Hong Kong, April 15 - China Haisheng Juice Holdings Co. plans to boost production of apple-juice concentrate by 17% this year, as it expects global prices to stay high on robust consumer demand from developed countries, Executive Director You Yong said.
Xi'an-based Haisheng crushes apples in China and exports more than 95% of its output to developed economies such as the U.S., Europe and Japan.
China is the world's largest apple-juice concentrate producer, and it produced about 70% of the world's total output in 2007, according to the U.S. Department of Agriculture. Haisheng accounted for about one-fifth of China's total output, or about 12% of the global market.
Haisheng plans to produce about 270,000 tons of apple-juice concentrate this year, up from 230,000 tons in 2007, You told Dow Jones Newswires in a recent interview.
The company plans to boost output by increasing the utilization rate of its plants to 85% from 75%.
Haisheng has an annual production capacity of 315,000 tons of apple-juice concentrate. It has eight processing factories in northeastern China, where many apple farms are located.
Haisheng's selling price of apple-juice concentrate is about US$1,800 a metric ton, up sharply from about US$1,000 a ton at the beginning of 2007, You said.
"I think it is more of a demand-pull situation. Consumers find apple juice is an affordable alternative to orange juice, which is a lot more expensive. I expect demand in the U.S. and Europe will likely rise 5% every year in the near future," You said.
He said orange juice concentrate sells for about US$2,700 a ton, partly because some countries are converting orange groves for biofuel crops.
But he said the 80% jump in prices of apple-juice concentrate last year isn't likely to be repeated this year, because "the rise was way too irrational."
Prices rose last year partly because concentrate producers passed on production costs. You said the company's apple costs rose 71% to CNY1,370 a ton last year. Last year's price more than tripled from 2004, when Haisheng paid about CNY380 a ton for apples.
Farmers prefer to sell their apples at higher prices in fresh markets, leading to tight supply of apples for pressing.
A sharp drop of output in Poland, the world's second biggest apple-juice concentrate producer, due to a severe frost last year also pushed up apple prices.
Haisheng doesn't own any apple farms but is considering setting up and operating its own farms, possibly in Xinjiang or Inner Mongolia in China, in order to contain rising raw material costs, You said. But he added there is no imminent plan to do so.