Corn Products China News Highlights Key Industry Updates

Corn Products China News
Corn Products
Vol.4 Issue 1, 2011

Copyright © CCM International Limited

Corn Products China News
Vol. 4 Issue 1. 2011 Publication date: 20 January, 2011

CONTENTS
News in Brief
1 Baolingbao Biology considers transferring raw material price increasing risk through
hedge service
1 Corn Starch in Tieling City firstly exported to oversea
1 Anhui BBCA obtains value added tax refunding
Welcome to the January issue of Corn
1 Chinese CPI in 2010 rises by 3.3%
1 The 6th China (Shanghai) International Starch & Starch Derivatives Exhibition 2011 to
Products China News, specially published
be hold by CCM International.
Supply and Demand Stepping into 2011, prices of most corn products
2 China to impose VC export quota in 2011?
stably run at a relative high level, caused by stably
Import and Export Analysis high corn price. However, it still has exception. Price
3 Chinese corn products Imp. & Exp. analysis in November 2010 of cornstarch has decreased in Jan. 2011 all over
Price Update the country, and VC price still undergoes a low level
6 Ex-factory prices of corn products in Dec. 2010 at the same time. In this issue, CCM has tried to
6 FOB corn price in Dalian Port from Feb. 2010 ~ Jan. 2011 predict that Chinese government is likely to impose
7 Domestic citric acid price keeps uptrend export quota on VC industry. In addition, another
8 China's cornstarch price decreases trade friction between the US and China happened
at the end of 2010, that is, China decides to run an
Market & Company Dynamic
9 DDGS from the US faces anti-dumping investigation in China anti-dumping investigation into DDGS originated
10 Quantum High-Tech succeeds in getting listed from the US.
11 Meihua Group's dream of listing comes true
13 Shanxi Huarong initiates 60,000t/a citric acid In 2011, Chinese corn products industry will be full
14 Alliance for China's amino acid industry established of opportunities. Two companies (Quantum High-
15 Xiwang Food to expand refined corn oil capacity tech and Meihua Group) succeed in getting listed
to expand their businesses, and a new company
Competitiveness (Shanxi Huarong) marches into citric acid industry.
15 Sucrose price or to keep uptrend in near future

Corn Supply By the way, it would be honored to tell you that 2011
16 Analysis into China's corn market in 2011 is the 10-year Anniversary of CCM, and CCM will
New Technology & New Products & R&D continue to provide you more professional, timely,
17 New energy-efficient fermentation biotechnology promoted accurate and complete news to you.

Main companies mentioned in this issue

Corn Products China News Vol. 4 Issue 1. 2011

Corn Products China News at a glance News in Brief
There is a possibility for Chinese government to impose
VC export quota on VC in 2011. Baolingbao Biology considers transferring
raw material price increasing risk through
In November 2010, performance of Chinese corn
products’ imports still witnessed downtrend, and import
hedge service
O
volume decreased by 68% over October 2010. In contrast, n January 17, 2011, Baolingbao Biology Co., Ltd. announced that at
the export volume rebounded, which increased by 16%.
present the company considers transferring the risk of raw material
China runs anti-dumping investigation into DDGS from price increase through hedge service, but there are no specific plans or
the US. programs at present.
Quantum High-Tech succeeds in getting listed in China's
Growth Enterprises Market, which will facilitate it to raise
funds for its business expansion. Corn starch in Tieling City firstly exported
Meihua Group succeeds in getting listed at the end of to oversea
2010, and it will expand its businesses in the near future.

Shanxi Huarong begins to establish an anhydrous citric
acid production plant with capacity of 60,000t/a.
O n December 23, 2010, 240.75 tonnes corn starch, produced by Tieling
Wanshunda Starch Co., Ltd. was exported to Singapore after being
quarantined by Tieling Entry-Exit Inspection and Quarantine Bureau. This
Amino Acids Industry Technology Innovation and is the first time for corn starch produced in Tieling City, Liaoning Province to
Strategic Alliance has been established at the end of 2010. be exported.
Xiwang Food plans to expand its refined corn oil capacity
to 350,000t/a from 200,000t/a.

Domestic citric acid price still maintains uptrend at the Anhui BBCA obtains value added tax
beginning of 2011. refunding
Domestic cornstarch price decreases in January 2011.

Sucrose price in China is increasing at present, and may
O n January 11, 2011, Anhui BBCA Biochemical Co., Ltd. announced
that after being examined and verified by the Ministry of Finance, the
paid value added tax in 2009 of about USD3.81 million is permitted to be
maintain at high level in 2011.
refunded. This value added tax will be reckoned in Non-operating income in
Corn price will keep at a high level in 2011 as its 2010.
undersupply situation.

A new energy-efficient fermentation biotechnology is
promoted by the country.
Chinese CPI in 2010 rises by 3.3%
O n January 20, 2011, National Bureau of Statistics of China announced
that the Consumer Price Index (CPI) in 2010 rose by 3.3% over
that in 2009, and in December 2010, the CPI increased by 4.6% over the
corresponding time of 2009 and 0.5% over last month.

The 6th China (Shanghai) International
Starch & Starch Derivatives Exhibition
2011 to be hold
T he 6th China (Shanghai) International Starch & Starch Derivatives
Exhibition 2011 will be held on May 26-28, 2011, in Shanghai Everbright
Convention & Exhibition Center.

CCM International Limited 1 www.cnchemicals.com
1


Supply and Demand

China to impose VC export quota in 2011?

