Ningbo Helong New Material Co. Ltd., an maker of WPC decking and outdoor products, displays its products outside its Ningbo, China, factory. (Plastics News photo by Steve Tololken)
The domestic market is growing, pushed by government infrastructure spending, but the sizable increase in manufacturing capacity runs the risk of worsening already difficult conditions, said Toland Lam, president of the Wood Plastic Composites Committee of the Beijing-based China Plastics Processing Industry Association.
“We are really facing hard competition nowadays, that is what I’m worried about,” said Lam, speaking in an interview at the China Sixth International Forum of WPC, held Nov. 3-4 in Ningbo. “You can see the property development market in China is not doing well ... Worldwide there is nowhere to go. The USA is recovering a little. Europe is sinking.”
Still, he said, investment continues to come into China’s WPC industry, either because people see potential or because they don’t study the market closely enough and instead are attracted by WPC’s reputation as an environmentally friendly industry.
“A lot of people don’t do a really full study,” Lam said, who is also chairman of one of China’s most prominent WPC firms, Meixin Manufacturing Co. Ltd. in Shenzhen. “They just jump in.”
Precise figures don’t exist for the WPC market in China, but the CPPIA WPC committee, which organized the Ningbo conference, estimates that 2011 production was about 1.5 billion pounds a year, with capacity of 2.2 billion to 2.6 billion pound.
Vinyl-related WPC accounted for about 661 million pounds of production, with the remaining 881 million pounds split among high density polyethylene, polypropylene, ABS and other materials.
Estimates at the conference said Chinese production will grow 15-25 percent a year for the next few years, which if that pans out, would push production over 2.4 billion pounds by 2015. Capacity is likely to rise faster than production, executives said.
While China’s housing market is slowing down, local governments are using a lot of WPC in building new parks and other public projects, he said.
“I think China’s business is still a little bit investment driven,” said Wayne Song, vice president of the WPC committee. “It is not demand driven. A lot of cities and a lot of provinces are still investing.”
Also, he said ongoing reconstruction following the 2008 earthquake in Sichuan Province is giving a boost, with one project alone using 110 million pounds of WPC materials, he said.
Some industry officials say WPC is popular with government projects because it uses recycled materials as feedstock and because it fits with government desire to support “new materials” industries.
Song, whose is also president of WPC machinery firm Futuresoft Technologies Inc. in Manalapan, N.J., and Jiangsu province, said that based on equipment sales, the WPC industry is doing much better than many other machinery markets and better than China’s economy as a whole.
One analysis presented at the forum, from Austrian WPC consulting firm Asta Eder Composites Consulting, said that China would account for 25 percent of worldwide WPC production by 2015, and roughly double its production between 2010 and 2015.
China is currently the world’s second-largest producer of WPC products, after the United States, with a little more than 20 percent of world production.
It’s a rapid increase from only about 154 million pounds of production in 2007, said Asta Eder, principal in the Vienna, Austria-based firm. The number of Chinese WPC manufacturers has grown from about 30 in 2007 to 100 now, she said.
China’s WPC market drew one foreign supplier to the conference.
Cuyahoga Falls, Ohio-based concentrate and additive maker Americhem Inc. said demand for higher-quality products in the market are creating space for the company’s weathering additives.
“It’s pretty price sensitive but it looks like we have some competitive inroads,” said Bill Podojil, vice president and general manager of the Americas for the company. “For Americhem, that is why I came here.”
That growing domestic demand will be needed, with Europe, one of China’s major WPC export markets, likely to be stagnant this year. More than half of China’s non-PVC-based WPC products are exported, with the US and Europe being large markets, although most of its PVC-based wood plastic composite products are sold within China.
Lam said some Chinese firms are exporting to Europe with no profits to keep production lines running.
Germany and northern European countries are still seeing growth in WPC demand but the economic problems in southern Europe could keep overall European demand growth in WPC at close to zero this year, said Michael Carus, managing director of Huerth, Germany-based consultancy Nova-Institut GmbH.
“In Germany we still have growth but for the whole of Europe, especially the south, we have zero growth,”’ said Carus, speaking in an interview after his presentation. European-wide WPC demand had been growing about 10 percent a year for the last several years, he said.