Corn Products China News

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

http://www.cnchemicals.com/maindocs/marketreports/maincontent/WhiteBiotechnology.htm

http://www.cnchemicals.com/maindocs/marketreports/maincontent/WhiteBiotechnology.htm

http://www.cnchemicals.com/maindocs/marketreports/maincontent/HighIntensitySweeteners.htm

http://www.cnchemicals.com/maindocs/marketreports/maincontent/HighIntensitySweeteners.htm

http://www.cnchemicals.com/maindocs/marketreports/maincontent/Saccharin.htm

http://www.cnchemicals.com/maindocs/marketreports/maincontent/CornStarch.htm

http://www.cnchemicals.com/maindocs/marketreports/maincontent/CornStarch.htm

http://www.cnchemicals.com/maindocs/marketreports/maincontent/Glucose.htm

http://www.cnchemicals.com/maindocs/marketreports/maincontent/Glucose.htm

http://www.cnchemicals.com/sets/contactus.htm

http://www.cnchemicals.com/subdocs/CCMservices2009.xls

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

www.cnchemicals.com Copyright CCM International Ltd. Email: [email protected]


1

www.cnchemicals.com Copyright CCM International Ltd. Email:

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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2


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

[email protected]



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.


[email protected]

3


4


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.

[email protected]



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).

[email protected]

5

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)



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%


6


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)



[email protected]


7


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



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


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


[email protected]

8



9

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


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.



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


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


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.

[email protected]

10



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)



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)


[email protected]

11



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)


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

[email protected]

12



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)


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.

[email protected]

13



14

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



15

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


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



16

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



17

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


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



18

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



19

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



20

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



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

[email protected]

21



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


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

[email protected]

22



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


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



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.



FIGURE 21: Sodium erythorbate production process in Jiangxi Parchn

[email protected]

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



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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