September 21, 2004
Brazil Soyoil Exporters Fear Chinese Law Will Curb Shipments
Brazil's soy crushers are concerned new Chinese soyoil import rules on hexane levels will be used to curb booming exports.
Exports from the world's No. 2 soy exporter to China soared 182% to 554,000 metric tons in the first seven months of 2004. But from next month, Chinese soyoil imports can have no more than 100 parts per million of hexane in unrefined soyoil, much higher than the industry standard threshold of 600 parts.
"They could use these new restrictions to cool down exports," said Cesar de Sousa Borges, vice president of the Brazilian Vegetable oil Industries Association, or Abiove.
He said the new rules are part of a strategy to limit soymeal and soyoil exports to nurture the expansion of the local crushing industry.
Hexane is a derivative of petroleum used to extract soyoil. Producers already make every effort to recover hexane and the threshold doesn't make any sense, said Borges.
Abiove forecasts Brazil will export 900,000 tons of soyoil to China this year, some 76% higher than the year before. Unrefined exports account for approximately 90% of these shipments.
Since vessels take 45 days to reach China, the new rules could start affecting shipments that left Brazil in the second half of August.
The new rules followed the ban of imports of Brazilian soybeans by Chinese authorities from a long list of companies in April and May after fungicide-tainted beans were found among cargoes.
Overall, soyoil exports are expected to reach 2.7 million tons in 2004-05, up 12% from the year before.