Sweeteners China News 1307 – New Research Available

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Reportbuyer.com just published a new market research report: Sweeteners China News 1307.

It is estimated that the development of some sweeteners in China is confronted with some problems now.

Actually, there exists an overcapacity problem in two industries, namely the sucralose industry and the xylitol industry. Some factors, however, such as the good prospect for sucralose and the diversified development has prevented the enthusiasm about investing in these two industries from weakening over the past few years, especially the one in the domestic sucralose industry.

Besides, some sweeteners in China rely so much on export. For example, the development of domestic mogroside industry is almost totally dependent on its demand from the US. But some products underperformed in export business in 2013. For example, the export volume of China's maltitol decreased by 16.94% year on year in the first four months of 2013, which exerted a negative effect on the industry's development.10. The first LiPF6 production line of China without using HF as raw material was officially put into production by Sichuan Huangming. Competition in domestic xylitol industry may be more intense in the near future.

It is predicted that the competition in the domestic xylitol industry will become increasingly intense in the near future because of the relatively serious overcapacity at present and more new production capacity to be launched in the near future.

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Actually, the overcapacity problem for the domestic xylitol industry at present is relatively serious. According to CCM's investigation, the total capacity of xylitol in China was over 132,000t/a while its national output was only about 67,000 tonnes in 2012, with an operating rate of just over 50%.

The overcapacity in the domestic xylitol industry can be attributed to two reasons as follows.

For one thing, high downstream concentration brought less opportunities to domestic xylitol producers to fully utilize their production capacity. For example, about 81% of the national output of xylitol was consumed by domestic downstream enterprises, and the consumption volume in the domestic sugar-free chewing gum industry accounted for about 86% of the domestic total in 2012. It is obvious that the development of the domestic xylitol industry depends on that of domestic sugar-free chewing gum industry. But in China the market share of sugar-free candy is so small that it limits the development of the domestic xylitol industry. In addition, high dependence on the domestic sugar-free chewing gum industry means that it is difficult for domestic xylitol producers to sell their products to other downstream industries in China.

For another, some xylitol producers in China rely so much on their export business. But due to the global economic crisis, the demand for China's xylitol from the overseas market declined in 2012. According to China Customs, 11,523 tonnes of China's xylitol was exported to the overseas market in 2012, decreasing by 30.83% year on year. It is believed that the weak demand for China's xylitol from overseas market in 2012 also gave rise to the decline in the operating rate of some domestic xylitol producers, worsening the overcapacity.

Nevertheless, under the overcapacity pressure in the domestic xylitol industry, some enterprises still want to enter the domestic xylitol market, which will further aggravate the overcapacity problem of domestic xylitol industry. For example, Shandong Shenghao Biotechnology Co. Ltd. (Shandong Shenghao, a wholly-owned subsidiary of Shandong Sun Paper Industry Joint Stock Co., Ltd.) took its first step into the domestic xylitol market by investing about USD16.23 million in the establishment of a factory of crystalline xylitol with a capacity of 10,000t/a and of liquid xylitol (50%) with a capacity of 4,000t/a in 2012. And in Jan. 2013, Zhumadian Tianfang Biological Engineering Co., Ltd. (Zhumadian Tianfang) invested as high as USD259.74 million to build a factory, including a production project on xylitol with a capacity of 40,000t/a.

Once the production projects above come into play, it is likely that the competition in the domestic xylitol industry will become more intense in the near future. On the contrary, it is predicted that the demand for China's xylitol both from home and abroad will not see a significant increase in the near future. The problem of the high downstream concentration is the first obstacle that the domestic xylitol industry should tackle, but it takes time to explore new downstream industries.

The intense competition of domestic xylitol industry finally has a negative effect on the producers' profit. In order to expand their market share, domestic xylitol producers would better decrease their product prices. Since 2012 the average ex-works price of crystalline xylitol in China has shown a downtrend from USD4,417/t in Jan. 2012 to USD4,233/t in May 2013. Though the cost of its raw material–corn cob–was also on a decrease, but the decrease rate was unable to keep pace with the one of xylitol's price. The average ex-works price of corn cob in China was USD77/t in 2012, but it just decreased to USD73/t in the first five months of 2013. It is obvious that by selling the same volume of xylitol domestic xylitol producers gained less net profit than before.

Therefore, more intense the competition in the domestic xylitol industry will be, more difficulties in selling the xylitol and lower prices of China's xylitol there will be. In the near future, the price of China's xylitol may continue to decline, leading some producers to withdraw from the industry.

Lier Chemical enjoys double-digit rise in revenue and net profit in H1 2013.

Read the full report:

Sweeteners China News 1307

http://www.reportbuyer.com/food_drink/flavours_ingredients/sweeteners_china_news_1307.html#utm_source=prnewswire&utm_medium=pr&utm_campaign=Food_Ingredient

For more information:
Sarah Smith
Research Advisor at Reportbuyer.com
Email: query@reportbuyer.com
Tel: +44 208 816 85 48
Website: http://www.reportbuyer.com

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