China is reinstating an export rebate policy for processed corn products in a bid to clear its huge stocks, Platts reported last week, citing a statement by the country’s Ministry of Finance.
Ten products, among which undenatured ethanol with purity of more than 80%, will benefit from a 13% tax rebate for exports from the start of September 2016.
As far as ethanol is concerned, however, the measure is unlikely to unlock exports.
There are concerns from international traders whether the corn used for the ethanol is genetically modified. Also, the Chinese corn ethanol may not prove popular in the North Asia market, with most Japanese and South Korean buyers preferring ethanol from molasses or sugarcane, Platts said citing a South Korean trader. In addition, market sources do not expect the FOB (Free On Board) China price to be competitive enough in the global market.
As a whole, only corn starch is seen as becoming competitive in the export market thanks to the policy. It would, however, need to compete with American corn starch which is of higher quality, a market source was cited as saying.
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China reinstates export rebate for corn by-products - Platts