China Sun Bio-Chem warns on profits as ethanol utilization dips

In China, China Sun Bio-chem Technology Group issued a warning that the company would swing to a net loss in the fourth quarter of 2008.

The company reported that ” losses continued to incur from the start up phases of the Group’s two new businesses involving the production of corn starch at Tieling Wanshunda Starch Co., Ltd., and ethanol at Sky Bright (Shenyang) Ethanol Co. Ltd.The losses were due to lower than expected average utilisation rates at the 2 plants in 4Q FY2008, which resulted in higher unit fixed cost allocation. The selling price of ethanol was further hit by the significant decrease in oil price which caused less demand from customers who used ethanol as raw material to produce certain chemicals for industrial uses.”

The company said that market in the first half of 2009 would continue to be “soft” but expected improvement in the second half of the year.

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