Will the starch industry be profitable in 2016?
I. Supply and demand of starch industry
In 2015, China's corn starch production capacity was 33.2 million tons, with a start-up rate of 57.02%, and the output was 18.6 million tons, which was higher than 14 million tons in 2014. The increased starch production mainly occupied a large part of the market share of cassava starch, and the total demand for corn starch in that year was 18.8 million tons.
At present, the starch industry in China is still operating at a high rate of 67%, while Shandong and Hebei are operating at a rate of 89%, which is the highest record after the Spring Festival. According to 67% starch production rate, the total monthly corn starch supply reached 185,000 tons; at this time, the total monthly starch consumption has fallen below 1.7 million tons, and the situation of supply exceeding demand is very obvious. At present, the decline in starch prices and the increase in inventories are obvious examples of over-supply and over-demand.
II. Starch Price
Affected by the purchasing policy of corn market, the situation of corn inversion in the north and South has been very serious in 16 years, which can be said to have reached a historic limit: at present, the mainstream purchasing price of corn in Hebei, Henan and Shandong has generally fallen back to between 1630-1710 yuan/ton (without discount); at this time, the purchasing price of corn in the northeast is generally between 1800-1960 yuan/ton, and the price of corn in the north and south is the most inverted. The total amount has exceeded 300 yuan/ton; according to the current average price of 1630 yuan/ton of corn in Hebei, Henan and Shandong, plus the overall processing cost of 500 yuan/ton (many manufacturers are less than 500 yuan/ton), the current factory price of 2200-2250 yuan/ton is profitable. However, starch enterprises in Northeast China are comparatively bleak. If there is no subsidy, the cost is about 1900 yuan + 600 yuan, and the cost is about 2500 yuan / ton. At present, the factory price of 2200-2250 yuan / ton has already lost a lot. If it is more serious, it will lose cash flow.
At present, the dominant price of starch in China is in North China. Under the influence of oversupply, demand and inventory increase, starch prices will mainly fall in the later period. For 16 years, the annual average ex-factory price in North China will be around 2100 yuan/ton, and that in Northeast China is expected to be around 2000 yuan/ton.
III. Starch Profit in 2016
As a whole, the supply of starch is excessive, the supply of starch is abundant, and the impact of aging maize warehousing, the profitability of North China will gradually decline until the loss, and some enterprises begin to stop production and limit production, so that the market reaches a balance between supply and demand.
The starch production enterprises in Northeast China have already lost a lot. In the future, even if the aging corn with 1400 yuan + 150 yuan is used, the cost will be around 2150 yuan/ton, and the factory price of 2000-2100 yuan/ton will also be a loss situation! (Starch Industry Association)
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