On July 9, 2012, the Ministry of Industry and
Information Technology (MIIT) announced that enterprises with inferior capacity
and high pollution & energy consumption in some industries, including
citric acid, monosodium glutamate (MSG), alcohol, paper-making, iron and steel
are to be eliminated in late 2012, according to CCM
International’s August issue of Corn
Products China News.
Acccording to the announcement, all enterprises
listed shall shut down their production lines by the end of 2012, or they will
be punished by Chinese government, showing the government's determination to
regulate domestic highly-polluting and energy-intensive industries. For
example, the government will withdraw their pollutant discharge licenses and
conduct other detailed punitive measures (Please refer to Corn Products China
News 1107).
As for corn deep-processing industry, a total
capacity of 70,000t/a citric acid, 143,000t/a MSG and 574,000t/a alcohol, were
in the list (TABLE, TABLE and TABLE). Seeing the high pollution and excessive
capacity in these three industries, in 2007, National Development and Reform
Commission and State Environmental Protection Administration (currently known
as the Ministry of Environmental Protection of China) co-issued Notice on the
Elimination of Backward Capacities in Papermaking, Alcohol, MSG and Citric Acid
from National Development and Reform Commission and State Environmental
Protection Administration (the Notice) to regulate domestic citric acid, MSG
and alcohol industries.
Generally, eliminating production lines with
high pollution & energy consumption is helpful to improve the
competitiveness of related industries, especially MSG and citric acid, in
China, which is the largest production and export country of MSG and citric
acid. Specifically speaking, the elimination will make domestic MSG and citric
acid producers raise the quality and yield rates of their products, enhancing
the competitiveness of their products and themselves.
Besides, the elimination can relieve the
over-capacity of these products to some extent. In general, the over-capacity
of these products makes their producers get in cut-throat competition,
resulting in decrease or low level of their market prices and finally profit
decrease or even loss of producers. For example, due to the low market price
and increasing cost of citric acid, COFCO Bio-chemical (Anhui) Co., Ltd., a
main citric acid producer with a capacity of 220,000t/a in China, suffered
profit decrease in 2011 and H1 2012 according to its 2011 annual report and H1
2012 report.
Furthermore, the elimination has different
effects on different scaled enterprises. Usually, small producers have inferior
technologies, higher energy consumption & pollution than large-scale
producers do. As a result, they have to shut down their production lines or
even the whole company but large-scale ones don't. For example, Henan Lotus
Flower Gourmet Powder Co., Ltd. (Lotus Flower Gourmet Powder), a main MSG
producer in China with a capacity of 300,000t/a, has to eliminate three
production lines of MSG with a total capacity of 113,000t/a according to the
elimination list (Henan Lotus Flower Gourmet Powder Co., Ltd. and Henan Lotus
Flower Enzyme Engineering Co., Ltd. are subsidiary companies of Lotus Flower
Gourmet Powder). But an insider from Lotus Flower Gourmet Powder indicated that
its capacity wouldn't sharply decrease because they planned to set up new
production lines of MSG with advanced facilities and technologies after the
elimination.
Chinese government has reinforced the
elimination of inferior capacities in recent years, as clearly stated in some
policies. For instance, the Notice just indicated that production lines of
citric acid that didn't meet national pollution discharge standard should be
eliminated, but the Catalogue for the Guidance of Industrial Structure
Adjustment (2011 edition) published in April 2011 added that capacity of citric
acid below 20,000t/a shall be eliminated.
As a matter of fact, the actually eliminated
inferior capacities always exceeded the target. For example, the target
eliminating inferior capacity of alcohol in 2010 was 300,000t/a according to
the Notice while 688,000t/a capacity was actually eliminated. For another, the
total eliminated capacity of citric acid, MSG and alcohol in 2011 and 2012 has
already exceeded the elimination target in the 12th Five-Year Plan (2011-2015)
(the Plan). It is predicted that Chinese government will continue strengthening
the elimination of inferior capacities in the rest three years of the
Plan.Inferior capacity of citric acid, MSG and alcohol to be eliminated by late
2012
On July 9, 2012, the Ministry of Industry and
Information Technology (MIIT) announced that enterprises with inferior capacity
and high pollution & energy consumption in some industries, including
citric acid, monosodium glutamate (MSG), alcohol, paper-making, iron and steel
are to be eliminated in late 2012.
Acccording to the announcement, all
enterprises listed shall shut down their production lines by the end of 2012,
or they will be punished by Chinese government, showing the government's
determination to regulate domestic highly-polluting and energy-intensive
industries. For example, the government will withdraw their pollutant discharge
licenses and conduct other detailed punitive measures (Please refer to Corn
Products China News 1107).
