China's Petroleum Circulation Committee appeals for ban on using corn to produce gasoline

12:20, August 11, 2010      

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The Petroleum Circulation Committee under the China General Chamber of Commerce, China's largest union of private oil companies, has submitted a written statement to the National Development and Reform Commission (NDRC) appealing for a ban on the use of corn to produce ethanol gasoline, the committee's President Zhao Youshan said on Aug. 9, according to the Beijing Times.

The reason why the committee submitted the statement is that "people have to compete with vehicles for corn," or more precisely, gasoline producers bought too much corn.

China's imports of corn exceeded exports for the first time in the first half of 2010, which resulted in recent hikes in corn prices. In addition, ethanol gasoline made from corn is negligible compared to the huge domestic demand for gasoline.

The committee said that according to its market research this year, in order to enjoy the 1,880-yuan-per ton government subsidy and tax exemptions, some domestic gasoline producers snapped up corn immediately after it went on sale and used the corn to produce ethanol gasoline. This has caused a serious shortage of corn, which is also an important foodstuff in the poultry-raising industry, and corn prices rose sharply.

China can produce 10 million tons of ethanol gasoline a year, indicating that 30 million tons of corn is needed each year because a ton of ethanol gasoline is made from three tons of corn.

It is noteworthy that China has shifted from a net corn exporter to an importer for the first time in the first half of 2010. According to Zhang Jianbo, an analyst from the corn industry under the Distribution Productivity Promotion Center of China Commerce, the net import of corn to China in the first half of 2010 stood at 78 million tons.
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