In 2016, as the purchase of corn for temporary storage comes to an end with the
purchase volume hitting a record high (125 million tonnes in Oct. 2015-April
2016), the corn extras in the domestic market are basically consumed.
Currently, the overstored corn plays a leading role in the market and the whole
market is filled with changes. However, as the downstream sector of corn
industry, the corn starch industry shows an upward trend.
Ex-works price
According to CCM's price monitoring, the ex-works price of corn starch has
started to rebound since April. Some manufacturers keep increasing the price in
June. On 14 June, the ex-works prices of first grade corn starch were:
Weifang Shengtai Medicine Co., Ltd.: USD364.25/t (RMB2,400/t),
USD30.35/t (RMB200/t) higher than last month
Shandong Shouguang Junneng Golden Corn Co., Ltd.: USD368.82/t
(RMB2,430/t), USD30.35/t (RMB200/t) higher than last month
The domestic market price of corn hit the bottom in May and then rise slightly
in June due to the short supply, allowing the manufacturers to raise their
ex-works prices. As a result, they take the opportunity to raise the ex-works
price. According to CCM's price monitoring, as of 14 June, 2016, the corn
market price was USD278.22/t (RMB1,833.16/t), USD3.04/t (RMB20/t) higher than
May.
Monthly ex-works price of corn starch in northern China, 2014-2016
Source: CCM
Operating rate
Since Oct. 2015, the operating rate of domestic corn starch enterprises has
maintained over 60% and hits a record high in June 2016 (73.46% in the first
work week of June – 1-8 June), thanks to following factors:
1. The rising profitability stimulated the producers. As the price rises of
corn starch and by-products are far larger than that of corn (raw material for
corn starch), enterprises enjoys higher profitability. According to CCM's
research, corn starch enterprises turned losses into gains in May – profit of
some reached about USD4.40/t (RMB29/t), USD8.35/t (RMB55/t) higher than April.
As of 8 June, the figure even increased to around USD18.21/t (RMB120/t).
2. The demand for corn starch strengthened. In April, the consumption of corn
starch was 1.61 million tonnes in China, up 3.9% MoM and 3.2% YoY.
Monthly operating rates of corn starch enterprises in China, 2014-2016
Source: CCM
Exports
China's export volume of corn starch increased in April 2016 after declining
for 4 consecutive months. According to China Customs, export volume of corn
starch (HS code: 11081200) was 5,537 tonnes in April, up 35.1% MoM. At the same
time, the export price increased slightly by 0.72% MoM to USD416.84/t. Notably,
more and more corn starch is exported to Indonesia, a proportion from 27% in
April 2016 to 53% in April 2016.
Exports of corn starch in China, Jan. 2014-April 2016
Source: China Customs
Despite the present upward trend in corn starch market, the lower purchase
price of corn for temporary storage is predicted to pull down the market price
of corn starch, later when the huge corn inventories flow into the market. This
may affect corn starch enterprises directly.
This article comes from Corn Products China News 1606, CCM
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Tag: starch corn