I n August 2010, when domestic price
of Vitamin C (VC) slumped to its
lowest level, it was reported that National
FIGURE1: Domestic VC price in China, 2009-2010

1 6 ,000
Development and Reform Commission
1 4 ,000
( N D R C ) w o u l d i m p o s e V C e x p o r t
quota at the end of 2010 for the healthy 1 2 ,000
development of this industry. However, 1 0,000
Unit: USD/t

until now, the measure has not come
8 ,000
out yet, and some experts consider the
measure will be published and carried 6 ,000
out in 2011, while others don't think so. 4 ,000
Hereinafter, analysis will be made into
2 ,000
this question: Will Chinese government
impose VC export quota in 2011? -
Ja n Feb Ma r A pr Ma y Ju n Ju l Aug Sep Oct Nov Dec
Let's first understand current situation of
Chinese VC industry. On one hand, total 2 009 2 01 0
capacity of Chinese VC product definitely
exceeds the global demand. China's Source: CCM International
top five large VC companies' capacity FIGURE2: Export price and volume of Chinese VC, 2009-2010
(124,000t/a in 2010) has accounted
for about 90% of global VC capacity.
1 4 ,000 1 2 ,000
And some expansion projects are still
being under construction right now. It 1 2 ,000 1 0,000
is estimated that total capacity of VC in
China will climb to 200,000t/a in 2012. 1 0,000
8 ,000
The terrible overcapacity situation has

Unit: USD/t
Unit: tonne

8 ,000
caused serious resource waste and cut-
6 ,000
throat competition in domestic market, 6 ,000
which hinders healthy development of
4 ,000
this industry. 4 ,000

2 ,000 2 ,000
On the other hand, VC price has situated
at a low level at present, hurting most
- -
VC manufacturers in China. Although
Ja n Feb Ma r A pr Ma y Ju n Ju l A u g Sep Oct Nov Dec
VC price has rebounded a little since
October 2010 aided by the production
Ex por t v olu m e 2 009 Ex por t v olu m e 2 01 0
suspension of some major VC producers,
like Shijiazhuang Pharmaceutical Group Ex por t pr ice 2 009 Ex pot pr ice 2 01 0
Co., Ltd., (Shijiazhuang Pharmaceutical) Source: CCM International
it still stays at a low level at present. On
quota measure sounds a suitable way. First, the measure can eliminate some
Jan. 11th 2011, the average VC price in
Export quota measure means the annual small manufacturers and turn around
China was about USD6,798/t, while it
export volume will be controlled by the current overcapacity situation to some
was USD11,730/t in corresponding period
government, and each qualified exporter, extent. Normally, the small manufacturers
of 2010. (FIGURE1) Besides, despite its
including manufacturers and traders, will are unqualified to get export quota,
export volume increased significantly in
be assigned an annual specific quota of especially those with inefficient
2010, average export price went down
the top limit export volume, and this top technology and high pollution. Thus,
over 2009, caused by the increased output
limit volume will be decided by capacity these manufacturers will be driven back
of Chinese VC. (FIGURE2)
and previous export volume of each from the international market, and it is
manufacturer. The measure can bring the likely for them to get out of this industry.
On the basis of the above situation, it is
following advantages.
urgent to regulate this industry and export
Second, it can ease current cut-throat



competition, and enhance Chinese VC pricing power. Currently, Therefore, it's predicted that it is quite probable for China to
the export price is cut down by foreign buyers as there are lots of impose export quota on VC in 2011. The government should
exporters for them to choose. And in order to seize more market enhance the supervision on the implementation of this measure,
share, many exporters lower their quotations. If the measure is if not, the measure would lose its role.
carried out, the major exporters can make alliance to strengthen
the pricing power. Besides, it also can avoid anti-dumping
investigation.

Import and Export Analysis

Chinese corn products Imp. & Exp. analysis in November 2010

1. Imp. & Exp. value analysis (TABLE1 )
1.1 Thanks to the surge of import volume, the import value of furfural increased by 42,532% in November 2010 over October 2010,
although its import price decreased to USD547/t, compared with USD39,800/t in October 2010. In fact, China totally imported
about 310 tonnes furfural from Iran this November, while the number was zero in previous months. And the imported furfural
almost flowed to Xiamen City, Fujian Province.

1.2 Owing to the increased export volume of glucose and syrup (50%>fructose content ≥20%), its export value increased by 80%
in November 2010 over October 2010. Philippines increased its import volume of the product from China significantly, amounting
to 916 tonnes, while it was just 22 tonnes in October 2010. Besides, Papua New Guinea imported 179 tonnes of this product in
November 2010, with the lowest price of USD468/t, compared with the highest price of USD2,406/t to Germany. Moreover,
because Vietnam, the largest export destination with the relatively high price of USD2,050/t last month, didn’t import the product
in November 2010. The export price reduced by 60%.

TABLE1: Imp. & Exp. value of Chinese corn products, November 2010
Import Monthly Export Monthly
Products
value, USD growth rate value, USD growth rate
Corn 17,423,036 -70% 2,459,110 85%
Cornstarch 874,210 -25% 11,433,831 -20%
Citric acid 413,550 114% 66,158,728 39%
Citrate 169,746 -43% 10,718,069 38%
Glucose and glucose syrup
98,831 -47% 26,322,742 25%
(Fructose content <20%)
Glucose and syrup
534,176 -13% 732,785 80%
(50%>fructose content ≥20%)
Fructose and fructose syrup
622,114 -5% 6,606,504 4%
(Fructose content >50%)
Mannitol 50,523 35% 1,136,223 34%
Xylitol 10,306 -96% 3,209,948 -9%
Sorbitol 37,089 -7% 4,771,691 15%
Furfural 169,674 42,532% 7,622,128 29%
Furfuryl alcohol and
140,920 428% 13,323,827 -7%
tetrahydrofurfuryl alcohol
Lysine 7,710 -93% 4,416,869 198%
Lysine ester and salt 156,701 -83% 12,943,560 -9%
Glutamic acid(GA) 8,275 88% 2,366,670 138%
Sodium glutamate 50,723 46% 25,046,846 0%
Inositol 21,403 28% 2,093,028 -25%
Total 20,788,987 -67% 201,362,559 17%
Source: China Customs



2. Imp. & Exp. volume analysis (TABLE2 )
2.1 The major reason for the increase in import volume of mannitol in November 2010 is that China increased the import volume
of this product from France this month over last month. The import volume of mannitol in November 2010 is 8 tonnes compared
with just 2 tonnes last month. About 8 tonnes of mannitol imported went to Shanghai City.

