July 16, 2007

 

Global Bio-Chem expands despite China's curb on corn processing

 

 

Global Bio-Chem Technology Group Co. Ltd, a major Chinese corn processor, is expanding its capacity by a third despite recent government initiatives to curb grain-based manufacturing. 

 

Grain processing companies use crops such as corn to churn out industrial or consumer goods, drawing down the nation's food supply. Government authorities are hoping to scale back operations of such industries and thus save farmers from high feed prices.

 

Far from scaling back its operations, Global Bio-Chem is expanding instead; its polyol facility is slated to start converting corn starch into about 20 kinds of plastic this month.

 

In a Reuters interview, Liu said that rather than clamping down on the company because it produces grain-based products, the government is supporting large-scale companies with advanced technologies such as Global Bio-Chem.

 

The company is based in China's top corn-producing province of Jilin and is the first company to commercially produce polyol from corn. The company currently operates a  200,000-tonne-per-year plant which produces lysine and sweeteners.

 

Beijing is closing small, polluting corn-processing plants across the country, while halting approval for any expansion plans for new or existing plants.

 

Despite the crackdown, Liu said the move should help stabilise domestic corn prices, especially as China is expected to harvest a record crop this year.

 

In China, Global Bio-Chem competes with Xiwang Sugar Holdings Co. , Luzhou Bio-Chem Technology or Fufeng Group Ltd.

 

Liu said Bio-Chem was benefiting from the high pork prices, which had encouraged farmers to use more lysine to grow healthier pigs after outbreaks of blue ear disease.

 

Lysine demand in China is increasing by 20 percent each year, Liu noted. Global bip-Chem, China's largest lysine producers, accounts for 60 percent of the country's lysine demand and a 30-percent share of the global market.

 

With lysine prices in China likely to recover 15 percent on average this year, Liu said Global Bio-Cham planned to produce 10 percent more this year, although it was not adding capacity.

 

The cuts in tax rebates, implemented since July, has done little to affect the companies's export. Up to a third of the lysine manufactured at the plant is exported.