appeared until now
due to the slow recovery of feed
industry. And DDGS price will not grow
remarkably in the short run.
On the other hand, this increase in
soybean meal price does not imply the
increase in demand, but just the
speculation of some merchants. And the
price may drop down soon in the near
future, which may largely pull the DDGS
price down by then.
Corn supply
Corn price maintains uptrend in late Mar.
Domestic corn price in some provinces
rose continuously in late March, mainly
attributed to Chinese governmental corn
purchase in northeastern China.
In Changchun city, Jilin province, the
corn price has been raised from
USD216/t in middle March to USD226/t
in late March 2009, up 4.6% (FIGURE
20). The corn market purchase price
was nearly 12.3% higher than the
governmental purchase price. In other
provinces like Hebei province, the corn
price has also risen to some extent.
FIGURE 20: Corn price changes in Changchun, Shijiazhuang and Wuhan from early Mar. to middle Apr. 2009
190
200
210
220
230
240
250
21-Feb 3-Mar 13-Mar 23-Mar 2-Apr 12-Apr 22-Apr
(Uni
t: U
SD
/t)
Changchun Shijiazhuang Wuhan
Source: CCM International
In some corn processing enterprises,
the prices were even higher. In
Changchun Dacheng Group, its corn
purchase price has been raised to
USD231/t, and that in Cerestar China
Resources Maize Industry Co., Ltd., has
been raised to USD228/t.
Corn processing enterprises had to
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23
raise their purchase price to buy
enough corn as stock, in competition
with the government. As the
governmental corn purchase in
northeast China will be finished in late
April), the farmers’ corn stock has been
reduced to a rump.
In addition, to accomplish the
governmental reserve plan, some
reserve companies had to buy
quantities of corn from north China like
Hebei and Shanxi, raising local corn
price. Additionally, as the price in
northeastern rose, traders in south
China turned to north China for corn
purchase, stimulating the price to rise in
north China.
Meanwhile, as more and more corn
purchased by government, the price
has rise remarkably since this March.
To offset the rising raw material cost,
most processing enterprises have
raised their corn product price. The
cornstarch price in Changchun reached
USD319/t in middle April, up nearly 4%
over middle March.
Meanwhile, some fuel ethanol
enterprises are satisfied to the current
relatively high corn price. In April, oil
price has exceeded USD50 per barrel,
pushing up the demand for ethanol.
Driven by the growing demand for
ethanol, corn price may further rise
during late April and early May.
Currently, the corn planting season has
started in China. To stimulate grower’s
planting activity, the government may
further push up the corn price, by
postponing the auction time of it
reserved corn.
Insiders indicate that corn price will
become relatively stable from early May,
which will depend on the governmental
auction price of its corn reserved from
2007 and 2008. From October 2008 to
April 2009, Chinese government had
totally purchased 40,000,000 tonnes
corn in northeastern China, and
4,000,000 tonnes in 2007 at a price of
USD195/t (exchange rate was 7.36).
To protect the feed farmers’ interests,
the government will try to stabilize corn
price. Due to the slack demand and
animal epidemic, domestic feed industry
recovery has been hindered. As
predicted, feed industry may recover in
the second half of 2009.
Corn Products Use Monitoring
Overview of China’s D-sodium erythorbate production
A balance between supply and demand
has appeared in D-sodium erythorbate,
an effective food antioxidant, in China
these years.
D-sodium erythorbate capacity in China
has totaled 33,000t/a, with only two
formal producers, Zhengzhou Tuoyang
Industrial Co., Ltd. (Zhengzhou
Tuoyang) and Jiangxi Parchn Group
Co., Ltd. (Jiangxi Parchn) (TABLE 2).
TABLE 2: China’s D-sodium erythorbate producers and their current capacity
Company Current capacity (t/a) Raw material Location Launch time
Zhengzhou Tuoyang 15,000 Corn starch Zhengzhou city, Henan province 1994
Jiangxi Parchn 18,000 Rice starch Dexing city, Jiangxi province 1993
Source: CCM International
China’s D-sodium erythorbate
production started from the 1990s, with
five or six producers possessing 600t/a
capacity in the beginning. Then, the
number of producers had reached 36 in
late 1990s with capacity exceeding
4,000t/a. However, hit by the weak
demand then, many producers had
been closed down before the 2000s,
with only Zhengzhou Tuoyang and
Jiangxi Parchn left.
The D-sodium erythorbate production
technology had been firstly developed
by Shanxi Microbe Research Institute in
CCM Newsletter Corn Products China News
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24
the 1980s, gradually applied by
producers since then. Based on this
technology, more advanced production
technology has been achieved by
enterprises like Zhengzhou Tuoyang
and Jiangxi Parchn.
China exports nearly 80% of its
D-sodium erythorbate produced. As a
legal and effective food antioxidant, the
demand for D-sodium erythorbate has
been growing across the world,
stimulating China’s D-sodium
erythorbate export these years.
