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Asia's demand for ethanol is set to reach 2 billion litres in the year ending September 2007, but it would not push up sugar prices, Christoph Berg, deputy director of German analyst F.O. Licht, said on Wednesday.



"We see a buoyant 7-8% rise in ethanol demand in Asia, but the rapid consumption will not have any impact on sugar prices," Berg told reporters at a sugar and ethanol conference.



India is rolling out a plan to boost the mixing of ethanol with fuels to cut its dependence on crude oil imports, and sugar firms are rushing to take advantage of the new market. Berg estimated ethanol demand in India at 550 million litres in the year ending September 2007.



In China, he said 8 or 9 provinces were blending ethanol with gasoline and put annual consumption at about 1.2 billion litres.



Industry officials said demand for ethanol and other biofuels in Asia was at a nascent stage, but it was set to grow rapidly. Countries such as India, Thailand, Malaysia and the Philippines together hope to save more than US$1 billion on fuel imports bill a year by using biofuels, industry officials say.



Berg estimated that in the next couple of years, 50% of the fuel would be sourced from grains and 50% obtained from sugarcane. Currently 60-70% of total ethanol output is derived from grains. Brazil is the world's biggest and cheapest producer of ethanol, as well as its biggest exporter.



"I believe in the long run India could become a net exporter of ethanol while Japan, South Korea and Taiwan could be net importers. China could also be a net importer," he said.

 

anybody knows when ethanol licence will be announced? i think price will shoot >80 when it happen

http://www.kelive.com/kelive/UploadPdfs/20061115112656171141106-China%20Sun%203Q06.pdf

 

On a downtrend.... be cautious

 

Rising corn prices. Bad news for China Sun.



A scramble by Asian corn buyers to secure supplies is likely to intensify in coming months, as dwindling stocks and sales restrictions by leading exporters look set to lift prices beyond current 10-year highs.



Limited exports by China and Argentina and the possibility of a ban on Indian corn exports are increasingly closing all options for Asian millers, who depend on imports for the bulk of their needs to make feed for animals.



Adding to their woes are dwindling supplies of feed wheat -- used as a substitute for corn in animal feed making -- as leading wheat producers are hit by erratic weather.



"There will be a big scramble for corn until March," Amit Sachdev, representative for India of the U.S. Grains Council, told Reuters. "Also, there are not many alternatives to corn which feed millers can buy at competitive prices."



Traders said with supplies expected to remain tight until March, when the new Argentine crop is harvested, Asia buyers were making desperate inquires for corn even from non-traditional suppliers.



"People are also looking to see is they can pick up some corn from Myanmar," said one trader.



U.S. corn prices have surged more than 50% since mid-September and on Thursday hit a new 10-year high. December corn closed higher at US$3.77 per bushel, after climbing as high as US$3.78.



"While the price gains witnessed over the course of the year are impressive, we believe the rally in corn prices is not over and continue to view prices with an upside bias," Barclays Capital said in a research report.



On the demand side, the upward pressure on prices is expected to come from surging U.S. demand for ethanol production, diverting away corn from exports. In addition, China's domestic consumption was surging, the report said.



China, on which most Asian buyers depend for small cargoes, sold nearly 4 million tonnes of corn for shipment between November and February.



But fears are mounting that China could default on some of its recent corn sales to South Korea because of surging domestic prices, which rose 10% in November. Asian buyers said this was sending a signal to the market that Chinese availability in 2007 was unlikely to improve.



"When China has started talking about imports, there is no point talking about how much they would be able to export next year," said one trader.



China's Xiwang Sugar Holdings Ltd., one of the country's top corn sweetener producers, said last week it would apply for 2007 corn import quotas totalling 600,000 tonnes, against this year's quota of 100,000 tonnes.



In recent years leading Southeast Asian corn importers have been getting the bulk of their needs from Argentina. But with Argentina suspending export permits last month on surging domestic demand, some Southeast Asian buyers are picking up cargoes from Thailand.



Traders said as much as 100,000 tonnes of Thai corn had been committed for exports to Malaysia, Vietnam and Indonesia for December shipments. Most deals were done between US$185 and US$190 a tonne, free-on-board.



"But now Thai prices have also started climbing and they also want to keep their corn for their own poultry sector," said one Singapore-based trader.



India's decision last month to export corn for the first time in many years had given the market some breathing space, but with local prices also surging, a ban on exports looks imminent. Traders said India ran the risk of committing more than it could supply as the domestic crop had been estimated to be around 12.4 million tonnes, compared with last year's 12.8 million. Annual domestic consumption is about 14 million tonnes.



"We have asked the government to curb exports and cut the import duty to ensure that the grain is available in India," said Amol S. Sheth of the All India Starch Manufacturers Association.