2.2 Probably caused by the approaching of cold weather and the increasing demand for meat, many countries in Europe increased
their import volume of lysine from China in November 2010. Take Poland, Netherlands, and Ukraine for example, they imported
565 tonnes, 248 tonnes, and 109 tonnes lysine from China separately, while these three countries' import volume from China was
zero last month. Besides, Belgium also almost doubled its import volume of lysine from China in November 2010, amounting to
720 tonnes.

2.3 Export performance of Glutamic acid (GA) was also good in November 2010. Vietnam, the US, and Italy increased their import
volume of GA from China, amounting to 1,420 tonnes, 20 tonnes, and 5 tonnes, rising by 203%, 1,200%, and 2,400% separately.

TABLE2: Imp. & Exp. volume of Chinese corn products, November 2010
Import Monthly Export Monthly
Products
volume, tonne growth rate volume, tonne growth rate
Corn 78,555 -69% 8,546 77%
Cornstarch 1,248 -17% 25,749 -20%
Citric acid 129 43% 68,674 36%
Citrate 41 -21% 10,845 43%
84 -23% 54,769 24%
Glucose and syrup
1,987 -12% 1,182 346%
264 39% 12,124 -1%
Mannitol 10 208% 617 30%
Xylitol 1 -99% 1,165 -10%
Sorbitol 37 95% 8,440 15%
Furfural 310 3,100,650% 3,657 24%
16 142% 5,084 -16%
Lysine 0.16 -95% 2,564 201%
Lysine ester and salt 7 -99% 7,409 -20%
Glutamic acid(GA) 0.36 8% 1,670 142%
Sodium glutamate 20 0% 17,068 -2%
Inositol 0.38 28% 201 -28%
Total 82,710 -68% 229,763 16%

3. Imp. & Exp. price analysis (TABLE3)
3.1 Thanks to the price surge of citric acid from Germany and Austria, the average import price of citric acid increased by 50% in
November 2010. Import price of citric acid from Germany and Austria was USD2,346/t and USD4,002/t in November 2010, while
it was USD2,061/t and USD1,678/t in October 2010 respectively. Besides, Germany was the largest import origin of Chinese citric
acid in November 2010, and Austria was the third largest.

3.2 In November 2010, China began to import Fructose and fructose syrup (Fructose content >50%) from Israel and Pakistan, with
import volume of about 40 tonnes for each respectively. And the import price from these two countries ( USD1,185/t and USD850/t
respectively) was much lower than that of other countries. Moreover, the import price from the largest import origin, South Korea,
decreased to USD1,578/t in November 2010 from USD2,238/t in October 2010. Therefore, the import price of the product reduced
by 32% in November 2010.



TABLE3: Imp. & Exp. price of Chinese corn products, November 2010
Import price, Monthly Export price, Monthly
Products
USD/t growth rate USD/t growth rate
Corn 222 -4% 288 5%
Cornstarch 700 -9% 444 0%
Citric acid 3,217 50% 963 3%
Citrate 4,132 -28% 988 -3%
1,174 -31% 481 0%
Glucose and syrup
269 0% 620 -60%
2,358 -32% 545 5%
Mannitol 5,028 -56% 1,842 3%
Xylitol 7,928 215% 2,756 0%
Sorbitol 1,002 -52% 565 0%
Furfural 547 -99% 2,085 4%
8,904 118% 2,621 11%
Lysine 49,742 54% 1,723 -1%
Lysine ester and salt 22,873 1,175% 1,747 13%
Glutamic acid(GA) 23,050 74% 1,417 -1%
Sodium glutamate 2,517 46% 1,467 1%
Inositol 55,737 -0.15% 10,421 5%

TABLE4: Export proportion of top 5 and top 10 destinations of Chinese
4 . E x p o r t d e s t i n a t i o n s a n a l y s i s corn products by volume, October ~ November 2010
(TABLE4)
Nov -10 Oct -10
Products
4.1 The major reason for decreased export Top five Top ten Top five Top ten
proportion of top five and top ten destinations Corn 100% 100% 100% 100%
of corn starch is that the largest export
Cornstarch 89% 97% 95% 99%
destination, Indonesia, decreased its import
volume markedly in November 2010 to 9,926 Citric acid 33% 49% 30% 48%
tonnes, while it was 20,087 tonnes in October Citrate 38% 59% 41% 64%
2010. Glucose and glucose syrup
61% 77% 54% 77%
4.2 In November 2010, India, Japan, and Brazil Glucose and syrup
97% 100% 84% 100%
decreased their import volume of mannitol from (50%>fructose content ≥20%)
China, which amounted to 144 tonnes, 61 tonnes Fructose and fructose syrup
92% 99% 96% 99%
and 19 tonnes, while the import volume in
October 2010 was 167 tonnes, 81 tonnes, and 48 Mannitol 72% 87% 81% 93%
tonnes respectively. Thus, the export proportion Xylitol 86% 96% 86% 98%
of top five and top ten destinations of mannitol Sorbitol 64% 80% 65% 86%
in November 2010 declined.
Furfural 97% 100% 97% 100%
76% 89% 78% 92%
Lysine 76% 90% 91% 100%
Lysine ester and salt 58% 76% 60% 77%
Glutamic acid(GA) 99% 100% 99% 100%
Sodium glutamate 57% 77% 55% 74%
Inositol 56% 78% 57% 80%



Price Update
Ex-factory prices of corn products in Jan. 2011
Price in January 2011 Price in December 2010
Products
(USD/t) (RMB/t) (USD/t) (RMB/t)

