This newsletter will help you stay ahead of the game in this
fast-changing market with real-time reporting on the entire sweeteners industry
chain, from raw materials to end consumption. It includes breaking news from
China and abroad, the latest market data (price, import & export,
production, consumption, operating rates, etc.), in-depth analysis of market
trends, Chinese government policy, performance of Chinese producers, M&A,
new technology, and expert commentary from industry insiders.
Here is the Editor's Note for you to know about the Aug.
issue specifically:
In H1, Chinese sweeteners companies showed very different
financial performances: downs in sugar and functional sugar manufacturers and
ups in HIS ones.
Sugar & functional sugar
The rise in sugar price did not benefit the manufacturers;
instead, the decrease in demand (caused by change in consumption habit) set
back their performance. For instance, Nanning Sugar recorded a YoY fall of
52.25% in sales from sugar business, and COFCO Tunhe 20.52%.
Now people are inclining to healthy consumption habit.
However, the domestic made functional sugar is still not well recognised,
challenging the manufacturers largely. In this context, Shandong Longlive had a
YoY fall of 0.04% in the sales of functional sugar. By contrast, Sanyuan
Biotechnology strategically carried out marketing activities and sales
promotions (participations into industry exhibitions / technology related
seminar, construction of official website and advertising) and improved the
recognition of its erythritol. In H1, the sales went up by 79% YoY.
HIS
Such sweeteners now are growing maturely and stably. Anhui
Jinhe, for instance, respectively achieved a YoY rise of 32.02% and 35.92% in
sales volume and sales of ace-K. It also noted another key factor: the tight
supply of raw material DK contributed to upturn of ace-K price.
Still functional sugar segment stands out amongst all
sweeteners and boasts bright prospect. The “Big Health” business is also hoped
to develop vigorously, which will be a contribution to the functional sugar
business.
Headline
- On 20 July, 2016, the CFDA released the Notice to Further
Enhance Supervision on Food Additive Production, a move intended to enhance the
supervision on food additive business and establish a traceability system. The
notice also pertains to the segmented sweetener business. Improving market
transparency and guaranteeing product quality and safety is paramount, however
this will cause increases in production costs for manufacturers and a slight
rise in prices.
- In late July 2016, Wanglong Group, a manufacturer of DK for
ace-K, suffered a pipeline leakage which forced it to suspend production for
repairs, causing tight supply of DK. The domestic ace-K market is expected to
be monopolised which is also predicted to increase the price of ace-K in the
future.
- On 28 July, 2016, the EU announced the final ruling
regarding the review of China made aspartame anti-dumping suit, showing results
consistent with primary determination: to continue levying anti-dumping duties
on Chinese aspartame exporters. It is expected that structure of shares seized
by the exporters in the EU will change and that exporters will vigorously
develop overseas market.
- Now Chinese oligosaccharide manufacturers are carrying out
"Big Health" business activities, in a move to strengthen their competitiveness
in this segment. Thanks to the strong demand for "health" and the
bright prospect of "Big Health" business, the production capacity of
oligosaccharides will increase and the price will decrease.
- On 5 Aug., 2016, Baolingbao announced the pass of Kosher
certification on its resistant dextrin. It is hoped that the company will
vigorously develop and produce functional sugars and enhance its profitability
in the future.
- In Aug. 2016, Sanyuan Biotechnology released the H1
financial report, which showed a turnaround. This is mainly because the company
expanded its main erythritol business and optimised its production process. It
is hoped that the company will continue improving its performance.
- On 18 Aug., 2016, Anhui Jinhe released its H1 financial report,
saying that both sales and profit increased, mainly thanks to the rises in
production and sales of ace-K. Publisher predicts that the company would
improve its performance stably.
- In H1 2016, Shandong Longlive recorded fall in sales and
rise in profit, mainly because of declines in sales of main businesses and
receipts of government subsidy.
- Since July 2015, China's sorbitol price showed a downturn,
mainly because of the continuously decreasing corn price and the weakening
demand. It is expected that the demand and price will increase to certain
extents, since its application range is expanded.
- In June 2016, China's exports of xylitol were down by 22.87%
MoM. However it maintained growths in H1. Given already low price, it is
expected that the figure will not decrease largely in the future.
On 5 Aug., 2016, Baolingbao Biology Co., Ltd. (Baolingbao)
announced that it passed the Kosher certification on its resistant dextrin,
which enables its sales in countries having large Jewish populations such as
Israel, Russia, the US and Canada. Specifically in the US, Kosher certified
foods appeared increasingly, at a rate of 10% per year.
"The rapidly growing Kosher food business provides an
opportunity for us to expand the market," stated Baolingbao. Early on 18
July, the company officially launched resistant dextrin onto the market.
Resistant dextrin is a dietary fibre based on starch, which
is dextrinised under acidic condition. It has features such as high tolerance
regarding digestion (certain intake of sugar alcohol will cause poor digestion
and diarrhea, whilst resistant dextrin will not have such problems unless it is
taken in in large quantities), low GI (= glycemic index), low insulin index,
low calorie, prevention of dental caries and strong solubility, and plays an
important role in food nutrition and clinical medical science.
Baolingbao is one of the few manufacturers able to produce
resistant dextrin in the world. As a new functional sugar, it is expected to
build new sources of profit growth to the company.
Baolingbao is now mainly running the business of starch
sugar, especially high fructose corn syrup (HFCS, 170,000 t/a). According to
its full-year 2015 financial report, its sales of starch sugar accounted for
50% of the sales mix. In 2016, the sales are hoped to increase further, since
HFCS is increasingly substituting sugar (due to constantly growing sugar price)
and price of its raw material corn is decreasing continuously.
Meanwhile, Baolingbao has been strategically developing
functional sugar business. In 2015, its sales from oligosaccharides rose by
5.27% YoY, and sugar alcohol by 80.88%. In regard to production, its 50,000 t/a
fructose (solid), 5,000 t/a galactooligosaccharide (GOS) and dextrin drying
projects were put into operation in late 2015, and its 5,000 t/a crystalline
trehalose project is to start up in H2 this year.
Functional sugars are highlighted for their not being broken
down by human body, nearly zero content of calorie, and being drive for the
proliferations of probiotics in intestinal tract. Their market prospect is
bright. For instance, resistant dextrin is of great significance to food
nutrition and clinical medical science; erythritol shows strong advantages in
baked food and chocolate thanks to its not absorbing moisture and good thermal
stability; trehalose is a good protective agent in pharmaceuticals and
bioproducts.
However, the production processes for functional sugars are
comparatively complicated, and the development of some products including
resistant dextrin and trehalose is at a primary stage in China. Enterprises
with an intention to develop the business should input large quantities of
capitals, which in the short run, will exert heavy pressure on them. For
instance, Baolingbao ever predicted that its expenses will increase in H1,
since the projects are just put into operation and are not working at full
capacity.
However, this strategic business certainly will bring new
profits to Baolingbao in the long run.
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