CCM: Supply of China’s starch remains tight before 2015 Spring Festival

Publish time: 6th September, 2016      Source: CCM
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  Before the Chinese Spring Festival in 2015, the supply of domestic starch market remains a little bit tight and it is predicted that the starch prices will be fluctuating in short term.



  Source: Bing


  It is disclosed that the inventory of China's starch market sees a little bit insufficient before the Chinese Spring Festival. It is forecast that the starch price will keep fluctuating in China in short term.


  Due to the tight supply of raw materials, losses of manufacturers and slow finances recovery, part of corn starch processing enterprises continue to suspend their production for production line repairs. The operating rates in North China do not increase at the moment. Of this, most of enterprises run at low production rates except one or two enterprises in Henan Province are preparing for regular overhaul in Spring Festival. Along with the coming Spring Festival, some enterprises will conduct overhaul in the first ten-day period of Feb. 2015.


  Meantime, recently, the inventory of imported corn starch sees declines especially the high-quality corn starch is in short supply. On one hand, the operating mode of manufacturers is changing to the de-stocking mode, thus manufacturers are gradually reducing their inventories and even some products are out of stock; however, on the other hand, the middle and low end products produced in Vietnam are sufficient, thus the supply for those corn starches are normal.




  Potato starch is the substitute of corn starch. Although there are market purchasing activities in North China's factories, the purchase volumes for potato starch are very few near the Spring Festival. What's more, traders hold cautious attitude towards purchasing and investment activities affected by the 2014 depressed market. It is revealed that the current inventories of potato starch can basically support the sales until the later period of the Spring Festival. Besides, the weakening demand from downstream market also put inventory pressure on the traders. Insiders predicted that the inventories of traders are about 70,000 tonnes, accounting for about 32% of the total domestic inventory (around 220,000 tonnes).


  Since corn starch is the substitute of potato starch and cassava starch, its declining price gives it the price advantage. In the past, corn starch accounted for over 80% shares in China's starch market based on its price advantage. At present, the price difference between corn starch and other starches is widening. It is known that the largest difference even reached 55% according to the reference prices of several starches in 2014. Therefore, corn starch will gradually replace other similar starches in the future because of its low price.


  Regarding the current situation, the price of China's corn starch is witnessing a growth trend. However, since the 2014 corn starch market suffered from long-term depression in earlier stage, investors and industry entrants still hold the wait-and-see attitude to the corn starch market, thus the spot market is hard to rebound in supply before Spring Festival. CCM predicted that if the market supply and demand (mainly the industrial demand from sugar factories, papermaking and fermentation industries) does not see substantial improvement, the market prices of starches are hard to be pulled up only by the insufficient supply and will mainly keep frustrating. 





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