Corn starch (North China) 440 2,920 450 3,000

Corn starch (South China) 490 3,250 503 3,350

Ethanol (Industrial grade) 837 5,550 818 5,450

Ethanol (Food grade) 1,000 6,633 980 6,533
80% Maltose syrup 473 3,140 488 3,250
70% Sorbitol 660 4,378 690 4,600
Monohydrate citric acid 980 6,497 953 6,350

Oxidized starch(Food grade) 995 6,600 983 6,550
68% Xylitol (Liquid) 838 5,560 834 5,560
HFCS (Fructose: 42%) 475 3,150 465 3,100
HFCS (Fructose: 55%) 618 4,100 600 4,000
Crystal Isomaltitol 4,297 28,500 4,502 30,000
Maltodextrin 568 3,765 556 3,705
75% Maltitol (Liquid ) 658 4,365 660 4,400
Anhydrous glucose (Food grade) 761 5,050 752 5,010
Glucose Monohydrate 550 3,650 540 3,600
Itaconic acid 2,200 14,593 2,200 14,661
98.5% lysine 2,156 14,300 2,236 14,900
Source: CCM International

FOB corn price in Dalian Port from Feb. 2010 ~ Jan. 2011

330

320

310

3 00
Unit, USD/t

290

280

27 0

260

250
26- 19- 2 0- 2 0- 21- 2 0- 1 8- 2 0- 2 0- 19- 17- 2 0-
Feb Ma r A pr Ma y Ju n Ju l Aug Sep Oct Nov Dec Ja n

Cor n 267 27 8 282 290 292 288 297 294 299 314 311 310

Source: CCM International



Domestic citric acid price keeps uptrend

E ntering the new year 2011, domestic
citric acid price witnesses uptrend,
majorly aided by the price increase of its
FIGURE3: Average price of monohydrate citric acid in China, 2010 ~ Jan. 2011

1 2 00

raw material and auxiliary material. In
1 000
January 2011, the price of monohydrate
citric acid averagely reached USD980/ 800

Unit: USD/t
t all over the country, increasing by 2.8%
6 00
over that at the end of 2010. (FIGURE3)
4 00
Domestic quotation of monohydrate
2 00
citric acid in Anhui BBCA Biochemical
Co., Ltd. (Anhui BBCA), China's leading 0
citric acid enterprise, was USD1,118/ Ja n - Feb- Ma r - A pr - Ma y - Ju n - Ju l- A u g - Sep- Oc t - Nov - Dec - Ja n -
10 10 10 10 10 10 10 10 10 10 10 10 11
t on Jan. 13th 2011, and the company
has stopped its domestic quotation for Source: CCM International
anhydrous citric acid. An insider from the
FIGURE4: Average price of sulphuric acid in China, 2010 ~ Jan. 2011
company disclosed that all the anhydrous
citric acid was for export, thus no product 140
can be supplied to domestic market. He
120
also expresses that the price increase
1 00
was mainly caused by the upgoing raw
Unit: USD/t

material price. 80

60

At the s ame t ime , We i f ang E ns i g n 40
Industry Co., Ltd. (Weifang Ensign) 20
quoted its anhydrous citric acid and
0
monohydrate citric acid at USD1,193/ Ja n - Feb - Ma r - A pr - Ma y - Ju n - Ju l - A u g - Sep- Oc t - Nov - Dec - Ja n -
10 10 10 10 10 10 10 10 10 10 10 10 11
t and 1,088/t for domestic market
respectively. Besides, another smaller Source: CCM International
citric acid manufacturer, namely
HuangShi XingHua Biochemical Co., FIGURE5: Export price and volume of Chinese citric acid, Jan. ~ Nov. 2010
Ltd., made quotations for anhydrous
citric acid and monohydrate citric acid at 9 0 ,0 0 0 980
8 0 ,0 0 0 960
USD1,186/t and USD1,065/t respectively.
940
Sales managers from both these two 7 0 ,0 0 0
920
companies also express that the price 6 0 ,0 0 0
Unit: USD/t
Unit: tonne

9 00
ascending is supported by the high price 5 0 ,0 0 0
880
of corn and sulphuric acid. 4 0 ,0 0 0
860
3 0 ,0 0 0
840
It's well known that Chinese corn price 2 0 ,0 0 0 820
has kept increasing in 2010, which exerts 1 0 ,0 0 0 800
cost pressure on corn deep-processing - 7 80
manufacturers and drives up price of Ja n - Feb- Ma r - A pr - Ma y - Ju n - Ju l- A u g - Sep- Oct - Nov -
most corn deep-processing products. 10 10 10 10 10 10 10 10 10 10 10
Although in Jan. 2011 corn price stops
Ex por t v olu m e A v er a g e ex por t pr ice
surging, it still runs at high level. On
Jan. 13th 2011, corn price in Weifang Source: CCM International
City, Shandong Province maintained at
inflation. Sulphuric acid price jumped RMB appreciation is one of the factors for
USD309/t.
to USD100/t in Jan. 2011, while it was export price increase of citric acid.
USD52/t at the corresponding period of
As the major auxiliary material of citric
last year. (FIGURE4) However, some experts also concerns that
acid, sulphuric acid's price also has
if export volume of citric acid reduces
impacted on citric acid price. In 2010,
By the way, citric acid also achieved sound in 2011 for some anti-dumping issues,
sulphuric acid price has also surged
export performance in Nov. 2010, with domestic citric acid price will decrease,
significantly, like most commodities
both export volume and price increase. as about 73% of Chinese citric acid is for
in China, which is caused by domestic
(FIGURE5) Some experts considered that exports.



