July 2, 2008

Corn starch makers to close as Beijing prepares for the Olympics

China has closed several small corn starch makers located in cities which will host events for the Olympic Games in August, as part of efforts to fight pollution, industry officials said on Tuesday (July 1, 2008).

Officials said the move was unlikely to hurt corn consumption because most of the plants being shut down were small.

Beijing has spent billions to curb pollution ahead of the Olympics to be held next month. 

To clean up the environment around the games venue, the government has also relocated and closed many polluting steel mills.

In Shijiazhuang, capital of Hebei province, neighbouring Beijing, 47 out of 49 starch makers were closed, said Angela Wang, a senior analyst with a futures company, Green Group.

However, big companies such as Xiwang Sugar Holdings Co and Fufeng Group Ltd. were not affected, said company officials.

Analysts agreed the closures would not affect overall supply as there is already too much capacity in the market. Moreover, corn sweetener production was declining over past months as a result of lower prices of natural sugar after record production.

Analysts estimated starch plants near Beijing consumed more than 1 million tonnes of corn a year. China's corn processing industry consumes about 40 million tonnes a year.

With demand from the pig breeding industry, domestic corn prices were likely to remain strong even after the October harvest partly because of higher planting costs, they said.

Physical corn price rose to record high or 8 percent in the year in May in Dalian, on anticipation of tight supplies, but Beijing swiftly moved to curb further increases through sales of corn reserves.