The Singapore-listed firm is the latest Chinese business to invest in corn sweeteners, which are seeing strong demand thanks to growing consumption of beverages and processed foods in the huge consumer market alongside soaring sugar prices.
Corn sweeteners have processing advantages over sugar in certain food formulations such as ice-cream and they are now competitively priced against cane sugar, which has been priced much higher in recent months owing to the effects of a drought on last year's crop.
Industry sources had already predicted that production of starch-based sweeteners would grow by 20 per cent in the current year to reach 5 million metric tons in 2006-07. The investment by China Sun Bio-Chem, adding annual capacity of 120,000 tonnes at a new facility in Suzhou in the eastern Jiangsu province, looks to be part of this trend.
"Corn sweetener has a wide array of products and the demand from this business sector has been increasing dramatically in the past few years. We expect the trend to continue as the Chinese people demand healthier sugar products and a better quality of life," said Sun Guiji, executive chairman and chief executive of China Sun, in a statement released on the stock exchange.
The group, which already produces more than 200 varieties of modified starch products at five facilities around China, plans to introduce different corn products to meet market demand, he said.
The firm could look into production of high fructose corn syrup, the sweetener of choice for beverage producers in the US, and a product that is seeing growing interest in China. Companies like Luzhou Bio-chem and Global Bio-chem have both recently invested in production capacity for this ingredient, which commands higher prices than glucose or maltose syrups.
"We intend to broaden our product ranges and extend the geographical spread and depth of our production capacity to seek revenue and profit growth for the group," said Sun.
The investment will be funded by proceeds received from its issuance of US$100 million convertible bonds in the company's fine chemicals subsidiary, Suzhou Gao Feng Fine Chemicals, according to the statement.
China Sun Bio-Chem has also recently built an ethanol production facility in Shenyang and is awaiting the go-ahead for production from the government.