In particular, 90% of Zhengzhou
Tuoyang’s D-sodium erythorbate has
been exported these years. On
domestic market, the company mainly
distributes D-sodium erythorbate in
north China, while Jiangxi Parchn
targets south China market, reveals Mr.
Yu, marketing manager of the company.
It is estimated that around 600 tonnes of
D-sodium erythorbate is monthly
consumed in China.
Via the D-sodium erythorbate
production technology, starch, the main
raw material, is firstly converted to
glucose, then to calcium gluconate and
finally to D-erythorbate acid, which can
be easily converted into D-sodium
erythorbate.
According to Ms. Wang, a staff of
Jiangxi Parchn, after the price war in
2006, D-sodium erythorbate price has
approached its production cost, with the
current price expected to keep stable for
a long time. In 2006, the two companies
have initiated a price war to seize
market share, pushing down price
remarkably.
At present, the export price (Shanghai
port) quoted by Jiangxi Parchn is
USD2,196/t, and that by Zhengzhou
Tuoyang is USD2,313/t. In 2006, the
D-sodium erythorbate price has ever
reached as high as USD3,075/t before
the price war.
In China, D-sodium erythorbate is
mainly applied to food industry like beer,
beverage and can etc. to keep food
fresh. Actually, the application area of
D-sodium erythorbate is being widened.
In addition to food industry, it can be
also used in developing solution to
replace poisonous quinhydrone, and as
antisludging agent in aqueous
processing.
However, it is unwise for new entrants
to initiate D-sodium erythorbate
production currently for two reasons,
explains Ms. Wang.
On one hand, little profit could be
gained under the current price.
Influenced by overseas D-sodium
erythorbate producers, it is hard for
Chinese producers to raise the price,
while the production cost, especially the
raw material cost, keeps increasing.
Production technology is another
obstacle. The current technologies
applied by the two Chinese companies
were both developed by themselves
and have been patented.
As the current price keeps stable, these
two companies may further improve
their production process and expand
capacity, and the current stable status
may be broken by then. And actually,
both companies are planning to expand
D-sodium erythorbate to 20,000t/a in
recent years, according to Ms. Wang.
Zhengzhou Tuoyang, reorganized from
Zhengzhou Biochemical Factory, is a
private antioxidant producer, with
business integrating D-sodium
erythorbate, D-erythorbate acid
(capacity of 6,000t/a), D-ribose
(capacity of 2,000t/a), starch sugar
(crystalline glucose, capacity of
70,000t/a), etc.
Jiangxi Parchn, reorganized from
Dexing Sodium Isovitamin C Co., Ltd.,
now has 16 subsidiary companies in
Jiangxi province, whose business
covers food additives, feedstuff,
chemicals, etc.
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FIGURE 21: Sodium erythorbate production process in Jiangxi Parchn
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25
Source: Parchn. Com
News in Brief
Changchun to build 50,000t/a xylitol plant
Jilin Kangmin Biotechnology Co., Ltd
(Jilin Kangmin) plans to build a corn
cob-based 50,000t/a xylitol plant with
investment of USD140 million in
Changchun, Jilin. Jilin Kangming aims
to become the largest xylitol producer in
China within three years and the largest
producer in the world within five years.
BBCA may use corn cob to produce citric acid
On 8th March, 2009, Anhui-based BBCA
succeeded to develop the new
technology based on corncob to
produce citric acid and xylitol, and
experiment has been authenticated by
domestic experts. This new technology
can remarkably lower citric acid and
xylitol raw material cost in BBCA.
DSM to build its fourth premix plant in China
DSM will build its fourth premix feedstuff
plant, namely DSM Vitamin (Changchun)
Co., Ltd., in Changchun city, Jilin
province, following Shanghai,
Liaocheng (Shandong) and Hengyang
(Hunan). With investment of USD5
Starch
Amylase
Glucose
Calcium carbonate, Bacteria etc.
Calcium 2-ketogluconic acid
Sulphuric acid
2-ketogluconic acid
Sulphuric, Methyl alcohol, Alkali etc.
D-Sodium erythorbate (Semi finished Product)
Decolor
D-Sodium erythorbate
CCM Newsletter Corn Products China News
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26
million, the construction will start in early May 2009, with the plant expected to be launched in December 2009.
Zhengzhou Tuoyang building 80,000t/a crystalline fructose plant
Zhengzhou Tuoyang Industrial Co., Ltd
(Zhengzhou Tuoyang) is building a
80,000t/a crystalline fructose plant in
Zhengzhou city, Henan province, with
investment of USD60 million. The
construction has started since early
2009.
Bayer cooperated with Sichuan University
Recently, a patent for the production
technology of biodegradable material
based on PC and PLA has been ratified
by the State Patent Bureau. This
production technology was developed
by Bayer, cooperating with China-based
Sichuan University (Chengdu city,
Sichuan province). The new technology
could help lower carbon dioxide
emission by 2/3, compared to traditional
technology.
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