China's cornstarch price decreases

M arching into 2011, domestic
price of cornstarch witnesses
downtrend all over the country.
FIGURE6: Cornstarch price in Changchun, Guangzhou and Weifang City, Oct. 2010 ~
Jan. 2011

(TABLE5) Take Changchun City, 6 00
Weifang City, and Guangzhou City for
example, average cornstarch price in 550
these three cities reduced to USD453/
t, USD471/t and USD491/t in Jan. 5 00

2011, down 4.4%, 1.6% and 1.9%

USD/t
450
separately over last month. (FIGURE6)
The following reasons can explain the 4 00
decrease of cornstarch price.
350
Firstly, market demand for cornstarch
is decreasing. During October and 3 00
1- 8- 15- 22- 29- 5- 12- 19- 26- 3- 1 0- 17- 24- 31- 7- 14-
November 2010, lots of cornstarch
Oct Oct Oct Oct Oct Nov Nov Nov Nov Dec Dec Dec Dec Dec Ja n Ja n
consuming companies rushed to
purchase cornstarch to increase their Gu a n g zh ou Ch a n g ch u n Weifa n g
stoc k in ord e r t o g u arant e e t he ir
production before Chinese Spring Source: CCM International
Festival, so the cornstarch price was TABLE5: Cornstarch price in some cities, Dec. 2010 ~ Jan. 2011
pushed uptrend at that time. However, Dec. 17th 2010, Jan. 17th 2011
City Province Change rate
USD/t USD/t
after that, demand from most of the
Shanghai Shanghai 506 498 -1.5%
downstream manufacturers reduced.
Suzhou Jiangsu 511 485 -5.0%
Thus, cornstarch companies have to
lower their quotations. Fuzhou Fujian 511 488 -4.4%
Nanchang Jiangxi 509 491 -3.6%
Secondly, small manufacturers decrease Wuhan Hubei 511 491 -3.8%
their prices in order to increase
Chengdu Sichuan 511 491 -3.8%
their sales volume and reduce their
Shenyang Liaoning 461 438 -5.0%
stock. Attracted by the comparatively
high profit margin since H2 2010 Qinghuangdao Hebei 471 446 -5.4%
(an executive officer from COFCO Source: CCM International
disclosed that the profit margin of
manufacturers, which also has impact It's believed that cornstarch price
corn starch in Sept. 2010 reached
on the price decrease of cornstarch. will rebound after Chinese Spring
USD15/t. ), many small manufacturers
Festival. On one hand, the downstream
rushed into cornstarch production at
Someone may think the supply increase manufacturers have to replenish
that time, which increased cornstarch
of corn in the market since Oct. 2010 their stock after the festival, and the
supply in China. Besides, many small
would be also a factor for cornstarch demand for cornstarch will increase.
manufacturers cut their prices, for
price decrease, however, it might not On the other hand, owing to the high
current low transaction rate and their
be the key reason as CCM estimated. price of corn, the small cornstarch
high stock.
Although newly harvested corn has been manufacturers have no much profit
marketed, its price still stays at a high against current low price, and some of
Thirdly, the product quality of small
level, for example, corn price in Weifang them even suffer loss.
manufacturers is inferior, thus, their
City in Jan. 2011 was USD308/t, the
prices are much lower than that of large
same as that in Dec. 2010.

Future of Modified Starch in Asia Pacific
CCM’s Market Reports Export summary data of Citric acid in China in
Announcement
2009
For more details, please contact CCM at Production, Market and Manufacturing Cost of
econtact@cnchemicals.com Sugar Alcohols in China



Market & Company Dynamic

DDGS from the US faces anti-dumping investigation in China

O n Dec. 28th 2010, Ministry of
Commerce of the People's Republic
of China (MCPRC) published a note
FIGURE7: Import volume and price of DDGS, 2009-2010

5 00,000 6 00
that China decides to run an anti-
4 5 0,000 550
dumping investigation into Distillers
5 00
dried grains with solubles (DDGS) 4 00,000
450
originated from the US since Dec. 28th 3 5 0,000
2010. It's believed that this move may 4 00
3 00,000
help domestic DDGS industry to some 350

Unit: USD/t
Unit: tonne

extent. 2 5 0,000 3 00

2 00,000 250
According to the note published by 2 00
1 5 0,000
MCPRC, the investigation period is 150
from July 1st 2009 to June 30th 2010, 1 00,000
1 00
and the industry injury investigation 5 0,000 50
period is from Jan. 1st 2007 to June
- -
30th 2010. Normally, the investigation
Ja n Feb Ma r A pr Ma y Ju n Ju l Aug Sep Oct Nov Dec
may be finished on Dec. 28th 2011.
Im por t v olu m e 2 009 Im por t v olu m e 2 01 0 Im por t pr ice 2 009 Im por t pr ice 2 01 0
This investigation can date back to
Nov. 16th 2010, when Anhui BBCA Note: The import volume in January, February, March, and April in 2009 was
Biochemical Co., Ltd., Jilin Fuel Alcohol 2,872 tonnes, 40 tonnes, 1,061 tonnes, and 758 tonnes respectively.
Co., Ltd., Fukang Alcohol Co., Ltd., Jilin Source: China Customs
New Tianlong Wine Co., Ltd. and other Besides, with superior quality, DDGS of anti-dumping duty to be imposed.
large domestic DDGS manufacturers from the US is more popular in But it is sure that the import volume of
submitted the application to MCPRC, domestic market despite its high price. DDGS will reduce if anti-dumping duty
re g a r d i n g r u n n i n g a n t i - d u m p i n g Price of imported DDGS in Guangdong is levied," said the insider.
investigation into DDGS from the US. Province was USD306/t on Dec. 31st
And the ministry has decided to carry 2010, while ex-factory price of the Some experts view that domestic DDGS
out the investigation, as DDGS output product in Shandong Province was manufacturers can grab more profit
of the applicants accounts for more USD226/t. And an insider from a as the product's price will be upraised
than 50% of natioanl total. And it's DDGS trading company said that the after the anti-dumping duty is levied.
believed that the imported DDGS hurts color of domestic DDGS looks not so It's predicted that domestic supply of
domestic industry. good as imported one, and its protein DDGS can't satisfy its demand in 2011,
content may be insufficient sometimes. and China needs to import the product.
Since 2006, the import volume of (Corn Products China News 1012,
DDGS has kept increasing significantly, However, given the price differential P3) Thus, aided by the undersupply
with 621 tonnes, 2,153 tonnes, 6,741 becomes wider, many feed situation and anti-dumping duty,
tonnes, and 652,166 tonnes in 2006, manufacturers may have a stronger market price of DDGS may be pushed
2007, 2008 and 2009 separately. willingness to domestic products. up. However, the undersupply situation
Moreover, the number climbed to Thus, if China does levy anti-dumping may make Chinese government not
the peak of 2.9 million tonnes during duty on imported DDGS from the US, levy the anti-dumping duty finally, or
January and November in 2010. domestic DDGS may get its opportunity the duty may be not so high, as the
(FIGURE7) Such a large import volume with much lower price. "It's hard to government must guarantee the healthy
has accounted for about 91% in total estimate the impact on the industry for development of feed industry.
output of DDGS in China. now, because it depends on the rate



