Owing to a Rapid Increase in Capacity, Corn Further Processing Sector Would Face Increasing Pressure from Overcapacity

By CnAgri2018-04-08 15:23:24 Print In the last ten years, corn further processing industry has always been the one regulated and restricted emphatically by the policies. But, in order to cut down corn stocks, the government carried out a serious of policies to encourage the development of further processing industry in 2016. Influenced by that, the companies start to draw up a plan of capacity expansion.   Recently, Siping Municipal Government of Jilin, China Complete Engineering Co., Ltd. and Tiancheng Corn Development Co., Ltd. signed framework agreement on newly building corn further processing industrial park project. The project is divided into two phases: the first phase is to build 0.3-million-ton fuel ethanol project that would start construction in June 2018 and put into operation in December 2019; the second phase is to set up 1.2-million corn project involving in corn starch sugar and amino acid biochemical products, which would start construction in May 2020 and put into operation in December 2021. It was predicted that 17 million MT of corn further processing capacity would put into operation in the next 2-3 years, and at that time, China’s corn consumption for further processing would range at 75-80 million MT every year.
 
However, China’s corn further processing industry has been experiencing serious overcapacity and is in the integration period. Especially fuel ethanol companies would see an extremely serious loss without the subsidies from government. In order to solve the problem of overstocks, the government encourages greatly further processing industry, which would bring about other problems: along with a tight balance of grain for a long time and the rationalizing of oversupply of corn, the problem of overcapacity faced by corn further processing would reappear, and newly-built projects possibly would fall into loss again.