WEIFANG, Shandong, China, July -- Shengtai Pharmaceutical, Inc. (OTC Bulletin Board: SGTI - News; ''Shengtai Pharmaceutical'' or ''the Company''), a leading manufacturer and distributor of high-quality, pharmaceutical grade glucose products in China, today announced that it expects prices for corn, its major raw material ingredient, to remain stable and sees sufficient supplies in the next two months.
Since mid-2007, food prices in China have been climbing at double-digit annual rates mostly due to shortages of pork and grain. However, corn prices in China have averaged about $255 per metric ton during the last nine months and currently remain at about that level. Corn prices in China have remained stable due to the Chinese government's policy to control the amount of corn consumption for the fuel industry. Additionally, it has been selling corn reserves to the open market on a weekly basis for approximately $240 per metric ton, in order to keep corn prices stable.
China is the second biggest corn-producing country in the world and Shandong Province, where Shengtai Pharmaceutical is located, is the major corn producing region. Corn is the principal raw material used to manufacture cornstarch and glucose. Shengtai Pharmaceutical's production facilities are situated well geographically in mid-Shandong. In August and September each year, the Company reserves more corn for production as a result of relative lower corn prices due to a seasonal rise in the supply of corn. The proximity to the corn production region ensures the Company with sufficient supplies of corn and minimizes the Company's transportation costs.
''We expect corn prices in the next two months will continue to remain stable despite the overall higher inflation rate in China. Our geographic advantage and stable corn prices, along with our increasing reserve of raw materials, should stabilize our gross profit margin,'' said Chairman and CEO, Mr. Qingtai Liu. ''In addition, we have successfully completed the trial production and quality tests of our new glucose facility and started its official operation at the beginning of July 2008. Our facility is running smoothly, while we expect some further adjustments to our manufacturing process to maximize our production cycle as we ramp up to full capacity. We continue to have sufficient supplies of corn which we will use to manufacture glucose from both our existing glucose facility and now our new state-of-the- art glucose plant.''
About Shengtai Pharmaceutical, Inc.
Shengtai Pharmaceutical, Inc. through its wholly-owned subsidiary Shengtai Holding, Inc. (SHI), a New Jersey corporation, and the Chinese operating company of Weifang Shengtai Pharmaceutical Co., Ltd., is a leading manufacturer and supplier of pharmaceutical grade glucose used for medical purposes, and the glucose and cornstarch products for the food and beverage industry and for industrial production in China. For more information about Shengtai Pharmaceutical, Inc., please visit http://www.shengtaipharmaceutical.com .