As for corn deep-processing industry, a total
capacity of 70,000t/a citric acid, 143,000t/a MSG and 574,000t/a alcohol, were
in the list (TABLE, TABLE and TABLE). Seeing the high pollution and excessive
capacity in these three industries, in 2007, National Development and Reform
Commission and State Environmental Protection Administration (currently known
as the Ministry of Environmental Protection of China) co-issued Notice on the
Elimination of Backward Capacities in Papermaking, Alcohol, MSG and Citric Acid
from National Development and Reform Commission and State Environmental
Protection Administration (the Notice) to regulate domestic citric acid, MSG
and alcohol industries.
Generally, eliminating production lines with
high pollution & energy consumption is helpful to improve the
competitiveness of related industries, especially MSG and citric acid, in
China, which is the largest production and export country of MSG and citric
acid. Specifically speaking, the elimination will make domestic MSG and citric
acid producers raise the quality and yield rates of their products, enhancing
the competitiveness of their products and themselves.
Besides, the elimination can relieve the
over-capacity of these products to some extent. In general, the over-capacity
of these products makes their producers get in cut-throat competition,
resulting in decrease or low level of their market prices and finally profit
decrease or even loss of producers. For example, due to the low market price
and increasing cost of citric acid, COFCO Bio-chemical (Anhui) Co., Ltd., a
main citric acid producer with a capacity of 220,000t/a in China, suffered profit
decrease in 2011 and H1 2012 according to its 2011 annual report and H1 2012
report.
Furthermore, the elimination has different
effects on different scaled enterprises. Usually, small producers have inferior
technologies, higher energy consumption & pollution than large-scale
producers do. As a result, they have to shut down their production lines or
even the whole company but large-scale ones don't. For example, Henan Lotus
Flower Gourmet Powder Co., Ltd. (Lotus Flower Gourmet Powder), a main MSG producer
in China with a capacity of 300,000t/a, has to eliminate three production lines
of MSG with a total capacity of 113,000t/a according to the elimination list
(Henan Lotus Flower Gourmet Powder Co., Ltd. and Henan Lotus Flower Enzyme
Engineering Co., Ltd. are subsidiary companies of Lotus Flower Gourmet Powder).
But an insider from Lotus Flower Gourmet Powder indicated that its capacity
wouldn't sharply decrease because they planned to set up new production lines
of MSG with advanced facilities and technologies after the elimination.
Chinese government has reinforced the
elimination of inferior capacities in recent years, as clearly stated in some
policies. For instance, the Notice just indicated that production lines of
citric acid that didn't meet national pollution discharge standard should be
eliminated, but the Catalogue for the Guidance of Industrial Structure
Adjustment (2011 edition) published in April 2011 added that capacity of citric
acid below 20,000t/a shall be eliminated.
As a matter of fact, the actually eliminated
inferior capacities always exceeded the target. For example, the target
eliminating inferior capacity of alcohol in 2010 was 300,000t/a according to
the Notice while 688,000t/a capacity was actually eliminated. For another, the
total eliminated capacity of citric acid, MSG and alcohol in 2011 and 2012 has
already exceeded the elimination target in the 12th Five-Year Plan (2011-2015)
(the Plan). It is predicted that Chinese government will continue strengthening
the elimination of inferior capacities in the rest three years of the Plan.
Main content of Corn Product China News 1208:
Domestic VC suffers from anti-monopoly sue from the US
Brazil reaches price commitment with Chinese citric acid and citrate
exporters
Chinese corn products Imp. & Exp. analysis in June 2012
Domestic market price of corn oil keeps stable in Aug. 2012
China's market prices of four key amino acids increase or keep stable in
Aug. 2012
Baolingbao enjoys uptrend in its performance in H1 2012
Two new subsidiary companies to make Meihua Group more competitive
Shengquan Group launches 20,000t/a cellulose ethanol production line in
Mid-August
Domestic corn starch sees depressed presentation in H1 2012
Inferior capacity of citric acid, MSG and alcohol to be eliminated by
late 2012
China's import volume of corn surges by about 67 times in H1 2012
Domestic market price of DDGS sees uptrend in Aug. 2012
… …
Corn Products China News, a monthly publication issued by CCM International on 20th of every month, reveals the driving force of news stories and deeply analyzes the influence of trends and
dynamics on domestic and
international corn deep processing industry.
About CCM
CCM is dedicated to market research in China, Asia-Pacific Rim and global
market. With a staff of more than 150 dedicated highly-educated professionals.
CCM offers Market Data, Analysis, Reports, Newsletters, Buyer-Trader
Information, Import/Export Analysis all through its new proprietary product
ValoTracer.
CCM International Ltd.
Guangzhou CCM Information Science & Technology Co., Ltd.
17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road,
Guangzhou 510070, China
Tel: 86-20-37616606
