There are a couple of forces at work to help CCGY sell product from the new plant.
One is the plant's location. It's much closer to port access...this is by design because the original intent was to import feed stock. Feed stock was originally going to be waste palm oil from Indonesia/Malaysia. Don't know if that's still the case with Gushan out of the picture...maybe more local waste oil is available for processing.
Anyhow, the location of the plant make exports of specialty chemicals more attractive as well. If you listen to what CCGY mgmt tells us, exports are an important part of the capacity expansion. In the past, they've received export requests that far exceeded their capacity...maybe now they can play in that market.
In terms of biodiesel, it is true that capacity seemed underutilized the past few quarters. However, this may be illusory. Margins weren't favorable so production was curtailed. In the past, CCGY could load up the truck with diesel, drive down the street, pull into the first gas station they came to and try to market all the diesel they could...drive down the street a little further and do the same...the trucks never made it more than 50 miles from the plant before all the product was marketed. So during good economic times with positive biodiesel margins the demand for product was definitely there.
Well, good economic times have returned to China. See recent talk of +9.5% GDP in 2h09. If biodiesel demand returns to historic levels CCGY won't have a problem selling product.
AI
