The Issue of Corn Starch Overcapacity Would be More Serious in the Next 2-3 Years

By CnAgri2017-06-13 09:33:36 Print

Along with the loosening of restrictions on newly-built corn further processing projects from the government and the preferential policies for corn further processing companies such as cheap materials and subsidies, some further processing companies have continued to make a plan of capacity expansion since last year. Corn further processing capacity would increase by 20 million MT in the next three years. Due to extensive use of corn starch and a long chain of downstream processing, broad space of demand growth but a saturated demand for corn alcohol, as well as instability of demand from fuel alcohol projects, newly-built capacity most is from corn starch or starch deep processing products, whose proportion ranges at 75-80%.

The period of a rapid growth in demand for corn starch has finished. Now, the demand for corn starch from starch sugar is biggest, accounting for more half of total corn starch consumption in 2016. Besides, paper making, chemical and medicine sectors, as well as food processing sector such as beer also are the main consumer groups of corn starch. However, sugar is in a periodically abundant supply and the consumption of starch sugar still is limited, besides, the demand for corn starch from other sectors won’t ascend obviously. In the next five years, domestic corn starch would maintain an annual compound growth of 5%. By 2020, the demand for corn starch would reach 27 million MT, up 20% from 2016.

2016 corn starch capacity reached 35 million MT. By 2020, corn starch capacity would have increased by 10 million MT to 45 million MT. It means the average operating rate of corn starch processing companies is only 60%, and the problem of overcapacity would be more serious.