Many pork-meat producers and meat processors are in a sad pickle as live pig prices have risen nearly 60 percent year-on-year, which transfers the cost to slaughtering and meat processing companies by squeezing out their profit from up to 60 yuan ($9.2) down to around 20 yuan ($3), the China Business News reported Tuesday.

The national average price for live pig is 15.5 yuan ($2.38) per kilogram and the figure in North China has reached 16 yuan ($2.46), the report said. Pig raisers gain 400 yuan ($61.48) per pig, reaching the peak in profit since September 2008.

The hikes are mainly attributed to the rising corn price, a main raw material for pig feeding, said an insider of the Guangdong-based Wens Group, the largest domestic pig-producing company. Corn price in Guangdong Province rose 30 percent from around 1,800 yuan ($277) per ton last year to between 2,250 yuan ($346) and 2,300 ($353) per ton.

Some pig slaughterers found their benefits from pig slaughtering declined to 20 yuan ($3) per head from previous up to 60 yuan ($9.2). While the animal’s population rapidly decreases, supply is approaching insufficiency.

Analysts say the clenbuterol scandal involving Shuanghui Group also greatly affected the market and supply.

Some industry insiders suggested that government subsidies can be a better option for helping ease the awkward situation for producers.

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Evergrande Real Estate Group, one of China’s biggest property developers, has announced the sale of a 49 percent stake in its subsidiary, Grandday Group Ltd, whose principal asset is a large area of land in Jiangsu Province. Analysts described it as a necessary step for the developer to ease its shortage of capital, amid a general tightening of credit loans.

The Hong Kong listed developer said in a statement late Monday that the stake in Grandday Group was sold to Chinese Estates Holdings Ltd for $500 million, and that the sale would enable the two companies to form a strategic alliance in property development.

Evergrande also said it plans to develop residential and commercial properties on the land, which has an area of 1.34 million square meters.

“This can ensure cash flow for Evergrande, which has acquired a large amount of land in recent years,” Fan Xiaochong, vice president of Sunshine 100 Real Estate Group,  told the Global Times Tuesday.

Among domestic developers, Evergrande is famous for buying huge areas of land, and speeding up the financing, investment and sales process in order to reap larger profits.

As of the end of last year, Evergrande owned 96 million square meters, having bought it at an average price of 520 yuan ($79.91) per square meter, according to the company’s statement earlier this year.

“All developers are diversifying their ways of maintaining strong capital, since accessing limited bank loans is much more difficult than before. Mergers and acquisitions will be a possible choice among developers, not just for Evergrande,” Fan said.

“For developers, acquiring a plot of undeveloped land is easier than acquiring a project already under construction,” Fan added.

Facing strict credit tightening policies, developers are facing capital flow difficulties. The index for the top 100 developers’ average cash flow, a standard to calculate the flow of money, declined to a negative 510 million yuan ($78 million) last year from the previous year’s positive 980 million yuan ($149 million), according to a report by the China Index Academy.

“For listed companies, acquiring and selling stakes is a possible financing method,” Chen Baocun, deputy director of the research institute with the National Real Estate Managers Association, told the Global Times Tuesday.

The price of shares in Evergrande increased by 5.22 percent Tuesday, closing at HK$5.64 ($0.73) per share, while Chinese Estates’ shares declined 0.88 percent to close at HK$13.44 per share.

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Subsidies to promote energy-efficient air conditioners for manufacturers are due to expire at the end of the month, with no indication that they will be extended for another year.

The Ministry of Finance and the National Development and Reform Commission (NDRC) first introduced subsidies in June 2009 to promote energy efficient air conditioners. The subsidies were extended for another year and expire on May 31. The NDRC has so far said nothing about extending the program.

The subsidies had been reduced to between 150 yuan ($23.06) and 250 yuan in 2010, depending on the type of unit purchased, compared to the previous range of 300 yuan to 850 yuan.

Costs for manufacturers are also rising because raw materials such as aluminum and copper are becoming more expensive. The global price of copper is projected to rise 22 percent compared to last year, according to Standard Chartered Bank.

“Although national subsidies will be cancelled soon, we haven’t heard anything from manufacturers suggesting that air conditioner prices will rise,” said a spokesperson surnamed Li from home appliances retailer Suning Appliance in Nanjing, Jiangsu Province.

“The price of air conditioners will not rise after the subsidies are cancelled and may go down, ” said Luo Qingqi, director of Pa Le Consulting Co.

There is currently overproduction in the air conditioner market, Luo said. Without subsidies, manufacturers will step up marketing efforts. Raising prices is risky, particularly for smaller manufacturers, which suffer more from inflation and higher costs.

Suning’s Li added that most manufacturers have begun promoting new products such as frequency conversion air conditioners, which are set to dominate sales this summer.

Top power companies lose $1.5 bln

China’s five State-owned power generating groups lost more than 10 billion yuan ($1.5 billion) on their thermal power operations in the first four months of the year, an industry official said, as the country braces for the worst summer power crunch in years.

With profitable wind and hydropower businesses included, overall power generation losses narrowed to 6 billion yuan, Xue Jing, director of the statistics and information department under the China Electricity Council, said at a conference in Beijing Tuesday. The council is overseen by the State Electricity Regulatory Commission.

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