Ethanol swings China Agri-Industries into profit

01.09.2017

The first half of 2017 saw China Agri-Industries, a subsidiary of China grainstrader COFCO, return to profit. According to Reuters, this change in fortunes was aided by a big jump in the profitability in the company's ethanol and oil seeds segments.

China Agri-Industries processes grains including soybeans, corn, rice and wheat. Reuters reports that the company's revenues rose 9% to HK$44.4 billion ($5.67 billion) while its net profit rose to HK$1.2 billion from a HK$292 million loss a year ago.

Driving the dramatic turnaround was a five-fold surge in China Agri-Industries' Biofuel and Biochemical segment. A higher ethanol output and favourable shift in government policy seeing its operating profit rise to HK$754 million.

According to Reuters, China dropped its support price for corn in 2016, slashing the cost of the grain which is a key raw material for ethanol. It also offered subsidies to encourage companies to buy more of the country's large corn stockpiles.

Beijing also imposed anti-dumping tariffs on imports of distillers' grains, a by-product of ethanol production, and hiked tariffs on imports of the fuel, assisting domestic ethanol producers.


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