Quantum High-Tech succeeds in getting listed

D ec. 22nd 2010 is the first day for
J i a n g m e n Q u a n t u m H i g h - T e c h
Biochemical Engineering Co., Ltd.
FIGURE8: Production situation of FOS in Quantum High-Tech, 2007 ~ H1 2010

1 0 ,0 0 0 1 4 0%
(Quantum High-Tech) to get listed in
9 ,0 0 0
China's Growth Enterprises Market 1 2 0%
8 ,0 0 0
in Shenzhen Stock Exchange. By this 1 00%
7 ,0 0 0
move, the company plans to raise funds

Unit: tonne
6 ,0 0 0 80%
to expand its fructooligosaccharide
5 ,0 0 0
(FOS) and galactooligosaccharide (GOS)
4 ,0 0 0 6 0%
businesses.
3 ,0 0 0 4 0%
Quantum High-Tech expects to raise 2 ,0 0 0
2 0%
USD25 million to expand the capacity of 1 ,0 0 0
FOS and GOS by 10,000t/a and 2,000t/ - 0%
a respectively. As long as the funds are 2 007 2 008 2 009 H1 2 0 1 0
available, their construction will be
started, and construction period for both Ca pa cit y Ou t pu t Ca pa cit y Ut iliza t ion
these two production lines is 2 years.
Note: The FOS capacity in H1 2010 is 5,000 tonnes per half year, then after the
Eying the strong prospect of FOS and
technology upgrading, the capacity of FOS in the whole year of 2010 increased to 11,000
GOS industries, coupled with current full
capacity operation of these two products, tonnes per year.
the company expects to grab more market Output in the above mentioned figure is calculated by that of low purity FOS, and the
shares and earn fatter profit through this high purity FOS has converted into low purity FOS.
expansion. Source: Prospectus of Quantum High-Tech

According to its prospectus, Quantum FIGURE9: Sales volume of FOS in China, 2007 ~ 2014
High-Tech has expanded its FOS capacity
1 2 0 ,0 0 0 9 0%
for twice since 2007 (FIGURE8), and
its capacity utilization can always reach 80%
1 0 0 ,0 0 0
around 100%, indicating current capacity 7 0%
can't satisfy the market demand.
8 0 ,0 0 0 6 0%
Unit: tonne

5 0%
Chinese FOS industry will witness rapid 6 0 ,0 0 0
growth in next few years thanks to the 4 0%

fast development of health-care products 4 0 ,0 0 0 3 0%
and infant formula industry. According
2 0%
to a report from Beijing Leadership 2 0 ,0 0 0
1 0%
Management Consulting Co., Ltd.
(Leadership), a strategic management - 0%
2 006 2 007 2 008 2 009 2 01 0 2 01 1 2 01 2 2 01 3 2 01 4
consultation company in China, 60% FOS (Est .) (Est .) (Est .) (Est .) (Est .)
was predicted to be used in health-care
Sa les v olu m e Gr ow t h r a t e
food and milk powder, and 30% in infant
formula in 2010. Besides, accompany with Note: The markedly lower growth rate in 2009 is caused by the “melamine scandal” in
higher and higher public's living standard 2008.
and the tendency of aging population Source: Prospectus of Quantum High-Tech
in China, more and more prebiotics are
needed. (FOS is a kind of prebiotics.) It's manufacturer in China, enjoys advantages low purity FOS can reach 4,000 tonnes per
estimated that the sales volume of FOS in these two products. Its FOS products' year, while that of its biggest competitor,
in China can reach 100,000 tonnes in purity ranges from 50% to 95% with namely Yunnan Jiansheng Bio-technology
2014 while it was 16,000 tonnes in 2009. powder and liquid status, while few other Co., Ltd., is only 2,500 tonnes per year.
(FIGURE9) Thus, Quantum High-Tech companies can produce FOS with the
believes it can earn more profit through whole purity range. Besides, in 2009, Besides, Quantum High-Tech has a large
expanding the capacity. the market share of Quantum High- and stable client to support its good
Tech in Chinese FOS reached about 44%. performance, namely Perfect (China) Co.,
Quantum High-Tech, the largest FOS Quantum Hign-Tech's sales volume of for Ltd. (Perfect China), which focuses on



health-care food and skin care products. In H1 2010, the
turnover from Perfect China accounted for 43% in total
turnover of Quantum High-Tech. And accompany with
the increased demand for FOS, the company will keep
striving to find more large clients and manage well its
customer relationship to grab more market share.
Make Fast Informed
It is worth noting that as FOS supply increases, its
price has started to decline since 2008. In H1 2010, the
Business Decisions with
average price of low purity and high purity FOS was

Industrial
USD1,059/t and USD2,329/t, compared with USD1,224/
t and USD5,010/t respectively in 2008.

