Are Chinese cooking oil producers stopping production in the face of government price controls?
Yes, according to domestic media reports. From yesterday’s China Business News:
An executive with one large-scale domestic cooking oil enterprise previously told this reporter that because the price of imported soybeans has remained high, the price controls on cooking oil have led to a 180-yuan loss on each ton of imported soybeans it processes. The drop in the price of cooking oil has affected domestic soybean processors as well, and an industry insider said that due to unprofitability, some oil plants in Heilongjiang had begun to halt production.
No, according to the National Development and Reform Commission, which called reports of a production halt “speculation” in a notice posted yesterday that mentioned several news outlets by name:
China Times report, “Cooking oil companies see signs of large-scale production halt,” seriously inaccurate
Recently, the China Times claimed that “cooking oil companies have seen signs of a large-scale production halt, and there is worry in the industry that the situation will lead to shortages during the Spring Festival.” Many other media outlets, including Sohu, Sina, Chongqing Times, and China Business News , republished the report. The Commission’s fact-checking revealed the report to be seriously inaccurate and entirely subjective speculation.
From the company mentioned in the article, Hopeful Grain and Oil Group, the temporary production halt of the past few days was due mainly to poor transport of soybean oil and soy meal, along with a large overstock. This year the country has greatly increased soybean imports and has ample national oil reserves. Business inventories are adequate, production is normal, and the domestic cooking oil market supply is completely guaranteed for the present and future.
Today, the China Business News struck back with a statement of its own:
A statement concerning the article “Another production halt seen among cooking oil enterprises”
China Business News
On December 13, an article on the website of the National Development and Reform Commission made this claim: Recently, China Times claimed that “cooking oil companies have seen signs of a large-scale production halt, and there is worry in the industry that the situation will lead to shortages during the Spring Festival.” Many other media outlets, including Sohu, Sina, Chongqing Times, and China Business News , republished the report. The Commission’s fact-checking revealed the report to be seriously inaccurate and entirely subjective speculation.
On December 13, this newspaper published “Another production halt seen among cooking oil enterprises.” After a careful comparison and investigation, we now make the following clarifications to our readers:
1. The article was researched and written independently by our paper’s reporter.
2. The article’s claim that “some cooking oil enterprises in Heilongjiang have halted production” has a specific sources and telephone recordings.
3. In regard to the profitability of cooking oil enterprises, this newspaper interviewed the general manager of a particular enterprise and obtained written materials from another enterprise to demonstrate that although the price of cooking oil would drop under a price cap, an unchanged price of soybeans would present serious problems for the enterprises’ capital chain. For balanced coverage, the reporter also spoke with three consulting companies and quoted the viewpoint of a China Oil Web analyst who was not optimistic about profitability for cooking oil enterprises.
This newspaper has data, text, and recordings as evidence for the content of the report.
As a newspaper that has always insisted on “responsibility to our times,” we take issue with the NDRC’s statement.
Editorial Department
2010.12.14
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