Required Report - public distribution

**Date:** 3/2/2005

**GAIN Report Number:** CH5019

CH5019

**China, Peoples Republic of**

**Oilseeds and Products**

**Survey Estimates China\'s Crushing Capacity at 70 MMT**

**2005**

**Approved by:**

![](media/image1.wmf)Ralph Gifford

U.S. Embassy, Beijing

**Prepared by:**

Jim Butterworth & Wu Xinping

**Report Highlights:**

In January 2005 China\'s Ministry of Commerce published the findings of
a survey of China\'s soybean crushing capacity. The survey estimates
China's total crushing capacity to be 70 million metric tons. This is
significantly higher that the 60 MMT estimate often quoted by trade
sources.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Beijing \[CH1\]

\[CH\]

**Introduction**

In January 2005, the results of a survey conducted in late 2004 by China
Chamber of Commerce for Import/Export of Foodstuffs, Native Produce and
Animal By-products (CNFA) were published on China's Ministry of
Commerce, Department of Foreign Trade website. (See
<http://wms.mofcom.gov.cn/article/200502/20050200343928_1.xml> Chinese
only.) CNFA is a quasi-governmental industry organization that is
supported by and takes direction from the Ministry of Commerce (MOC) and
works closely and National Development and Reform Commission (NDRC).

The purposes of the survey were to determine: 1) how many crushers exist
in China that crush at least 200 MT per day; 2) where most of the
crushers are located; 3) the daily crushing capacity of those crushers
that met the 200 MT per day minimum; 4) the total national crushing
capacity; and, 5) whether the existing crushing capacity is adequate or
excessive for China's needs.

###### 

###### Findings

*Total Number of Crushers:* The survey found 169 crushers that met the
200 MT per day minimum. Crushers of less than 200 MT per day were not
counted. Of those 169 crushers, 90 crush at least 1,000 MT per day.

*Total Crushing Capacity:* As of the end of 2004, the 169 surveyed
crushers had a total capacity of 233,700 MT per day. The survey assumed
a normal utilization rate of 300 working days per year, so China's
annual crushing capacity is 70.1 MMT per year. The 90 crushers with a
daily capacity of at least 1,000 MT averaged 2,192 MT per day, or
approximately 59.2 MMT per year. Thus, these 90 crushers accounted for
84.4 percent of the national total.

*Geographic Distribution:* The surveyed crushers are located in 19
provinces. Of the 90 previously mentioned crushers, 63 are located in
seven coastal provinces: 1) Liaoning; 2) Shandong; 3) Jiangsu; 4)
Zhejiang; 5) Fujian, 6) Guangdong; and, 7) Guangxi. These 63 crushers
account for 73 percent of the national total crushing capacity, meaning
a large portion of China's crushing capacity is located in seven coastal
provinces.

**Conclusions of Survey**

Based on the estimated 29 MMT of soybeans crushed in 2004, the 70 MMT
capacity far exceeds China's crushing capacity needs. The survey
estimated China needed 22 MMT of soybean meal in 2004 (21 MMT for
domestic use plus 1 MMT exported.) This converts to 27 MMT of soybeans;
meaning China's average capacity utilization rate is less than 40
percent.

Given this excess capacity, the survey cautioned all crushers and their
investors to heavily scrutinize any further expansion plans.

**FAS Comment**

Although this survey provides the first meaningful data Post has found
recently, Post cautions readers against using the averages cited above
because China's crushing industry runs the gamut from the world's
largest crusher (12,000 MT per day) with the latest technology to small
family-run operations that use labor-intensive, outmoded technology. The
large, efficient crushers operate nearly 24 hours a day, 365 days a
year, whereas the small crushers may only operate during the harvest
season. So, the composition of the average is as important as the
average itself. Also, survey's finding that China's total estimated
annual crushing capacity of 70 MMT is well above the 60 MMT estimated by
most analysts.

The Chinese Central Government has been trying to cool overheated
sectors of China's economy and the crushing industry has been expanding
rapidly over the past several years. This survey may be intended to
justify slowing future expansion through tougher credit policies and
other measures.