Besides, in high purity FOS field, Quantum High-Tech
loads relatively high pressure. Meiji Corp and OFAFTI Biotechnologies
China News
Corp are the main exporters of Chinese imported high
purity FOS, which are the major large competitors for
Quantum High-Tech. Besides, Baolingbao Biology Co.,
Ltd. (Baolingbao) plans to launch its high purity FOS
production line with capacity of 10,000t/a at the end of Monthly Newsletter with insightful analysis on
Jan. 2011, which may become another major competitor
for the company in high purity market of FOS. Currently, Bio-Fuel
China's high purity FOS is mainly depended on imports.
Bio-Product
As for the product of GOS, it also has good prospect. It Bio-Chemical
is estimated that GOS demand in China will climb to
6,000 tonnes ~ 10,000 tonnes in next 2 ~ 3 years, while
Bio-Material
current capacity of domestic GOS is smaller than 2,500t/
a and sales volume of domestic manufacturers was only
1,500 tonnes in 2009, thus, great market potential exists
in this field.

By the way, Quantum High-Tech will enter health-care For more details, please contact CCM at
products industry and as reported, the company will try econtact@cnchemicals.com
to merge other prebiotics manufacturers to expand its
business scale.

Meihua Group's dream of listing comes true

O n Dec. 24th 2010, China Securities Regulatory Commission
(CSRC) published its approval that Wuzhou Minovo Co., Ltd.
(Wuzhou Minovo) merges Meihua Biotechnology Group Co., Ltd
and the rest will be held by Wuzhou Group (2.19%) and the
shareholders of public share of Wuzhou Minovo. (8.54%)

(Meihua Group) through issuing additional shares of 900 million, Actually, Wuzhou Minovo, a listed company in Shanghai Stock
which signifies Meihua Group succeeds in Backdoor listing. Exchange, was engaged in producing electric equipments before
merging, and the company performed not well in 2007 and 2008
The merger of Wuzhou Minovo and Meihua Group can date back with meager profit. So it expects to increase its profit and develop
to Mar. 2009, and it includes two mutually conditional parts: On better by dint of the transition from electric equipments industry
one hand, Wuzhou Minovo sells its most assets to Wuzhou Group, to fermentation and amino acid industry which enjoy great
the largest shareholder of Wuzhou Minovo before, with value prospect as the company believed.
of USD37 million. On the other hand, Wuzhou Minovo merges
Meihua Group through issuing 900 million additional shares Monosodium glutamate (MSG) industry, an important
with value of USD874 million. And after the merger, Wuzhou fermentation industry, is developing well at present. Its average
Minovo will be renamed as Meihua Biotechnology Group Co., Ltd. annual growth rate of output during 2004 to 2008 reached
(New Meihua Group) and at the same time, Meihua group will be 13.6%, and its national total output from Q1 and Q3 in 2010
revoked its corporate capacity. In addition, the shareholders of reached about 1.8 million tonnes, increasing by 17.7% over the
Meihua Group totally own 89.27% shares of New Meihua Group, corresponding period of 2009. In addition, it's predicted that the



total output of MSG in 2010 may reach 2.1 million tonnes. expects to expand its businesses to a further step through
listing. The MSG's turnover of Meihua Group was about
Moreover, as the government has restrained development USD574 million and USD598 million in 2008 and 2009
of corn deep-processing industry since 2007, along respectively, and its market share during the same period
with the close attention paid by the government to MSG reached 18.1% and 14.6%. (TABLE6)
industry for its high pollution, the number of MSG
manufacturers reduced from 200 to about 20, which After being listed, Meihua Group plans to expand its
relaxes the intense competition situation in this industry.
businesses. Right now, the company has an under-
Currently, the total output of top 12 manufacturers construction project. The investment of the first stage of
accounts for about 89% of the national total. this project (including 30,000t/a capacity of threonine,
30,000t/a capacity of lysine and 160,000t/a capacity of
In addition, some leading MSG manufacturers, which glucose) is USD211 million and it is planned to complete in
also produce glutamic acid (GA) as well, the raw material April 2011; that in the second stage (40,000t/a threonine,
of MSG, reduce their sales volume of GA and use them to 6,000t/a nucleotide, and 160,000t/a glucose) is USD151
produce MSG by themselves in order to upraise their MSG million and it is planned to start in May 2011 and launch
market share. This move reduces MSG output of some in May 2012. The company also has interest in inosine,
small producers whose GA is sourced from outside. Thus, vernine, tryptophan, and arginine production in the future.
the industrial concentration becomes higher and higher.
Meihua Group is not just involved in MSG industry, but
The high industry concentration contributes to high gross also in other amino acid products, such as threonine,
profit margin and market price for the leading companies. corn byproducts (maize embryo), and feed. Besides, the
The sales gross profit margin of the top two manufacturers, company also produces upstream industry products, like
Fufeng Group Limited and Meihua Group, reached 30% ammonia, and it even generates electricity, which makes
and 29% in 2009, while it was 18% and 22% in 2008 it enjoys cost advantage. At present, the company owns
respectively. Average MSG price is about USD1,360/t two major production bases, located in Tongliao City and
currently, compared with about USD950/t and USD1,564/ Bazhou City respectively, with MSG capacity 350,000t/
t in corresponding period of 2009 and 2010. a, threonine capacity 35,000t/a, feed capacity 300,000t/
a, corn byproducts capacity200,000t/a, and ammonia
Meihua Group is a main producer in MSG industry and capacity 80,000t/a.

