China soybean imports to stay flaccid for 2-3 yrs

REPORTS FROM THE MPOB INTERNATIONAL PALM OIL CONGRESS (PIPOC) 2005

Chinese soybean imports are likely to stagnate for the next 2-3 years at current levels, said Steven Zhou, promoter of Shanghai Pansun Cerals and Oils Development Co Ltd, one of the top Chinese oils and oilseeds importer.

In 2004-05, i.e. during the October-September period, the imports are likely to touch 27-28 million tonne. Last year's imports were around 24 million tonne. As the largest oils and oilseeds importer in the world, Chinese demand impacts the international prices significantly.

"This is largely due to the current over-invested crushing capacity which is now finding it difficult to sustain. The rumour mill is abuzz with news that many small and medium enterprises are in talks with multinationals, such as ADM and Bunge, to sell off their processing units," Zhou said.

Currently, the Chinese soybean crushing capacity is estimated at 50 million tonne a year, he added. Over the years, China has encouraged imports of bean vis-à-vis meal and oils as it will increase job opportunities in the crushing and refinery business, apart from saving the country's foreign exchange.

Over the last few years, with the crushing industry burgeoning in the coastal regions, soyoil has penetrated into the rapeoil market, largely in the Yangtzi River region in the country.

Further, palm oil is also seen making its presence felt as a cheaper alternative to both rapeoil and soyoil. However, palm oil is still to gain popularity as an edible oil and is mainly used for blending oils, food manufacturing and chemicals. The chemical industry's demand for palm oil, especially palm stearin, is seen rising significantly.

The import and consumption of palm stearin here has gained momentum over the last two years following the rapid development of domestic chemical industry and enhancement of extraction facilities, Zhou said.

Currently, the capacity of extraction facilities is estimated at 10,000 tonne per day. Palm stearin imports have also risen as in 2003 its import tariff was lifted.Chinese palm consumption is restricted by quota limits but is likely to rise post the removal of quota regulations in 2006, he added. Currently, China 's palm oil consumption is about 300,000 tonne per month.

In 2004-05, Chinese palm oil imports are likely to touch 3.86 million tonne, including 2.35 million tonne of RBD palmolein and 1.5 million tonne of palm stearin. Crude palm oil imports are minimal into the country due to higher tariffs. Currently, Malaysia fulfils 69.8 per cent of the Chinese demand followed by Indonesia at 29.8 per cent.

(This correspondent's trip was sponsored by Malaysian Palm Oil Promotion Council)