Some Potato Starch Processing Enterprises Stopped production Due to the Inspection of Environmental Protection

Date: 2015-08-09

“That potato is promoted as staple food cannot stop the declining price of potato in the short time. Affected by the inventory pressure and the early germination, potato price continues to drop. Besides, some potato starch processing enterprises
stopped production due to the inspection of environmental protection, leading to the cease of potato purchase. If China wants to change the long-term loss of potato industry by boosting potato as staple food, farmers should plant high-quality varieties rationally and the government should issue relevant policies to support it.

China’s MSG industry has restructured and integrated its production capability and output for years and meanwhile the market demand also see stable development along with the changing consumption structure. Thus, even the costs in raw materials
are enhanced, caused by the temporary storage and acquisition, yet no effects have been exerted on MSG processors in making profits.

In 2014, affected by the rising corn price and weakening demand for oils performance. However, since customers are paying more and more attention to healthy Therefore, Xiwang Food is expected to increase profit through its corn oil products. Affected by the falling price of ethanol, reducing policy subsidy and overcapacity of citric acid, COFCO Biochemical’s performance fell in 2014. Although the company expects to gain profit from ethanol fuel in the future, it is hard to realize in the short term due to the rising production cost.

In 2014, Global Bio-chem’s performance witnessed a decline, mainly due to the depressed domestic economic environment and the weak demand for lysine under the downturn of livestock industry. Also, the new-type fuel ethanol has not been
adequately promoted in China, and the international price of crude oil saw declines also make it hard to gain profit.

Under the economic downturn in 2014, Changshouhua Food achieved continuous profit, since it seized more market share through reducing price and raising gross profit margin of main products by improving production technique. In 2014, Fufeng Group achieved sustained profitability through integrating MSG business, developing top-grade amino acid products in medical beauty industry and expanding market of xanthan gum.

According to the financial report, China Starch’s net profit slumped in 2014, due to production line cessation. Since China Starch has finished relocation and upgrading at the end of 2014, it is predicted that the company may achieve profitability through improving output and upgrading production technology under the increasing temporary storage and purchase in 2015.

Due to the poor-quality temporarily-stored corn after a long-time storage and the increasing volume of temporarily-stored corn shrinking the market circulation, the domestic corn price goes up and the temporarily-stored corn fails to meet the demand of corn deep processors. Meanwhile, since the imported corn is popular with purchasers based on its advantageous price and quality, the import volume of corn witnesses substantial growth. Thus it is predicted that the sales of temporarily-stored corn will bear pressure in the future. In Feb, 2015, China’s export volume of glutamic acid recorded large decline, mainly due to the falling export volume of
Meihua Bio.

In March-April 2015, China’s enterprises release the 2014 financial report. Thus, in this issue, CCM selects financial reports from representative enterprises in each industry to analyze their performance. CCM tries to summarize their performance and look back the industry in 2014, meantime forecast the changes in 2015 through the company dynamics. For example, China’s MSG industry suffers from overcapacity in recent years and many small-sized enterprises are gradually eliminated. 

In 2015, the domestic demand of MSG industry is about 1.85 million tonnes, which make a balance between supply and demand. Meihua Bio cooperates with Ningxia EPPEN Biotech to integrate the production capacity and output. Fufeng Group becomes a monopoly in the MSG industry based on its advanced technology and mature experience. Although the corn price is increasing, the MSG industry is hardly impacted. What’s more, in April, the completed temporary storage & purchase of corn is the weather vane of the corn price trend in 2015. The large volume of temporarily-stored corn this time and China starts to imported corn from Ukraine due to the American GM corn arouse concerns of corn deep-processing sectors. 

That China announced to promote potato as staple food cannot stop the price declined of potato in a short time. Affected by the inventory pressure and early germination, the potato price continues to decline. It is hopeful that China may issue relevant policies to support potato to become staple food.     

Under the slowing down economic growth, Chinese government arouses more and more attention to the environmental protection. It’s predicted that the livestock industry, foundry industry and feed industry will enter the stage of sustainable development.  

The USD/RMB exchange rate in this issue is USD1 .00=RMB6.1434 on 1 April, 2015, sourced from the People’s Bank of China. All the prices mentioned in this newsletter include the VAT unless otherwise specified.”

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