TABLE6: Market situation of top 6 manufacturers in MSG industry in China, 2008 ~ 2009
Turnover,
Sales volume, tonne Market share, %
NO Company million USD
2008 2009 2008 2009 2008 2009

1 Fufeng Group Limited 516 676 332,871 661,425 20.1 25.9

2 Meihua Biotechnology Group Co., Ltd. 574 598 369,682 371,614 18.1 14.6

3 Linghua Group Incorporated Company 459 417 151,769 268,675 8.2 10.5

4 Shandong Qilu Monosodium Glutamate Group 264 387 144,624 182,246 12.2 7.1

5 Henan Lianhua Monosodium Glutamate Co., Ltd. 333 362 224,373 287,585 9.0 11.3

6 Xinle Monosodium Glutamate Foods Company 276 314 166,128 191,316 7.8 7.5

Note: The market share is calculated by output.
Source: Meihua Group

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Shanxi Huarong initiates 60,000t/a citric acid

O n Dec. 18th 2010, Shanxi Huarong
Citric acid Chemicals Co., Ltd. (Shanxi
Huarong) held a foundation stone laying
PICTURE1: Foundation stone laying ceremony of Shanxi Huarong’s anhydrous citric acid
project, 2010

ceremony of its 60,000t/a anhydrous
citric acid project (PICTURE1), which
signifies that the company begins to march
into China’s citric acid industry.

Located in Dali Science Industrial Park
with an area of 22 hectares, the anhydrous
citric acid plant mainly produces
anhydrous citric acid, compound feed
and liquid carbon dioxide products, with
capacity of 60,000t/a, 68,000t/a and
26,000t/a separately. Total investment
for this plant is about USD75 million.
An executive officer in Shanxi Huarong
disclosed that the project can be put into
operation at the end of 2011, and it’s
estimated that the company can contribute
to annual tax payment of USD8.6 million.

It's reported that citric acid production
technology in this company is quite
advanced, which can reduce the corn
consumption, energy consumption and Source: Shanxi Huarong
water consumption by 13%, 35% and 60% manufacturers may witness an opportunity the development of China's citric acid
separately per tonne citric acid production, by dint of the demand increase. And industry.
indicating that its manufacturing cost can the quality of our anhydrous citric acid
be as low as USD226/t. product satisfies BP93/BP98 standard and However, the manufacturers can find the
GB/T8269-1998 standard, and I believe ways to cope with the anti-dumping issues,
The executive officer also revealed that the product will have a good performance such as expanding the market where no
both domestic and international markets by then.'' said by the executive officer. anti-dumping and anti-subsidy duties are
are the targets for the company's citric imposed, entrepot trade, etc. In 2010, the
acid products. Although some countries However, China's citric acid industry has annual growth rate of China's citric acid's
levy anti-dumping and anti-subsidy duties situated in overcapacity currently, and export volume reached 9%, while it was 2%
on China's citric acid, Shanxi Huarong still it's not so easy for the new manufacturers and 3% in 2009 and 2008 respectively.
has confidence in the international market, to win their own place in this industry.
thanks to its huge demand for citric acid. In 2009, the total domestic capacity of The executive officer in Shanxi Huarong
It's reported that the global demand for citric acid was about 1,200,000t/a, and didn't disclose the company's measures to
citric acid is about 1.3 million tonnes, and about 73% of Chinese citric acid was cope with other's countries' anti-dumping
its annual growth rate will keep at 5% ~ 7% exported. What's worse, some countries, issue at present, but he expressed the
in next few years. like the US and EU, levy anti-dumping market environment may change after a
a n d a n t i - s u b s i d y d u t i e s o n C h i n a ' s year since the products in this plant is to
''As the largest citric acid production citric acid products, which reduces the be marketed a year later, and the company
base in the world, China's citric acid profit of manufacturers and restrains will make corresponding tactics by then.



Alliance for China's amino acid industry established

A mino Acids Industry Technology
Innovation and Strategic Alliance
(the Alliance) was established at
PICTURE2: Establishment ceremony of Amino Acids Industry Technology
Innovation and Strategic Alliance, 2010

the end of 2010, initiated by China
Fermentation Industry Association
(CFIA). (PICTURE2) And it's believed
that the Alliance can bring positive
effect on China's amino acid industry.

So far, there are 65 members in the
Alliance, which is involved in the
manufacture, trade, and research
of amino acids and some leading
companies also join in the Alliance,
like Baolingbao Biology Co., Ltd.
Actually, only the members in CFIA
can join in the Alliance, disclosed by
an executive officer in CFIA. So if a
company wants to become a member
of the Alliance, it has to accede to
CFIA firstly. Then it should submit an
application to the Alliance, and after Source: China Fermentation Industry Association
being approved by the Alliance, the
situation through establishing the S e c o n d l y , t o c o - s h a r e t h e n e w
company can become a member of it.
Alliance. The Alliance will be engaged technology and information amongst
The executive officer also said that the
in the following work to play its role in members in the Alliance, and
applicant has to be involved in amino
2011. strengthen cooperation with some
acid industry, and foreign company is
research institutes, like college and
not restrained.
Firstly, to promote technical scientific research institution. The
cooperation and make breakthrough Alliance shall fund to support the R
The Alliance is to facilitate healthy,
in core technologies. The Alliance will & D by research institutes or leading
fast and strong development for
focus on some research of advanced manufacturers, and the new research
China's amino acid industry. Now
manufacturing technology, like clean a c h i e v e m e n t s w i l l b e c o - s h a r e d
although there are over hundreds
and energy-saving production, bio- amongst members.
of large amino acid manufacturers
manufacturing, chromatographic
in China, whose annual production
separation, membrane filtration Thirdly, to establish a training system
value totally can reach USD6.76
technologies. It will also define some for members in order to cultivate
billion, and their tax payment also
standards for this industry and pay talented people in amino acid industry.
can reach USD0.75 billion per year,
close attention to the industrialization
the innovation capability of them is
of some new technologies and Fourthly, to build up a pre-warning
poor, especially in the aspect of new
high value-added products, such mechanism of amino acid industry
technology's R&D, energy saving,
a s D - a m i n o a c i d , β - a m i n o a c i d , risk and ally members to cope with
environmental protection, etc.
nonprotein amino acid, small peptide, industry risks. And the Alliance will
etc. also enhance communication between
Thus, CFIA and relative government
members, like high profile visit.
departments try to ameliorate this

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