Sweeteners China News 1510 (12 issues per year)

Nov 12, 2015, 16:25 ET from Reportlinker

NEW YORK, Nov. 12, 2015 /PRNewswire/ -- A trick is played in China's food industry, probably in all industries around the world: once comes a promising product, enterprises will take aim at it and in droves expand the production capacity. Always, however, they will reap as they have sown.

This has been proven by the corn deep processors, of course starch sugar producers involved. The continuous capacity expansion and the product homogeneity led to fierce competition and price fall. Worse, the production costs increased, as the price of corn (raw material) saw growths year by year, supported by the government's purchase for storage policy. This, undoubtedly, posed a huge threat to the corn deep processors. Here, Global Bio-chem made the running, from loss to production suspension and finally to reorganisation.

In 2015, however, the purchase price of corn for temporary storage is decreased by 11% YoY. The decline in costs, to some extent, contributes to the demand expansion and oversupply relief in the starch sugar segment. It is expected that the starch sugar price will also go down. This will enable starch sugar to further substitute sucrose, of which the price is now increasing due to the supply shortage. Then the consumption of starch sugar will grow.

Certainly, when the substitution rises, the price upturn for the local-made sucrose will be restricted. Now China's sucrose market is also trapped in predicament. In 2014/15 extracting season, the overall loss reached about USD314.94 million (RMB2 billion). Fortunately, this figure was USD1.26 billion (RMB8 billion) smaller than that in 2013/14, thanks to the supply shortage and the tighter import policy.

The corn deep processing and sugar making industries are basic for the agricultural and food industries in China. Surely the Chinese government has the intention to forward their healthy development. At a deeper level, they are competitors: how to achieve a win-win, is also the problem for the enterprises involved to cope with. From October 201 5, China enters the 2015/16 sucrose (cane sugar + beet sugar) extracting season. Due to the further decreased supply of raw material sugarcane, the output of cane sugar will further run short, unable to meet the demand. This is expected to push up the domestic sucrose price. However, the substitute corn starch sugar and the imported sugar (raw sugar + refined sugar), probably will place restrictions on the rise.
In 2015, the purchase price of corn (for temporary storage) in China will be down-regulated by around 11 %. This is expected to pull down the market price of corn largely, beneficial to the corn deep processing businesses such as starch sugar.

On 8 Oct., 2015, Nanning Sugar announced to acquire Yuanfeng Sugar and Yongkai Sugar & Paper's Daqiao Sugar Plant. This will be favourable for the company to increase the sugarcane resources and to expand the production capacity.
In H2 2015, Guangzhou Shuangqiao's construction of starch sugar production projects goes well. Guangzhou Shuangqiao is actively deploying the starch sugar market in South China and Central China and will further improve its strategic business layout nationwide.

In October 2015, Guangxi Guitang released the relocation proposal. From this, the company intended to improve the production technology level and optimise the product structure, so as to finally build up a sugar, pulp and paper production base.
In October 2015, GFS signed the Strategic Cooperation Agreement on Luo Han Guo Business with the People's Government of Longjiang Village (Guangxi Zhuang Autonomous Region). From this, the 2 sides will cooperate in Luo Han Guo related planting technology, to further promote the industry healthy development. This also marks a significant step for GFS to ensure the supply of Luo Han Guo.

In October 2015, Wanfu Biotechnology signed to transfer its 100% of shares in a grains & oils subsidiary. This marks a significant step for the company to adjust the assets structure, from which it probably will withdraw from the starch sugar market and will fight in the organic agricultural business.
In October 2015, NFBC noted the plan to construct an oligosaccharide plant in the Yunfu Health Medicine Industrial Park. As a company dedicated to the production of oligosaccharides such as GOS, NFBC is positive about the future market.

During January-August, 2015, China's cyclamate export structure, influenced by the EU's anti-dumping investigation, was changed: Golden Time Chemical reduced the exports whilst Fang Da Yangquan and Xuchang Ruida increased. As the EU is a major destination for China's cyclamate, the changes in China's export structure will be based on the results from its anti-dumping investigations.

During January-August 2015, China's exports of sorbitol decreased largely, mainly because the sales to Southeast Asia were unsatisfactory. It is expected that this declining trend will continue in the whole 2015.
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