Normally when corn prices surge, Asian feed millers resort to buying feed wheat as a substitute from either China, India or other leading wheat suppliers. But industry officials said that window of opportunity was also closing fast.



"Do we have any feed wheat supplies this year?" asked Mark
Samson, vice president for South Asia of the U.S. Wheat
Associates. "It's an extremely difficult scenario."



Australia is suffering one of its worst droughts in a decade, reducing its wheat output by over 60%. India has turned into a wheat importer from an exporter, and Chinese feed wheat supplies have also dried up.

 

more or less bottom out at 0.645 current price should be able to enter with partial exit at 0.72/73. keep some for potential climb to 1.1+

 

It was higher on expectations of strong earnings contributions from its ethanol products next year, dealers said.



"We expect ethanol products to account for 26% of sales and 40% of gross profit in 2007, assuming a 38% gross blended margin," Kim Eng analyst Gregory Yap said in a recent note.



China Sun is expected to start trial production of its new ethanol plant this month and its management is optimistic that it can ramp up utilization of its initial capacity of 100,000 tons to 60-70 pct next year.



Yap has a "buy" recommendation on with a $0.95 target price.



"It will be an added bonus if China Sun eventually gets the license for fuel ethanol as we have not factored (that) into our forecasts," he added.

 

Westcomb has cut its target price to $0.86 from $1.03 following its weak third quarter results. Westcomb noted that the bonds could suffer a similar fate.



"We expect the convertible bonds to be treated in the same manner and will a cause drag in profits should the share price of China Sun trend upwards," Westcomb said in a client note.



The research house, however, kept its "buy" rating on the stock on the view that China Sun's new ethanol plant, which has already started trial production, and its foray into non-fuel ethanol products will provide impetus for profit growth in 2007.



I think there's still some downside.

 

Beware ! Beware !

First is ML Rumours ! Lead all the way up and come down.....

Now is Kim Eng's Say ! Lead all the way up and come down ......

What is next ? Who to believe .... Is there a third one Crying Wolf ???

 

still heading south leh.

 

Kim Eng re-iterate a call to buy as target is 0.95c ! How, is it alright to collect at 0.685 now ?

 

But the sun is rebouncing again!

 

Its third quarter net profit fell 36.3% yoy as its bottomline was hit by derivatives losses. The company booked RMB40.25 mln in losses arising from a decline in the fair value of its derivatives instruments.

 

Q3 net profit was RMB35.66 mln vs RMB55.97 mln last year. Price fall was reflecting profit fall.



May still fall further. Avoid.

 

Good healthy volumes on this counter. But I think its on a downtrend now.

 

just read on CNA that NYSE fined Morgan Stanley for inaccurate trading reports. Maybe SGX shld do the same to ML.

China stocks seems good for "hit and run" trading, hardly suitable for long term investment.

 

It is confirm coming down ! Thus, this shows that such a big company Merrill Lynch also gives out rumour news, to move the price up from 0.665 all the way to 0.75, then coming down to 0.715 and then today.



 This round I do not know they offload how much they are holding, thus I wonder can this be reported to any SGX agency for passing rumour so as they can make a quick escape from this counter ~!!!!!!

 

CLARIFICATION CONCERNING A RESEARCH REPORT ON THE CHINA SUN GROUP ("CHINA SUN") BY MERRILL LYNCH PUBLISHED IN THE DOW JONES NEWSWIRES ON 6 NOVEMBER 2006  

The board of directors ("the Board") refers to the research report by Merrill Lynch published in the Dow Jones Newswires on 6 November 2006. The Board wishes to inform that the management of China Sun had received a call from Merrill Lynch on 2 November 2006, seeking clarification on some market rumours. The management responded that it is China Sun's standing policy not to comment on rumours and that they are not aware of any events that would require an announcement to be made by China Sun.

The Board would like to affirm that it is not aware of any event or matter, which causes it to believe that any of the rumours as noted in Merrill Lynch's report to be true

 

It is coming down again ! Can invest or not ? Is it going down trend liao ? Can some one chk and provide any technical rpt ?

 

Seems we all missed this boat when it was 0.67 - 0.68, when my dealer call me to buy.

 

Merrill Lynch assured investors that China's relatively low corn prices would continue to boost the firm's earnings.



Analyst Eddy Loh said in a note that corn prices in China have increased only 12% yoy in October, versus a 61% rise in the United States in the same period.



China Sun's share price had fallen 11% in the last week, possibly due to the surge in U.S. corn prices and the likely provision of a fair value loss related to its $12.8m convertible bonds, according to Loh.



"We do not see any significant deterioration in its fundamentals," Loh said. However, he added that China Sun's net profits for its first nine months "could be flat" against the same period a year ago after factoring in the RMB30-40m ($3.81m-$5.08m) fair value loss on its convertible bond.