Increased competition among Chinese crushing companies was hitting profitability in the sector and leaving half of the potential production capacity idled due to poor margins, representatives of two leading Chinese crushing companies were quoted as saying at a forum in Dalian, AgriCensus wrote.
“China’s soyabean crushing industry is seeing intense competition, with the annual [crush] capacity reaching between 190M tonnes and 200M tonnes,” Li Feng, assistant director of a business unit at leading Chinese crushing company Yihai Kerry, was quoted as saying at the forum on 2 November in the report on the same date.
However, the actual crushed volume was only around 95M tonnes, or around half of that capacity, he added.
Meanwhile, increasing competition among crushing companies had driven up prices for imported soyabeans, while cutting prices for finished products such as soyabean oil and soyabean meal, which was leading the sector into negative crush margins, he said.
China’s crushing capacity was also highly concentrated in a handful of players, with the top 10 crushers accounting for roughly 80% of overall crush volume, according to Feng.
“Our crushing industry needs to self-discipline, and not to engage in too heated competition,” he said.
Luo Yonggen, the chairman of another leading Chinese soyabean crushing company, Jiusan Group, reflected Feng’s comments at a separate keynote speech at the forum.
Chinese crushing companies – including state-owned, private and foreign firms – had been expanding capacity recently, with daily crushing capacity reaching 482,000 tonnes as of September with volumes expected to increase to 500,000 tonnes next year, Yonggen said.
“But with the expansion of capacity, the utilisation rate has been lower than 60% in the last three years, meaning around 40% of that capacity has been wasted,” he was quoted as saying.
As crushing capacity is expected to expand further, industry competition will intensify and make it harder for crushers to gain spot sales profits, according to Yonggen.
Bumper soyabean harvests in South America countries had pushed down soyabean meal prices, which could lead to increased use in feed products, he said.
However, due to reduced over-capacity in China’s feed industry, the growth of soyabean meal demand would still be limited, he added.
