China’ prospering corn starch industry threatened by emission discharge permit

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Publish time: 15th August, 2017      Source: CCM
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  China's growing corn starch industry is facing a threat by the newly introduced emission discharge permit system of China's government. The requirement to get the permission in order to continue producing might have a negative impact on the industry and slows down future development.  

  

   

  

  China's corn starch market is prospering currently. According to market intelligence firm CCM, the price, export volume, and demand for corn starch is booming these months. On August 6, the price was able to rise by 7.12% compared to the market price in May. The increase is backed up by rebounding corn prices in the country. The export volume of corn starch went up by significant 181% in the first five months of 2017. Hereby is it worth mentioning, that starch sugar is experiencing a boom in export volume as well. The demand of corn starch went up by more than 29% in May 2017 compared to 2016 and by 1.46% compared to April. After all, at the end of July, the average operating rate of domestic corn starch companies was 70.11%. Although the figure fell a little bit, it still remained at a historically high level.  

  

  According to CCM's market monitoring, the consumption of corn starch in China was steadily growing from January to May 2016. In the same period in 2017 however, the consumption fall from 172 tonnes in January to 155 tonnes in March and then climbed slightly again to 162 tonnes in May.  

  

  Emission discharge permit system

  However, the prosperous growth is being threatened by the new emission discharge permit system, proposed by China's government. In the beginning of August, the Ministry of Environmental Protection of the People's Republic of China has published a catalogue including the establishment of an emission discharge permit system. According to CCM, a total of 78 industries were included in the publication, whose emissions account for about 80% of the China's total. It is predicted by industry insiders, that the new regulations are likely to bring negative impact on the related industries, of which one of them is the corn starch industry.  

  

  Companies in the affected companies are ordered to prepare for the coming emission discharge permit, which they will have some time to prepare and how it affects management. Besides, those have already been identified as key emission discharge units and with emissions out of limits by the authorities also will be listed in the system. What's more, the emission discharge permit will be linked to environmental protection tax, environmental impact assessment and related environmental policies and management. Notably, starch companies with corn processing capacity of ≥ 150,000 t/a were also involved in the catalogue, and they need to obtain emission discharge permit within 2018. This procedure is likely to bring a negative impact on the booming corn starch market.  

  

  Emission discharge licenses will be valid for 3 years after issuance, and for 5 years after the first renewal. All industries are required to confirm to the guidelines by the end of 2017. The plan of the government takes part in an overall direction towards transparency and focuses on engaging the public in environmental stewardship and supervision.  

  

  Polylactide downstream market

  One major use of corn starch in China is the processing of polylactide, where corn starch and cassava are manufactured into biodegradable plastic products like bags and plates. This downstream industry is highly promoted by China's government, which is still searching for effective ways to reduce the huge corn stockpile, that is consisting of mainly low-quality corn with no use for food and feed processing.  

  

  However, in order to make the polylactide industry to a notable downstream processing market for corn, the procedure has to be enhanced. Currently, the process of producing plastic products out of corn starch is very slow and cash consuming, with only one tonne of polylactide coming out of three tonnes corn. Also, considering the higher costs of corn-based biodegradable plastic bags compared to traditional ones, the demand is still on a low level in China, especially outside the major cities. A ban on plastic bags in supermarkets whatsoever would boost the demand up to 3 million tonnes a year, according to experts' estimations.  

  

  About CCM

  CCM is the leading market intelligence provider for China's agriculture, chemicals, food & ingredients and life science markets.  

  

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