China’s
growing corn starch industry is facing a threat by the newly introduced
emission discharge permit system of China’s government. The requirement to get
the permission in order to continue producing might have a negative impact on
the industry and slows down future development.
China’s corn starch market is prospering currently. According to market intelligence
firm CCM, the price, export volume, and demand for corn starch is booming these
months. On August 6, the price was able to rise by 7.12% compared to the market
price in May. The increase is backed up by rebounding corn prices in the
country. The export volume of corn starch went up by significant 181% in the
first five months of 2017. Hereby is it worth mentioning, that starch sugar is
experiencing a boom in export volume as well. The demand of corn starch went up
by more than 29% in May 2017 compared to 2016 and by 1.46% compared to April.
After all, at the end of July, the average operating rate of domestic corn
starch companies was 70.11%. Although the figure fell a little bit, it still
remained at a historically high level.
According
to CCM’s market monitoring, the consumption of corn starch in China was
steadily growing from January to May 2016. In the same period in 2017 however,
the consumption fall from 172 tonnes in January to 155 tonnes in March and then
climbed slightly again to 162 tonnes in May.
Emission discharge
permit system
However,
the prosperous growth is being threatened by the new emission discharge permit
system, proposed by China’s government. In the beginning of August, the
Ministry of Environmental Protection of the People's Republic of China has
published a catalogue including the establishment of an emission discharge
permit system. According to CCM, a total of 78 industries were included in the
publication, whose emissions account for about 80% of the China's total. It is
predicted by industry insiders, that the new regulations are likely to bring
negative impact on the related industries, of which one of them is the corn
starch industry.
Companies
in the affected companies are ordered to prepare for the coming emission
discharge permit, which they will have some time to prepare and how it affects
management. Besides, those have already been identified as key emission
discharge units and with emissions out of limits by the authorities also will
be listed in the system. What's more, the emission discharge permit will be linked
to environmental protection tax, environmental impact assessment and related
environmental policies and management. Notably, starch companies with corn
processing capacity of ≥ 150,000 t/a were also involved in the catalogue, and
they need to obtain emission discharge permit within 2018. This procedure is
likely to bring a negative impact on the booming corn starch market.
Emission
discharge licenses will be valid for 3 years after issuance, and for 5 years
after the first renewal. All industries are required to confirm to the
guidelines by the end of 2017. The plan of the government takes part in an
overall direction towards transparency and focuses on engaging the public in
environmental stewardship and supervision.
Polylactide downstream
market
One
major use of corn starch in China is the processing of polylactide, where corn
starch and cassava are manufactured into biodegradable plastic products like
bags and plates. This downstream industry is highly promoted by China’s
government, which is still searching for effective ways to reduce the huge corn
stockpile, that is consisting of mainly low-quality corn with no use for food and feed processing.
However,
in order to make the polylactide industry to a notable downstream processing
market for corn, the procedure has to be enhanced. Currently, the process of
producing plastic products out of corn starch is very slow and cash consuming,
with only one tonne of polylactide coming out of three tonnes corn. Also,
considering the higher costs of corn-based biodegradable plastic bags compared
to traditional ones, the demand is still on a low level in China, especially
outside the major cities. A ban on plastic bags in supermarkets whatsoever
would boost the demand up to 3 million tonnes a year, according to experts’
estimations.
About CCM
CCM
is the leading market intelligence provider for China’s agriculture, chemicals,
food & ingredients and life science markets.
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